Author Topic: Dave Ramsey's Investing Advice  (Read 15733 times)

mrpercentage

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Re: Dave Ramsey's Investing Advice
« Reply #50 on: May 31, 2015, 04:54:26 PM »
I have had 12+ % returns. Many American Funds "R" shares will do it.

SGRNX, FCNTX, RWMFX, RIDFX, PAMCX, FARCX

thats from Arizona State Deferred Compensation-- all at, above, or really close to 12%
« Last Edit: May 31, 2015, 05:18:17 PM by mrpercentage »

forummm

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Re: Dave Ramsey's Investing Advice
« Reply #51 on: May 31, 2015, 05:39:23 PM »
I have had 12+ % returns. Many American Funds "R" shares will do it.

SGRNX, FCNTX, RWMFX, RIDFX, PAMCX, FARCX

thats from Arizona State Deferred Compensation-- all at, above, or really close to 12%

I thought you might be from AZ. Do you work for the university?

Wolf359

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Re: Dave Ramsey's Investing Advice
« Reply #52 on: June 01, 2015, 10:48:44 AM »
Growth is a mutual fund made up of growth stocks.  Aggressive growth are midcap growth stocks.  Growth and Income is what we would call a blend of growth stocks and dividend stocks.  International is self-explanatory. 
Correction: I found a statement where he clarifies: growth stocks are mid-cap stocks.  Growth and income are large-cap stocks.  Aggressive growth are small-cap stocks.  International is international stocks.

Thank you for translating this in a way that make sense to me. I have always found these terms somewhat bewildering.

He uses 12% rate of return as a motivator to convince people to invest in retirement funds at all, which some people seem bound and determined to avoid, but is probably the laymen's most straightforward path to wealth.

I think much of the above definitions are incorrect. 'Growth' means stocks that are expected to have high capital appreciation. It has little to do with size. They generally are considered higher quality companies, and therefore have higher P/E rations. A simple explanation is that growth stocks are more highly-priced 'glamor' stocks, and value stocks are the 'dogs' that no one wants, and therefore might be undervalued (but also more likely to fail). Small, medium, and large refers to the relative capitalization of the company, and nothing more. There are small value stocks, and small growth stocks. There is no such thing that I know of as an 'income stock fund.' There are dividend stock funds, and many of the stocks in that fund will be value stocks. Value stocks are more likely to pay dividends, but not all do. An income fund is focused on current income, and so will have a lot of instruments that are not stocks, like bonds and debt instruments, as well as dividend-paying stocks.

Here's a good place to start learning: http://www.bogleheads.org/wiki/Stock_basics

In general, most people make a mistake trying to 'slice and dice' the market by picking 'tilts' towards different sectors or stock classes. Realize it is mostly noise, and it's a great way to screw yourself. Over time any given sector is likely to revert to the mean (i.e., end up with the same return as the whole market together). The average investor reads that, for example, that large cap growth stocks have done well, and invests in such a fund just when that sector starts to under perform the rest of the market. That's how I invested for years, looking at the past 3-5 years return to pick what fund to get into. I always underperformed the market.  I finally wised up and just put my money into Vanguards total stock market index.

Just admit you're not smarter about this than the rest of the world of investors, invest in the entire market, and stay the course.

The question I was originally answering was about what Dave Ramsey's Investing Advice actually was.  I wasn't addressing what I thought his advice ought to be.  I like (but don't need) his opinions on debt, but I strongly disagree with his investing advice. 

He recommends 100% actively managed stock mutual funds (75% domestic, 25% foreign) for all investors at all times, selected on the basis of past performance.  Most people here would not agree with that strategy. Rather than avoiding expenses, he actually pushes people towards loaded stock funds. And (as you've noticed), his definitions are wrong.

On the other hand, if you tell him that his math doesn't work, his response is somewhere along the lines that the people who need his course need it because they weren't good at math in the first place.  That's a non-answer answer.  It might be true, but it doesn't change the quality of his investing advice.

mrpercentage

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Re: Dave Ramsey's Investing Advice
« Reply #53 on: June 02, 2015, 12:26:24 AM »
@wolf a good retirement account has special deals so those funds are not loaded. AMECX for example would normally have a 5.75% load but in a work retirement account that same fund is RIDFX with 0 load and .35 expense. Not bad for an almost 12% life time

@forum no I work for the state but being as I can not represent them in such forums I speak for myself and will not list my agency

TomTX

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Re: Dave Ramsey's Investing Advice
« Reply #54 on: June 02, 2015, 05:23:37 AM »
I have had 12+ % returns. Many American Funds "R" shares will do it.

SGRNX, FCNTX, RWMFX, RIDFX, PAMCX, FARCX

thats from Arizona State Deferred Compensation-- all at, above, or really close to 12%

Yeah, but what dates? Since inception it's about the same as the S&P 500:

https://www.americanfunds.com/individual/investments/r-shares-with-and-without-fee-waivers-and-expense-reimbursements.htm

Returns are in the same ballpark as the S&P 500 with dividends included (7.4% annualized - May 2002 to May 2015)

http://dqydj.net/sp-500-return-calculator/

mrpercentage

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Re: Dave Ramsey's Investing Advice
« Reply #55 on: June 02, 2015, 07:44:04 AM »
Perhaps it's because I'm looking at R-5. Not cherry picking it's what's in my options at work
« Last Edit: June 02, 2015, 07:57:34 AM by mrpercentage »