Financial Advisors React to SHOCKING Dave Ramsey Call! 😱

Financial Advisors React to SHOCKING Dave Ramsey Call! 😱

#Financial #Advisors #React #SHOCKING #Dave #Ramsey #Call

You uh you’ve done some great work and in some ways i love you in other ways you’re stupid and arrogant All right guys so you know one of the favorite traditions around here at the money guy show is the content team likes to find interesting videos and catch our reactions to and so today uh they’ve let us know that there’s an interesting video they found from one of

Our neighbors just south of here mr dave rams and they said there was an interesting caller that called in and they had sort of an exchange and they wanted to hear what you and i thought about it fair enough fair enough all right here we go

Up next is gonna be chris in los angeles hi chris welcome to the ramsay show hey dave how are you doing great man what’s up um there’s a couple things one you uh you’ve done some great work and in some ways i love you in other ways you’re stupid and arrogant

Maybe bury the stupid a little later because i mean holy cow maybe not lead with that here here’s the thing that i don’t know if it’s phone if it’s the internet but we’ve all kind of gotten a little separated from the golden rule of treating people like you want to be

Treated i wish i’d have been paying attention to ken coleman’s reaction so i could have seen what his face did when stupid his face is ah can you can you back it up just a little bit so i can pay it because i i mean i want to see

His reaction on the reaction show on that just a little bit in other ways you’re stupid hello darkness my old friend okay iceman he’s still thinking what’s my dad how can i help you all right by the way that’s a great way to start any conversation right there yeah well

My first question would be are you smarter than warren buffett okay how old are you because you push i’m 35. okay cool dave is trying to figure out who the heck just called my show in my building ken is like oh boy and he knows he knows somebody’s poking the

Lion right now i’m thinking is what’s going on what’s the point of your call how can i help you the point of my call is you push people into actively managed funds when over time if you push people into an index fund they would have about 50 more money when they return

Okay um not sure where you went to school for your math class no but you failed okay now what was the premise of that what did they call it so what the caller said is uh if you have actively managed investor versus a passively managed investor at the end of

Their investing lifetime in their career the passive investor will have substantially more than the active investor what he’s laying out wow dave is our neighbor to the south yep and yet the content team also knows we love us some index investing so if we’re going to make our point to dave

Ramsey on why index investing investing is better than active why did we have to wrap it in a guy who in the first two sentences caught him called him stupid it just i mean like i’m like oh no that’s the team that’s the side of the

Equation this is where this is gonna get us sideways with um our neighbor to the south the uh actually compounding god i i understand dramatically i’ve been t i got socks older than you i’ve been teaching this a while okay so i think dave should get some new socks

If he’s got 35 year old son here’s the thing you’re basically become doing what bogle said and bogle invented a wonderful thing with the index fund and the s p 500 funds are wonderful index funds are wonderful they are not a cure-all and there is no possible scenario unless you’re an

Absolute idiot in picking your actively managed funds that you would have 50 percent more in an index fund so i’m trying not to do absolute statements so i don’t even get embarrassed when you’re 20 we think a 10 rate of return is reasonable but we let

It come down each year because as you adjust your risk as you add diversification to the portfolio by the time you’re 30 it’s nine percent rate of return by the time you’re 40 we can’t think eight is reasonable by the time you’re 50 you’re probably thinking seven

You know and so forth it walks down in incremental steps one dollar for a 20 year old that turns into 88 or has the potential to turn into 88 at 65. if you actually just lowered the rate of return by one percent down to nine percent it

Does change the 88 to a 56. now i’m not going to do the public math sure to figure out percentage differences but it is a big rate of return over the long term can have an impact for sure the actual facts are more than 50 of the funds under perform

The indexes okay that’s the two seconds it’s actually way way more than 50 percent the fact is two percent two percent above if if you have a seven percent return versus a nine percent return which you have the compounding cost bringing your return down by two percent over 50 years

Further than what we do that that would be true but none of those numbers you’re using are accurate in terms of what the s p has produced or what actively managed funds are produced well but he’s not talking about return he’s some of the differential in return

Differential of the long term of active versus passive that’s the actively managed funds that i personally have picked have outperformed the indexes by more than two percent as a portfolio because it’s fairly easy to study mutual funds no this is something there’s a reason when you look at the

Spivo research and other research out there index funds if you look at them on a 15 20 year basis they outperform 85 to 86 of the active managers or you could say it said differently 86 percent of active managers underperformed the index fund so the sheer fact that

The number’s so big means it’s the exact opposite of easy it perception-wise you would think hey what’s what’s so hard with doing that and you know and so i think i think that’s my my issue and so i think what dave is saying is if only 14 of active funds outperform their indexes

Over the long term he’s basically saying i got it i’m dave ramsey can pick not just one year but over the long term the 14 of active funds that are going to outperform i that seems that seems like an aggressive statement that 14 15 that do outperform they typically when you go to

Year two year three the same functions are not there it’s so there is some consistency problems with um what dave just showed but if you’re not going to study them and you’re not going to have a good advisor in your corner then using the index funds is a great idea but he

Said if you’re going to have an advisor if you’re not going to have an advisor in your corner you should own index funds i disagree i think that like a really good advisor should also utilize index funds in in the real world that’s not an it’s not an either or i think

That really good advisors figure out how to incorporate that into an investment plan so i disagree a little bit there here’s what we actually found in the real world versus um versus someone’s hypothetical vacuum discussion of theory okay as we studied the largest study of millionaires 90 of them became wealthy

Without becoming without inheritance inheritance did not cause their wealth and says the same thing did it with their 401k with actively managed funds now some of the funds actually underperformed the s p and some of them over perform the s p davis right the majority do reach their million dollar status seven figure

Status and their retirement plans it’s also ramsey solutions dave and those guys have put together that it’s age 49 that’s actually where i get that stat that i share from that age 49 is from that that same type of type of research but here’s where i think it we vary a little bit

What is the largest 401k provider for like fortune 500 country companies in the the s p 500 where do they have their retirement plans it’s fidelity investments yeah fidelity investments is one of the lowest cost providers of index funds so um i’m a little disconnected in the fact that

Industry-wide the largest 401k provider is actually one of the greatest index providers i think there could be some correlation actually using indexes it’s a little off from what what what was just shared and some of them used an s p because a good 500 fund was in there

Was in their portfolio good disclaimer let’s go back to warren buffett for just a second are you aware that warren buffett does not have all of his investments in index funds other than the fact that he has stated that the average guy because he’s a vocalite the average guy

Should buy index funds instead of actively managed funds other than that he doesn’t actually do what he says he’s going to do with that he actually has an actively managed portfolio called berkshire hathaway are you aware of that yes i am doing it with with the money he’s

Leaving to his place when he dies well that’s fine i mean where the money’s going is not not relevant to the mathematical discussion i have people bring warren buffett up because they go look warren is out performing well he does so i always try to make the differentiation that

Warren buffett even though he’s buying apple he’s buying coca-cola and all kind of other individual stocks with his holdings at berkshire hathaway warren buffett has primarily made the lion’s share of his assets and money from berkshire hathaway buying entire companies and that’s a it’s still an investor but

It’s just a different type of investor than what the the typical retail investor the typical investor it’s working with a financial advisor realize we’re in he’s doing a different category it’s not apple’s apples that’s apples and oranges on on how he built his wealth the mathematical discussion chris

Is simply this warren buffett made comments frequently about the average guy should buy index funds and i really don’t have a problem with that you can get rich with index funds not 50 percent richer that’s complete bs but you know is true but if you but you

Can get rich with index funds i don’t have any problem with that at all if that makes me arrogant fine but i think we’re confused you see he just did he just hit the magic button right there i’ve got a book suggestion for chris it’s called how to

Win friends and influence people it’s a class i think the caller smart guy i’m not going to take anything away because i think he was he’s smart i would echo ken coleman though there is a way to attract and talk with honey versus just coming in there and popping

Warren because like i said it does break the golden rule i was cut truthfully i give dave a little credit i felt like he came he pulled back he pulled back on on the punches there but i do kind of feel like hopefully we paid respect to both

Sides so you felt like you had a nice um tour guide mediator somebody to kind of help you figure out how to navigate this discussion that was just happening i’m only going to add one thing in there and it’s the reason why we love index funds and we generally opt for more

Index funds and actually manage funds is because of something dave’s team says all the time we’ve heard dave say forever that like 80 of personal finance comes down to behavior yeah well one of the things we love about index funds is it removes you having to do the behavior

That dave was talking about of go try to pick which fund is going to be the best one this year which one’s going to be the next one next year and how do i buy and how do i sell instead of being out there trying to beat the market it’s

Okay to just be the market because when it comes to investing time into the market is way way way more valuable than trying to time or time being the market i’ve been doing what i’ve done doing for 30 years chris and it’s made me a multi multi multi multi millionaire and i

Invest in actively managed growth stock mutual funds that outperform the indexes across the four types we teach i actually invest in what i tell people to do i don’t tell people to do something while i’m investing in something else oh i think he did it different than my

Friend i don’t i don’t know he just said different than my friend warren he actually just threw shade at once i don’t wanna i don’t wanna close this negative because we all know dave has gotten so many people out of debt this is the great thing about focusing on wealth building the good

Habits the savings is that there are so many different paths to create wealth you know dave has done it through active management but then we know index funds from our own experience of helping people navigate how to create wealth and this is the great thing about money in

General if you start young enough start building the habits you too whether you’re doing active whether you’re doing index you’ll do it i mean you’ll make wealth because that’s why i talk about that concept of 88 times over is that every dollar you can invest when you’re 20

Years of age has the potential to turn into 88 my guidance to everyone is do the basics like dave talks about get out of debt don’t be you know a servant of the credit card industry and all those things but do try to maximize your army of dollars growing for you save

Early save often make it a consistent automatic habit uh if you heard you know we’re talking about this idea of 88 times over and how powerful one dollar can be if you haven’t gone to check out our website go check out resources we have a deliverable that is

Completely free that’s called how powerful are your dollars we call it the wealth multiplier you want to know what every dollar that you save right now can turn into by the time you get to retirement go to resource resources and check that out and you are

Going to be blown away that just like brian said so long as you’re showing up and staying consistent and even dave said it you can be rich no matter which strategy you employ if you show up and stay disciplined you can do it even with index funds even dave again that’s right you

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