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  • corn18
    replied
    Here's what I believe in and I follow:

    1. Dave Ramsey to get out of debt
    2. Mr. Money Mustache for saving
    3. Bogleheads for investing

    And daily visits to SavingAdvice.com

    I have no idea if this is better than anything else, but it has me back on track.

    Tom

    Leave a comment:


  • LivingAlmostLarge
    replied
    No I think that making the assumption someone is saving 15% prior to DR is crazy. Second I believe that if you are 50 and have nothing saved it's VERY LIKELY otherwise why would you need dave ramsey?

    Tell me do normal people save? Do normal people have debt? Or have they been saving till age 50 for retirement?

    I think most have not or they would not need dave. Second, 15 to 20 years working is pretty GENEROUS. I would say only half of people will reach 65 working WITHOUT getting laid off for being old or getting too sick to work. Have you actually run the monte carlo simulations of saving only 15% for 15-20?

    There is no calculator in which case that's enough. Want proof? Check out this. http://www.mrmoneymustache.com/2012/...ly-retirement/

    According to Mr Money Mustache (Who I do trust more math wise than dave) it will take 43 YEARS to retirement if you save 15%. And this is the guy who advocates paying off the mortgage ASAP. Who preaches living simply! To retire in 15-20 years you have to be saving 40-50% of your income.

    That's why compounding again I mentioned is the most important thing in savings.

    Also I don't think Dave Ramsey dumb actually the guy is BRILLIANT. Who else can go bankrupt and then sell to people how to get out of debt and make millions? NOT a dummy. Rather a very savvy businessman. Everything he shells makes money. And the financial advisors still are a bad idea.

    I forgot about the 8% withdrawal rate. Terrible advice.

    Leave a comment:


  • tripods68
    replied
    Originally posted by Petunia 100 View Post
    Not a bad idea. I have blogged about it before, and there are plenty of other threads discussing his plan, its strengths, and its short-comings. Even so, not a bad idea.

    http://petunia100.savingadvice.com/2...-scary_100084/

    That's Awesome!

    Leave a comment:


  • Petunia 100
    replied
    Originally posted by tripods68 View Post
    I am not here to debate whether people should do or don't do their homework before investing. People do dumb things everyday. And it doesn't matter to me or cared whether you like or don't like DR.

    Maybe you guys need to open a new thread. "Why I hate Dave Ramsey, or Dave Ramsey is terrible...." Let it all out! .
    Not a bad idea. I have blogged about it before, and there are plenty of other threads discussing his plan, its strengths, and its short-comings. Even so, not a bad idea.

    http://petunia100.savingadvice.com/2...-scary_100084/

    Leave a comment:


  • tripods68
    replied
    Originally posted by Petunia 100 View Post
    So basically, it is people's own fault if they follow DR's advice to their detriment? That's absolutely true, but does not change my opinion of DR at all.

    I am not here to debate whether people should do or don't do their homework before investing. People do dumb things everyday. And it doesn't matter to me or cared whether you like or don't like DR.

    Maybe you guys need to open a new thread. "Why I hate Dave Ramsey, or Dave Ramsey is terrible...." Let it all out! .

    Leave a comment:


  • Petunia 100
    replied
    Originally posted by tripods68 View Post
    There is no excuse for being IGNORANT! Investing requires some homework.

    And if people fails to do their homework ahead of time; not understanding the overall risk of what they are investing, fee structure, expense ratio, or asking basic questions on commissions--their own FAULT not DR. Don't act like you were deliberately victimized by DR after the fact, and if you didn't know the risk of investing and felt deceived somehow. Its because you didn't do your homework properly. Its that's simple. If you don't know anything don't invest.

    Let's not make up excuses of why people get deceived. There are lot of product out there like, credit cards companies that advertised to enticed people to use their card with 2% rebate or 0% for the first 6 months. And you wonder why people get into debt trouble.

    Its great that people like DR found a "niche" in the market place made his program successful over the years. Too many people are in debt and needs help.
    So basically, it is people's own fault if they follow DR's advice to their detriment? That's absolutely true, but does not change my opinion of DR at all.

    Leave a comment:


  • tripods68
    replied
    Originally posted by Petunia 100 View Post
    What you call "doing business", I call deliberately deceiving people in order to profit from their ignorance
    There is no excuse for being IGNORANT! Investing requires some homework.

    And if people fails to do their homework ahead of time; not understanding the overall risk of what they are investing, fee structure, expense ratio, or asking basic questions on commissions--their own FAULT not DR. Don't act like you were deliberately victimized by DR after the fact, and if you didn't know the risk of investing and felt deceived somehow. Its because you didn't do your homework properly. Its that's simple. If you don't know anything don't invest.

    Let's not make up excuses of why people get deceived. There are lot of product out there like, credit cards companies that advertised to enticed people to use their card with 2% rebate or 0% for the first 6 months. And you wonder why people get into debt trouble.

    Its great that people like DR found a "niche" in the market place made his program successful over the years. Too many people are in debt and needs help.
    Last edited by tripods68; 11-04-2015, 11:52 AM.

    Leave a comment:


  • Petunia 100
    replied
    Originally posted by tripods68 View Post

    That's your opinion.

    He has paid ELPs advisors available on his website across the country. They partner with him to promote their own product/services. That's just part of doing business. Whether people chooses to partner to one of his paid ELP, that's up to the them. There's nothing wrong offering a product/services with fees or loads that people may want or not if they do their own research.
    What you call "doing business", I call deliberately deceiving people in order to profit from their ignorance. He could easily advise people to put 3/4 of their money into a total US stock market index fund and the other 1/4 into a total international stock market index fund. That money would then be invested approximately 25% each into his "growth, growth & income, aggressive growth, and international" categories. And at a fraction of the cost. But, there's no revenue for DR in that, so forget it.


    Originally posted by tripods68 View Post
    People like to bash him and say "he's terrible, or he's stupid". That's because people don't listen to his advice--without inserting their own personal biases to the situation. He tells people straight up! And that's what I like.
    Oh, I don't think he is stupid. He has made a fortune from his brand, and continues to rake in more. People trust him and hand over their dollars. For example, his latest budget product, which offers a service very similar to what Mint offers for free, costs $11 per month. And his loyal followers can't sign up fast enough. He's one hell of a salesman.

    Leave a comment:


  • Petunia 100
    replied
    Originally posted by LivingAlmostLarge View Post
    I still think and I know I'm not alone in voicing the opinion that giving away the advice to count on 12% ROI ridiculous.

    Let me explain once again, if you are 35 when you start his program and take 5 years to get to step 6, then are 40 and spend another 10 years paying off the house. Then you are 50 and you start "investing" you won't be investing anywhere nearly as risky as you need to be to get 12%.

    First read the intelligent asset allocation book and ready why a 100% stock allocation is incorrect (as Dave Ramsey suggest you listed his 4 stock categories), over a properly allocated 80/20% strategy. Second as people age people do NOT get the 10% annual returns of the stock market because most financial advisors (dave ramsey being the exception) move their investors/clients into less risky stocks. I'd like to see Dave put his money where his mouth is and ask to see his 100% stock portfolio. If I had to gamble I would "bet" that he's diversified in stocks/bonds/commodities and he's got a professional manager whose shifting him as he ages and may need money. He might well be making well over 12% but it's not for the average joe. I can say there have been many years in the past decade we've done over 30% gains, but it's likely mostly luck and staying invested.

    Oh wait the guy went bankrupt in the 1980s from bad real estate deals. I give him lots of props and credit for getting people out of debt.

    But I refuse to perpetrate the idea that a 100% stock portfolio is the way to go at age 50. In fact at age 36 we've got bonds in our portfolio. Not a lot but some. We've got a lot of cash due to circumstances but we follow and believe the balanced asset allocation

    Actually Dave Ramsey is terrible because he promotes mutual funds that carry fees and loads through his investment advisors. How can this be helping?

    Please read this http://qvmgroup.com/invest/2013/07/3...ur-allocation/

    You don't just do an SP index until you retire. That is an inaccurate market snapshot. But stocks returned on average 7.4% since 1936 and bonds 2.4%.
    I agree with you LAL, but IMO the big disservice isn't the 12% return, but the statement that you can safely withdraw 8% per year from your nest egg. He is promoting an extremely risky strategy. That would be OK with me if he warned people that an 8% withdrawal rate will result in your nest egg being completely gone within 20 years more than half the time (according to the well-respected Trinity study), but he does not warn them at all.

    Leave a comment:


  • JoeP
    replied
    Originally posted by tomhole View Post
    But you know what, if I were to retire at 55 and only got average returns vs. 12% returns, the simulator says I would only have a 1% chance of making it to age 90 and in fact, I run out of money at age 65.
    What kind of assumptions does your simulation make with respect to living costs? I ask because I hear it often: people saying they can't afford to retire now because of costs.

    I'll admit I do not know a lot about how the ACA has changed that and will change that, but for us, we plan on greatly reducing our expenses (I believe you said the same, Tom) in the form of downsizing for many reasons: partly for saving money, but also to reduce consumption.

    Leave a comment:


  • corn18
    replied
    Great example of people talking past each other.

    Leave a comment:


  • tripods68
    replied
    Originally posted by LivingAlmostLarge View Post
    if you are 35 when you start his program and take 5 years to get to step 6, then are 40 and spend another 10 years paying off the house. Then you are 50 and you start "investing" you won't be investing anywhere nearly as risky as you need to be to get 12%.
    Before you do baby step 6, you must be doing baby step 5 (Invest 15% in retirement). That means you already been investing for years. You will not be starting out of nothing by age 50. Even if you have paid your home age 50, it doesn't mean you stop working. You have to work for another 15 years or 20 years while aggressively saving for retirement.


    Dave Ramsey doesn't particularly like investing in bonds funds since it generate lower ROI compared to stock MFs. It doesn't mean it cannot be part of the overall asset allocation. Feeling aside, this is valid point (whether you agree or not) asset invested mostly in bonds say 60/40 will have lower return. Thus, gives credence a greater chance that retirement investment maybe exhausted early before they die. If you outlive your retirement asset then you are completely screwed.

    The opposite is true, High Risk Investment = High ROI (90/20 asset allocation) There's a greater chance retirement investment will NOT exhaust completey before they die.


    Originally posted by LivingAlmostLarge View Post
    Dave Ramsey is terrible because he promotes mutual funds that carry fees and loads through his investment advisors.
    That's your opinion.

    He has paid ELPs advisors available on his website across the country. They partner with him to promote their own product/services. That's just part of doing business. Whether people chooses to partner to one of his paid ELP, that's up to the them. There's nothing wrong offering a product/services with fees or loads that people may want or not if they do their own research.

    Again, I'm not here to defend or promote Dave Ramsey investment advice nor am I paid advisor (Maybe i should). You may or may not like his investment advice. I don't really care. He's advise goes beyond personal finance IMO.

    People like to bash him and say "he's terrible, or he's stupid". That's because people don't listen to his advice--without inserting their own personal biases to the situation. He tells people straight up! And that's what I like.
    Last edited by tripods68; 11-03-2015, 07:36 PM.

    Leave a comment:


  • corn18
    replied
    I can give a real world example:

    Right now, I have a plan to retire at 60. I assume an average return of 5% after taxes on my portfolio (I'm 60% stock, 40% bonds). This is conservative compared to historical market returns. Based on a monte carlo analysis of the last 115 years of the stock market, I have a 95% chance of not running out of money before I am 90. That is pretty good.

    If I change the inputs and assume an average return of 12%, I can retire at 55 with a 100% chance of not running out of money before I turn 90. And my portfolio is twice as big when I die than when I retired. That is awesome! Dave just shaved 5 years off my retirement age!

    But you know what, if I were to retire at 55 and only got average returns vs. 12% returns, the simulator says I would only have a 1% chance of making it to age 90 and in fact, I run out of money at age 65.

    So my conclusion is that assuming a 12% return for the purpose of retirement planning is just stupid.

    Tom

    Leave a comment:


  • LivingAlmostLarge
    replied
    I still think and I know I'm not alone in voicing the opinion that giving away the advice to count on 12% ROI ridiculous.

    Let me explain once again, if you are 35 when you start his program and take 5 years to get to step 6, then are 40 and spend another 10 years paying off the house. Then you are 50 and you start "investing" you won't be investing anywhere nearly as risky as you need to be to get 12%.

    First read the intelligent asset allocation book and ready why a 100% stock allocation is incorrect (as Dave Ramsey suggest you listed his 4 stock categories), over a properly allocated 80/20% strategy. Second as people age people do NOT get the 10% annual returns of the stock market because most financial advisors (dave ramsey being the exception) move their investors/clients into less risky stocks. I'd like to see Dave put his money where his mouth is and ask to see his 100% stock portfolio. If I had to gamble I would "bet" that he's diversified in stocks/bonds/commodities and he's got a professional manager whose shifting him as he ages and may need money. He might well be making well over 12% but it's not for the average joe. I can say there have been many years in the past decade we've done over 30% gains, but it's likely mostly luck and staying invested.

    Oh wait the guy went bankrupt in the 1980s from bad real estate deals. I give him lots of props and credit for getting people out of debt.

    But I refuse to perpetrate the idea that a 100% stock portfolio is the way to go at age 50. In fact at age 36 we've got bonds in our portfolio. Not a lot but some. We've got a lot of cash due to circumstances but we follow and believe the balanced asset allocation

    Actually Dave Ramsey is terrible because he promotes mutual funds that carry fees and loads through his investment advisors. How can this be helping?

    Please read this http://qvmgroup.com/invest/2013/07/3...ur-allocation/

    You don't just do an SP index until you retire. That is an inaccurate market snapshot. But stocks returned on average 7.4% since 1936 and bonds 2.4%.

    Leave a comment:


  • tripods68
    replied
    Originally posted by LivingAlmostLarge View Post
    We are completely DEBT FREE. NO mortgage because we rent. According to Dave Ramsey we should stay that way.
    Congratulations in being debt free. People would love to be in your situation completely debt free.

    Originally posted by LivingAlmostLarge View Post
    I am 36 years old, my DH will soon be 38. If we wanted to we probably could "retire" and work part-time for medical benefits and college savings. We'd probably come out ahead because our kids would qualify for need based scholarships. We aren't staying debt free.
    Indeed, being completely debt free offers more flexibility.

    In our situation, even if we paid off our home in 5 years, we'll continue to work for another 15 or 20 years to achieve our ultimate goal.


    Originally posted by LivingAlmostLarge View Post
    So explain to me how Dave Ramsey isn't doing a grave disservice to tell people to plan to use 12%?
    Dave Ramsey is doing society a huge favor by promoting a 'debt free society. You can incorporate a lot of his teaching principle since most are just common sense approach in handling variety of family situation. His books are available in many public library. I've never heard someone or a caller of his "Dave Ramsey failed me". You failed because you didn't follow his baby steps.

    He merely uses 12% ROI as a PROJECTION 20-30 years Long-term investment horizon in a fully diversified mutual funds. Its' possible but its not out of line. I don't think his lying or making false assumption. He may very well be earning 12% on some of his investment because he's been investing for over 30 year. I don't care about his 12% ROI personally nor people should hold him accountable. He doesn't promote specific MFs or where to put your money. Investment is high risk without careful research/study and due diligence.

    A lot of what he say are based on his own personal experience and people can take that for what it is. With a massive audience listeners between 10-12 million -- I'm pretty he has plenty of critics. That's okay.i'm not here to defend or promote DR. This program is not for everybody. I think too many people focuses way too much on 12%. I'm saying you shouldn't. He gives you the tools to succeed and the possibility of wealth building. We know its works for us since starting and following his baby steps principle.



    side note:
    According to historical records, the average annual return for the S&P 500 since its inception in 1928 through 2014 is approximately 10%.
    Last edited by tripods68; 11-03-2015, 09:09 AM.

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