Dave Ramsey recommends a 100% equity portfolio consisting of actively managed mutual funds.
He recommends growth (mid cap), growth & income (large cap), aggressive growth (small cap) & international funds @ 25% each.So i did some research and it seems like this are actual funds dave recommends to his employees:
https://www.bogleheads.org/forum/viewtopic.php?p=7009228#p7009228Here you can see the performance compared to just the S&P 500:
https://www.portfoliovisualizer.com...ocation4_1=25&symbol5=VFINX&allocation5_2=100As has been pointed out after fees you're doing worse than a passive S&P 500 ETF like VOO or SPY:
https://www.bogleheads.org/forum/viewtopic.php?p=7009965#p7009965See AlsoThe 3 Fund PortfolioBogleheads Three-fund PortfolioThree-fund portfolio - BogleheadsInvest Like a Legend: John Bogle's Blueprint for a Balanced PortfolioBut what if you invest like dave ramsey using etfs instead of actively managed mutual funds?
Well turns out it depends on the investing timeframe (start and endpoint). Sometimes you're doing better
with ramseys strategy and sometimes with the s&p 500. Using the full track record of these etfs you're doing better with the s&p 500 right now:
https://www.portfoliovisualizer.com/backtest-portfolio?s=y&sl=4RsmD5QP0LIq9XKbEVAbPdBut maybe ramseys portfolio is less volatile because it includes international stocks and stuff?
No. I noticed Stdev is almost identical to the s&p 500 and if you watch the charts from the
portfolio visualizer links you will find that both portfolios react very similar to market swings.So the ramsey portfolio costs you significantly more in fees and even if you're bypassing that by using ETFs
you're still not guaranteed to make more money (depends on your entry point) and it also isn't less volatile than a passive
S&P 500 ETF like VOO or SPY.Am i missing something or is VOO, SPY etc. the hands down better choice out of the 2?
Any argument for using the ramsey portfolio instead? (Modified using ETFs or not)
murray t turtle likes this.
Generally, over time, you can just assume that anything that is correlated to the overall U.S. market, is going to underperform if there is a human in the mix. Of course that will include any kind of actively managed fund. While there are exceptions, you will need to be lucky to find one.Brokers, market makers, programmers, suppliers, equipment manufacturers, etc. etc., are all in line for a cut of your invested dollars. These good folks provide a service. Just be aware that you will be paying for it. There is no free ride.
Last edited: Nov 15, 2023
murray t turtle and piezoe like this.