In a recent interview, Dave Ramsey claimed he beat the S&P 500 over the last 30 years because “it’s not hard to do.”
The big question is, is it really that easy to beat the S&P 500 over time?
According to David, it’s not. In fact, most active fund managers fail to do it over time.
A recent study revealed that 85% of fund managers underperformed in the S&P 500 in the last ten years – this underperformance caused the disappearance of mutual funds altogether.
Based on these stats, how do we rate Dave Ramsey’s claims that he outperformed the index by 12% and 13% in some years?
David believes it’s not advisable to collect all your money and move the index fund route. The first step should be seeking the services of a financial advisor.
Good financial advisors will more than offset whatever fees they charge you in the form of enhanced returns that stem from sticking to your investment goals.
Unfortunately, most investors let their emotions undermine their investment decisions. We’re supposed to buy low and sell high, but most investors do the opposite. Fuelled by emotion, they buy high and sell low.
For David, a good financial advisor will help protect you from yourself and remind you of the plan you created and why you need to stay on track toward your goals.
It doesn’t matter how much money you have. It only matters how much you actually get to spend after taxes.
The three main takeaways from Dave Ramsey’s claims about beating the S&P 500:
Take everything Dave Ramsey says with a grain of salt. His entire business is built on making investing seem easier than it actually is.
Beating the S&P 500 is not as easy as Dave Ramsey claims.
You need a qualified financial advisor to help you yield much higher returns over time to increase the likelihood that your life savings will last through life expectancy.
Mentioned in this episode:
David’s books: Power of Zero, Look Before You LIRP, The Volatility Shield, Tax-Free Income for Life and The Infinity Code
PowerOfZero.com (free 3-part video series)
@mcknightandco on Twitter
@davidcmcknight on Instagram
David McKnight on YouTube
Get David’s Tax-free Tool Kit at taxfreetoolkit.com