Today I discovered a disturbing article regarding financial guru Dave Ramsey. I discovered this as I was perusing his website and came across a half-hour radio interview with the article writer from the Motley Fool.
I give the guy kudos for at least agreeing to go on the show and debate his views, and I equally give Dave kudos for not ripping the guy a new one--something he sorely needed.
The article in reference on the Motley Fool site is listed here, and the basic gist of his argument is regarding the 12% average rate of return the stock market has done since the mid 1920's. This supposedly causes people anxiety as they harp on with "Oh, you can't get 12% on your mutual funds!"
I have one word for this: bull.
The company I work for offers a 401(K) program, and in its mutual fund offerings I have four I am invested in. The average in the last 3 years (the furthest back the data provides unless I view the prospectus), one did a little less than 10%, two were are 13%, and one did 16%. I don't know about you, but that's a lot more than 12%. Besides, I looked at the information Wells Fargo gave us and ALL of the information they state advised that the average rate of return was 12%!
And here's my greatest contention in response to the "foolish" article: WHO CARES! You're splitting hairs and analyzing data to death, depending on how you want to look at it. This is why I hate following politics any longer, because when the government spews out data for something, you can analyze it fourteen different ways to Sunday and come up with a different analysis--this depends on which political party is in power and which news program you're watching.
Take Ramsey's teachings of never having a car payment. If you were to save for decades what you'd pay for in car payments, investing in mutual funds which have averaged 12% rate of return, it comes to 5-7 million dollars--and to top it off, Dave ALWAYS ends this statement with "And if I'm half right, you're still okay!"
I tried to comment on the Fool's article, but I could not without registering on their website--something I am not about to do. Because of this, I will not EVER visit their site nor purchase any of their products.
(Oh, by the way, the guy who wrote the article had NEVER attended his 9-week Financial Peace University course, had NEVER read any of his books--except for a few choice article in the Total Money Makeover--and was not a regular listener to Ramsey's show. I don't know about you, but if I was going to write an article trashing someone's views, I'd want to do a lot of research and read a lot on what that person said.)