The Great Investing Debate: Dave Ramsey Takes on a Skeptical Caller
Dave Ramsey’s live radio show is known for its lively discussions, but a recent caller from Los Angeles took things to a whole new level. Chris, the caller, didn’t mince words, saying, “You’ve done some great work, but in other ways, you’re stupid and arrogant.” Ramsey’s co-host, Ken Coleman, couldn’t help but chuckle at the blunt statement.
The Challenge: Actively Managed Funds vs. Index Funds
Chris’s main point was to question Ramsey’s long-standing advice on actively managed funds. He claimed that investors could end up with 50% more money at retirement if they opt for low-cost index funds instead of paying higher fees for actively managed ones. Ramsey wasn’t convinced, firing back, “Not sure where you went to school for your math class, but you failed.”
Ramsey’s Defense: Decades of Experience
With decades of experience under his belt, Ramsey insisted that his picks for actively managed funds have consistently outperformed the indexes. He quipped, “I’ve got socks older than you,” emphasizing that, with proper research, it’s possible to find actively managed funds that deliver better returns.
The Warren Buffett Factor
When Chris mentioned Warren Buffett’s endorsement of index funds, Ramsey pointed out that Buffett himself doesn’t stick solely to passive investing. “He actually has an actively managed portfolio called Berkshire Hathaway,” Ramsey said. “I really don’t have a problem with index funds. You can get rich with index funds – but not 50% richer. That’s complete BS.”
Ramsey’s Conviction: Putting His Money Where His Mouth Is
As the debate continued, Ramsey clarified his position: he practices what he preaches. “I’ve been doing this for 30 years and it’s made me a multi-multi-multi-millionaire,” he said. “I invest in the same actively managed growth stock mutual funds I tell people to use.”
The Verdict: It Depends on Your Priorities
So, who’s right? It ultimately depends on your investment priorities. For hands-off investors, index funds might be the way to go. But for those willing to do their homework – or hire someone who will – actively managed funds could offer a chance to beat the market.
Seeking Professional Guidance
If you’re deciding on the best investment strategy for your needs, consulting a financial advisor can be a smart move. They can walk you through your options, break down the pros and cons, and help design a plan tailored to your goals.
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