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#p7009228 Here you can see the performance compared to just the S&P 500: https://www.portfoliovisualizer.com...ocation4_1=25&symbol5=VFINX&allocation5_2=100 As 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#p7009965 But 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=4RsmD5QP0LIq9XKbEVAbPd But 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)
Anyone choosing actively managed funds or ETFs is making a bet on the manager, or more specifically whatever factor(s) the fund managers are using for asset selection. Since you (as the client) are not in a position to evaluate the manager's process, don't know what factors are being used, and don't know if said factors will correlate to future outperformance, it's a bet where the odds cannot be calculated i.e. a gamble. Accordingly, unless these conditions are violated (like if you identify a boutique manager with a rare/unique process exploiting a bespoke edge), it's never a good idea to invest in actively managed funds or ETFs vs the passive benchmark/index trackers.
%% WELL I checked with one of his REALTY ELPs[I think he gets a small cut of any business there]; never did sell that property LOL. No doubt they average better than average. 1]I've been satisfied with my non USa ETFs, but i may not aVerage 25% on them LOL But I dont have my RE liscense liket he does also. 2]IF i had to pick only one benchmark, it maybe SPY or VOO ONE only is almost sure to underperform ,even SPY or VOO is not one ; simple math . Business is not a gamble , even though some do it like that in silver state
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.
Well if i wanted to go with the ramsey portfolio i would do it using passive etfs. I surely would NOT use actively managed mutual funds. But again it doesn't get you less volatiliy (reacts pretty much the same as S&P 500 to market swings) and it also doesn't guarantee you higher profits (depends on your entry point) so i don't see a reason to get 4 etfs instead of just buying VOO or SPY. https://www.portfoliovisualizer.com/backtest-portfolio?s=y&sl=4RsmD5QP0LIq9XKbEVAbPd Again if i'm missing something please let me know.
Its the same old story. It is virtually impossible to beat the market for non-professionals. Even most professionals can't beat the market, just read any of Bogle's books where he did the research himself. Another thing is that the more stocks you own the more it performs like the market so you actually have to be non-diversified to really beat the market. Magnificent 7 vs. nontech SPY is a good example of this: SPXT +8% ytd (S&P 500 ex-Tech ETF) SPY +18% ytd FNGS +87% ytd (NYSE Fang+ ETN) Reminds me of the idiots running the CalSTRS pension fund and their obsession for paying hedge funds to lose money for them instead of just buying SPY+QQQ. I think from 2000 to 2022 they made 0.5% annualized. Its amazing they even bother with a CIO at all.
%% LOL, looks like you found a way to, dont know if you are pro in SEC sense.LOL UPRO ,not really for a Pro only/ can do it. Have to be super selective\can lose 3x spy-voo LOL. Fidelity Contrafund tend$ to beat SPY-VOO a lot , but not all the time. Seems like IJR is a good ride many times; but Dave ramsey likes 50 year time frame; 3 yr, 10 year are some of my favorites + IJR underperforms on those,but may excell on 3 years. VOO has a big bid\ ask spread, bigger than FNGS LOL
The only active managed funds I trust!! When the bow tie goes, maybe I'll go... He has be consistent for over 40 years so I go with them... https://www.royceinvest.com/about/history/
%% STRANGE/how the leaders rotate/ small caps underperform plenty; but i was checking out some 2o year data. Small caps beat SPY in a 10 year run,[of 20 year run] even though that seldom happens, not in past 10 years
I had my kids in RVT in the 1990's... This company is great for a Roth IRA... https://www.royceinvest.com/funds/royce-value-trust/xrvtx.aspx Go to the bottom and look at their returns vs Russell 2000...