❗ Dave Ramsey's mutual funds exposed. | FinTips

How are you doing today? Dustin Tibbets, here financial advisor to jazz wealth managers. Today we are going to do something a little different. Grab a drink, sit down, this is going to be a little detailed, maybe a little more than you're used to seeing. Do you know who Dave Ramsey is? Yes, you've probably heard of him, if you haven't heard of Dave Ramsey. He is quite a popular financial guru. He does a great job and I always say you know how you can give someone a It's a tough time trying to motivate people to do the right thing with their money, right, he gives a lot of advice, a lot of it is free, but he gets very angry and I understand part of that comes from you know it's super popular.

You know, politician, half the people will hate you, half the people will love you, but we wanted to focus on some of the things he says today and see if we can share the data with you and use it more as an experiment. working together versus me just shoving a bunch of information down your throat and trying to say one thing or another, well here we go if you follow Dave Ramsey or have ever heard of him before you know he talks about the four

mutual

funds

that he thinks you should invest in aggressive growth, growth, growth and income and international, which is why I see

funds

all day.

I look at each of our 401k clients four or three B's, whatever. I'm happy to help with any of that stuff etc. I've seen a lot of these funds and it always resonated in my head that people say you can't earn 12%, that's horrible sir. Ramsey, you're giving bad advice. I mean, I see the comments. I even heard him receive calls. Well, I don't follow it directly all the time. I just think it's a little unfair, so we set out to say, could we? Studying each

mutual

fund is that it is even possible that there are 66,000 375 mutual funds.

Could we filter them somehow and see if we can replicate the performance? So if I missed something here, you think I can improve on something. Be nice, but leave a comment. We can always adapt and move forward as we go, but I want to share with you what I have so you can make whatever decisions you want and go from there. When we thought about this, we said that it is very important that you share it in a way that is as objective as possible, in fact, it is simply factual, we cannot say as possible, we have no margin for error here.

I don't want this to be seen as discrediting anyone or giving anyone a hard time. I support the guy I support all the financial gurus I was more of a Bruce Williams type growing up so I missed the Dave Ramsey thing, but I want to find a way to support everyone here, you motivate this, do you too? There we go, okay, so bear with me. It would be sliding some things in and showing you a lot of information, but the first thing we wanted to do was say, can we get the data on every mutual fund out there?

Yes, what could be number two? If someone took your advice and looked for an aggressive growth fund, looked for an international fund, how would they find it and how could they be 100 percent sure that they chose an aggressive growth fund? I can't remember a time when Dave Ramsey said about the Fidelity funds were actually in the category that he suggests, so here we go, let's start with aggressive growth. The first thing we did was upload sixty-six thousand three hundred and seventy-five different funds that we could find, but we couldn't actually find any of them. this is all we said so the fund prospectus has to say your goal is aggressive growth if you say your goal as growth and income get rid of it if you say your goal is currency related get rid of it correctly if it's a commodity base get rid of it has to say that your goal is aggressive growth, so we were able to reduce from sixty-six thousand three seventy-five to two hundred and thirteen results, that's a lot of results, we don't have time to analyze them all, so We said it would make sense for someone not to choose a fund that's only five years old, mr.

Ramsey has been at this for a long time, so it's likely that the funds he's talking about have been around for some period of time. We picked 20 years and said he had to give us enough data to present something really impressive, so we moved on. and we said let's filter out any of them that are under 20, we don't even want to mess with them, we just want the kind of existing funds that have been around that filtered it down to 36. The results here at the bottom you see a list of all these funds here and we said okay, the fees are going to be important, we have to take into account the fees there because I know he talks about having loaded advance funds there, which I have a hundred. percent against because I don't know of any front loading funds where you pay the loading and then you're done, there are no expenses after that, which is how it should be if you pay a fee up front.

I couldn't find Anyway, what we said is okay, we want to know that it has definitely been around for at least 20 years, so here you can see in years since its inception, we want to know the all-time total return of this fund. The rest of the math for you there and we wanted to know any fees that may be involved with this fund so that's the first one so we looked at that aggressive growth. I'll get to the sheet in a moment here, then we look at growth, this was a little bit more difficult because growth funds tend to skew a little bit and maybe not even be available for some of you, so we say okay, these funds They have to be based in the United States, where we can actually go and buy them correctly. there can't be any kind of weird effects there you can see everything that we solved, obviously, fixed income, we don't want to do anything, we had to do this because it wouldn't filter everything that we want, we had to go through and be specific and say: get rid of commodity funds, getting rid of bond funds, money market funds and things like that, otherwise, it was included in our list, so we went from sixty-six thousand three seventy-five up here to about four thousand and we said yes.

I can't study four thousand funds so show us just the 20+ year old funds that brought us down to eight hundred and ninety one since that was a lot we said okay we won't pick the underperforming funds that's not fair , can. Don't just pick some random fun with bad performance and try to say this doesn't work, so just show us the funds that are in the top fifth, what do you say 95th percentile performance? So we thought okay, that'll filter everyone out. the garbage ones and we will only look at the best of the best in terms of performance, that led us to 44 different funds here, so the same thing we said from the beginning we want to verify that we want the returns of all time and I want to know the fees involved , which don't include advance fees, but we'll cover that here in a moment.

Okay, then we move on to growth and revenue, same thing. We were very specific to make sure there were no actual charges. Russian funds or something that might have gotten in the way or things you can't even buy anyway, so we filtered all that out and said okay, we want them to be 20 years or older and we want to see only the best performers, which led us to this was quite a bit, there were 71 different funds here, but the same thing we gathered the same information, we put it all together and finally we went to the international funds, now the international funds in a mutual fund perspective usually say global stocks, like that it's like they're like filtered there, that's how Morningstar filters it, that's how any fund prospectus will include it, so just so you know we're not playing there, that's how we filtered it and said okay, 20 years or Los elders had to show us the best of the best and here are our best performing funds, of course you could see they were old enough and everything was set up there so we took it to a good old spreadsheet and put it to the old one. and what we did was say: okay, we want to pick the top three, let's eliminate the fees for a second, who cares what the fees are, let's see if the best performing funds in those categories can generate the returns that were expected, so you got the dark green, this is the best performer, the lighter green is second and then of course you got the third.

The goal was to create three different portfolios to see their performance over time. If it is highlighted in red, this is a front. loaded fund that charges from five and a half percent to five and three quarters percent as an initial load, we take that into account in our performance here that we are going to show, well, let's go to the graphs so we can I have to move them, oh, I want to show you everything here, so let me stretch this guy as big as possible and we'll go up a little bit because you need to be able to see everything well, go up more, more, more, okay. perfect, so the first thing we did was say let's take the first portfolio combination, the best performing fund of all of them in each category, let's put them in a fund of 25% each and see how they would have returned, we know we have to go . at least 20 years back because we have so much information going back to 1990 or a little before that, if you can see it, hopefully you can see it there, so we put the growth of $10,000, they say someone puts $10,000, where would they put? be as of today relative to the market, so the first place fund does well you does better than the market, that's where you are, they are annualized returns over the life of this investment, if you had chosen that, let's call it 10% nine point nine six percent the market returned nine point seven two very well, yeah, you're just outperforming the market, there's no argument, it's not 12 percent, but there's no argument in terms of that performance using everything what is available to us.

Well, I'll take this one out, we move on to the second place where we take the second best performing fund and put them in the mix, now taking into account of course the fees and everything that is involved in the mix there and because now this The number it looks a little different. You'll see the S&P change a little bit because the data is a little smaller. We couldn't go back that far. Although this fund is all these funds are more than 20 years old. There are some that are more than 20 years old. is not older than others, so the furthest we can go back and calculate all the fund data together seems to be around 1990, there is still plenty of time to get a good baseline result here so you can see that the background that comes second here works well with the data. provided eleven point five five percent which is close enough to 12.

I'll give you that right that works and you got ten point three two three over the same period of time, if you invested at that time, you can also go back and say, "You're Well, what's up?" Over the last ten years, the right markets returned 13 percent and this fund basically returned the same as the market that we were able to do 20 years in 1999 and let's look back on that so we can see the same thing there, a little bit better than the market; they're not 12 percent averages, but I mean, given how the markets did pretty well, that's the second place combination, then we move on to the third place combination here, this would be the third best performance in each of the categories that we cover there and we want to go back as far as possible, there we go, so you got a return of about ten point two six percent relative to nine point nine one with the overall stock market, so basically ten percent, so it's not twelve percent, but it still worked fine there, and that's what the three backgrounds are like if you put all three of them on the map together, yeah, it should load, there we go, if you put all three of them on the map, there you can see, okay, we don't have any bottom or any average that reaches twelve percent or more is correct, if you analyze and try to select some of the years, you can do that, but we don't have a tendency to long term of twelve percent or more, we still have a respectable profit here, although that's the big point, if you were trying to do a little better than the market, you did it in almost all the funds, you know, the only reason why The one that did not do so in this one is because the first ones are the funds with the best performance of those. because two of them were front load funds, so you paid an average of two point eight one percent in front loads plus the expense ratio, so if those fees had been eliminated you would have done a lot better, but unfortunately , what can you do?

Then we said, "Okay, what if we were budget conscious? What if it's okay? We don't like the first place combination because that includes front-loading funds. We don't like the second place combination. Maybe we just "We don't like it. I don't like it." HE,yes, we don't like the third place combination. What would happen if we chose only these funds among the first three? Oh, that's going to be a little off. Sorry, let's go back real quick. I want to make this very clear. And if? We went back and said, "Okay, this is a front-load fund, let's not use that one." The second place is a frontload fund, but the third is not, so what if we said let's build a portfolio from any of the funds that didn't?

I don't have front loads with that one, I do a little better, maybe that's what he's talking about, maybe he likes those, but you know, maybe we shouldn't pay the fees even though he mentions upfront loaded funds, so we did what we call a fee conscious mix of your funds there and we set it to the maximum here, let me stretch it so you can see absolutely everything, make it nice and big. Okay, there you have it, so with a fee conscious mix , now we're talking right, so now we have about a ten point eight three percent return relative to the market, which is the widest spread, by the way, in terms of should I invest in the index or should I buy a bunch of Dave Ramsey style mutual funds, this was the biggest margin, so if we were aware of the fees and actually moved away from front loaded funds, we did better in the long run, these are also adjusted for dividends and all. along the way, so this includes absolutely every possible return, the S&P return is the total return, it actually says right there the total return of every dividend included in its history or at least as far back as we're looking for. accounting for this performance, so this is in the At the end of the day, every dollar there, so the fee conscious fun wins if I put the three funds back in there, you'll see the colors are going to change, actually the fund conscious of the rates switches to hot pink, which surpasses everything else, then what I think you pretty much agree with what the man says or you have discovered that maybe it is not what you thought or it is better than you thought at the end of the day, while it does not return the 12% that I have.

I've heard him say many times that it's close enough, right, get it off me, that's how I feel about it, like it's close enough, he's doing a good job, he has good suggestions, you can certainly pick up other funds that had a best performance, we could put any There are a number of different mixes together that are not in those four categories that have better long-term performances, like this one, which could be a good follow-up video, but at the end of the day you know the people who attack him, you have the right data and I could bother him by saying no, he's won 1 on 1 on 1 point, 1/2 percent off, 1.75 percent off, but come on, he's doing a good service by having someone to do all that work for you and we're just trying to help you.

To kind of solidify that and share that performance with you, so let me know in the comments what you think you're going to criticize me for this. Did I miss something? If I did it, let's do it again. I have no problem doing this and fine-tuning along the process. way, but I just want to share that with you because you know at the end of the day there's more than one way to invest and if you don't agree with the way he wants to invest and you agree with someone else or you're working with us here at jazz and we're doing better than that, okay, there's no wrong way to do it, as long as you're investing towards your goal, don't use any of these funds that you just saw on the screen because you think I'm going to go right back to them because You need those funds for your goal, just invest for your goal.

By the way, I should add that quite a bit of volatility was expected, more volatility than the overall market in each of those funds, so in return for that. higher returns you have to experience more drawbacks and you go to the first combination I showed you, the maximum drawdown was 20 and a half percent, you may not care that the standard returns creation is almost 14%, so you got it. We'll have to expect a wide range there, the second, maximum reduction of 19.5%, the third, 19%, even the fee-conscious, 119.8.6%, so I know that's a lot of numbers to throw at you, but You should know that if you do. invest in those four funds you will feel it during the good times you will be happy but during the bad you almost have to look the other way right don't be scared don't run away and blame Dave Ramsey for it you just know that no, it's going to be a little more volatile and That's all, that's all I have for you.

I hope you'll join us later for the closing beet program. We do it every day to talk about stock market participation and statistics and data like this with you, I like to get the opinion out when I can, but we try to share data as much as possible and we hope to give you a lot more of that, let me know how we did it if there is anything else we can do. we can improve here and make it even better for you or if there is any study that interests you, we have data on literally everything on the planet right now, every stock, whether it's here or in Hong Kong, you name it, we have the performance of every economic number and everything, so if there's something you've been wondering about something someone said, we could write down the numbers and show you what the real result is.

I hope you have a great rest of your day, thanks for watching and for all that work. maybe you hit the subscribe button maybe yes, it's a red button it's a click maybe you do I hope you do see you later Why should you choose Jazz Wealth as your retirement or long-term investment service? Our portfolios are managed by us, not by an anonymous mutual fund manager, our private classes will teach you all about investing and how to get your money, best of all, our fiduciary standard means your best interests come before ours.