Can A Mutual Fund Be A Bad Investment?

Carlos is with us Carlos is in Indianapolis hello Carlos how are you hello well how are you David better than I deserve sir how can I help? Thank you very much, in fact I am facilitating the course in Spanish, you already know the others with your Spanish version of Finance Universidad de la Paz and it is an incredible pleasure to do so. Thank you Andrés, he is a wonderful teacher. He I'm glad you're doing a great job and the question I need to make sure I know how to answer. it has to do with

investment

s and 401k plans or

mutual

fund

s, especially with respect to the scenarios that occur that use a fairly high level of interest, you know, accumulation and you know, I know that my own

investment

s have not done well in the past. a couple of years, so what are we saying today?

What kind of performance can we expect to achieve in the long term? Of course, these investments are long term, but we are not seeing the same level of performance that we have seen before in some of the markets fall, you would say that you are not seeing the same level of performance that you have seen before. The way you put it, it sounds like you think that's projection into the future. Don't know. I don't know if it will be bad or good in the future. I mean, if you go back to, say, the time before the early '90s, you would have said the same thing you would have said, huh, these comebacks have been indifferent oh, it's been horrible, it's been a difficult time and then, all of a sudden you get a whizz-whiz decade, yeah, and that raises all the averages and then, you know, from those decades you get to 2008 and it goes in the bathroom, right? it's just horrible I mean it's the worst recession in the history of the markets or one of the worst recessions in the history of the markets and just horrible times and you know that messes up the numbers and then we come back and we know we're back. and back and forth and back and forth and these current returns are ruined more by oil than anything else, you know, oil stocks are falling because all profits are down across the board, other companies are making money, but oil stocks are dragging the rest of the averages down if you look through that and that's what we're sitting in the middle of right now, but what I'm seeing is if I look at a growth stock

mutual

fund

in my 401k, my personal 401k and I and I look at the average annual return over the history of that fund and that fund is 50 years old, 80 years old or 40 years old and I look at that average, that's the average I'm going to use, It's not that far away. of what's in those returns in those videos, you may find that now again you know that if you want to shorten the return window that you're looking at, you can create all kinds of scenarios that would require you to project lower and if you personally If you think there's a black cloud over the future, then you would project lower.

These are examples, they are not guarantees, they are examples of what the market has done and really what I want to do and what you want to do and what nudity wants to do. more than anything it's teaching people to think, not teaching them, not telling them, just do this blindly because you said to do it or I said to do it, but teach them to think that my personal portfolio has done what you know We project on those things and I've had some years where I did much better and then other years I did much worse, but you know, my personal portfolios outperform the S&P 500 and I'm not a rocket scientist, I mean, you can choose mutual .

The funds in the average 401k, if you look, can outperform the S&P and that's what you're looking to do if you did it over the last decade because you have 2008 in the last decade, I mean, you'd be down about 9%. after fees, but if it goes back to the last decade or doesn't have that 2008, look statistically. I mean, you know numbers work. I can tell you from talking to you statistically if you just take a big chunk of the numbers with a huge A recession like 2008 requires an incredible surge in the market just to keep the averages where they were, yes, and because of that, the only way to smooth out things is to dig deeper into the history to obtain more precise information. view, I think, but if you say well, the future is not, there is just all these things, there are all these problems, well, there have always been all these problems, I mean, at any time in history, look, there was something that gave us It made us worry and think about the future.

It wasn't right I don't know what the future will hold I don't know I make my decisions about mutual funds based on their past history, but I don't know if that will be the future I make my decisions when buying a property based on the quality of the neighborhood but I don't know if They're not going to move a toxic waste warehouse next door I don't know if I can't be sure What's going to happen, all I know is what I have to look at when I buy that particular property and there's no guarantee when I buy that property, but I bought it in a good neighborhood, there is quite a big one.

The trees and people seem to be using their herbicides and you know, I think we're going to be in good shape here and you know no one has their car up on blocks in the front yard trying to plant things in it or anything, etc. that's a good neighborhood and I'm going to be fine with that, but it could change. I mean, the neighborhood I grew up in has changed. You know a lot of you look back at the old neighborhood and I mean, I thought I didn't think of anything at the time, but it can become a neighborhood over time, you know what I'm saying, so you just have to look at what you're doing the same things, it's true, the mutual fund, what neighborhood it is in. and how I feel about the future and the prospects of that, but I'm not going to completely condemn the stock market as an investment vehicle based on what it's done since December based on what it did in 2008 and if you don't want to use a 12 percent number use an 8 percent number use a 5 percent number I don't care, but you should base it a little bit on logic and the logic would be to look at the past over a long period of time and look at a particular fund for a long period of time and that is logical and reasonable and Carlos, if you go online, you will find that a lot of people criticize me for this, but they don't understand, they say that I am, you know what I am. somehow guarantee someone a 12 percent rate.

I'm not. I have been able to earn more than that, but I am not and I am not a rocket scientist. I'm not really, but you know, maybe you can't. you haven't been able to find a background that does that so you need to use your brain when this is your message for your class Carlos you need to tell them use your brain learn how this works and choose good backgrounds choose good things than have a good story, just like choose a house in a good neighborhood, that's the point where we're teaching people to think that we don't want people to blindly follow someone's financial theory or idea, they need to learn and think, and then that. aligns you to win in the long term very good question thanks for mentioning that.

I appreciate it. This is the Dave Ramsey show. Hey guys, thanks for watching. If you enjoyed this video, click the subscribe button to get the latest content and check out these other great ones. clips from the show you are not a victim you are not a victim of large corporations you are not a victim of Wall Street you are not a victim of capitalism you are not a victim of wealth inequality you are not a victim of racism you are not a victim