The Money Guy Show Reacts to Dave Ramsey's 8% Withdrawal Rate
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- เผยแพร่เมื่อ 19 พ.ย. 2023
- When projecting how much you should be investing for retirement, your expected rate of return and withdrawal rate in retirement are two of the most important factors of the equation. Dave Ramsey believes it is reasonable to expect 12% returns and withdraw 8% every year in retirement. Is this a solid strategy?
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I know you guys are friends with him… but there is a reason why I watch/listen to your show and not his.
Nothing wrong with listening to both and using your brains.
@@Helibeaver You have to turn off your brain to listen to Ramsey ramble about Joe Biden and Jesus...I like how Money Guy focuses on MONEY, not a bunch of personal belief/political BS. Ramsey loves to throw the christian right-wing nonsense in even when it's not relevant to the topic at hand. He's so overrated as a financial advisor because he talks with such authority about topics that aren't relevant to finance. Money Guy debunks the guy's investment practices constantly
I don't listen to Dave anymore. I recommend Dave for folks with debt issues, but beyond that the money guys are doing it right.
I cannot watch Ramsey and his Mini-Me(s) anymore...I tried. Full disclosure: Ramsey's Baby Steps helped guide me for years and I am thankful. I have $0 debt right now (Woo hoo - student loan and mortgage paid off)! I have read other comments and agree that our beloved Money Guys are a great resource for beginners trying to build their nest egg while getting or staying out of debt AND for progressing financial mutants ❤❤❤❤❤
Dave just doesn't really use analytics in his decision making, its all emotional decisions. It's hard to follow $$$ advice from someone who is either A. Ignorant or B. Not willing to adjust his opinion, when the blatantly obvious facts are right in front of him. @@Helibeaver
Dave is great for the mindset shift and strategy for getting out of a lot of debt. The rest? Not so much.
Well put! Succinct and mirrors my two cents.
Dave prompted me to get out of ~50k worth of debt. Paid off the credit cards and cars, and even paid off the low-interest student loan debt.
After that, I discovered the money guy show and I'm so glad I did. I do enjoy being debt-free other than the mortgage, but the Money Guy show is far superior when it comes to long-term wealth strategies in my opinion.
Why even go to Dave when you can go to others who get the whole picture right.
Amen! Dave's big push on psychological & behavioral change is crucial. I strongly recommend baby steps 1-3 (sometimes 4). Beyond that - go your own way.
Spot on!
Dave is fantastic at getting people out of debt - particularly for people who need and are ready to hear and respond to the tough love that he gives them. However, to have publicly called out and an insulted an *employee* who is ultimately aligned with his vision is one of the most wildly unprofessional things he could have done. Worse, George Kamel was simply explaining that if you're going to retire EARLY, you need to pay special attention to your withdrawal rate. Love you guys! Keep up the great work.
Nuance isn't in Dave's limited vocabulary.
Or any other American's vocabulary @@rnt45t1
Absolutely correct.... retiring EARLY means you really gotta watch your withdrawal rate...
George Kamel is the future of Ramsay's company. He definitely caters to someone like me who really likes to look at numbers. Dave Ramsay is losing it. It's time to step down Dave.
Nobody under the age of 80 should retire under any circumstances@@Simon-vo7gi
Everybody understands the 8% withdrawal rate is a little goofy, but watching him throw George under the bus was nuts.
Yeah that was a bad look
George will soon break away from Ramsey solutions
I agree. I love the show, Dave and his personalities. Dave needed to exercise tact in that situation. 😢
@@moggekungenthe problem is Dave has a stranglehold on those who work for him.
@@dforrest4503he can always quit, so i think when he believes that he can go for his own he will break away, time will tell
Dave: 8% withdrawal rate in retirement is safe. Investments always grow at 11% or better.
Also Dave: You can’t invest more than 15% vs paying off a mortgage early because of the beta / risk of loss from investing so you’ll lose your house.
11%? 😅.
One of Dave's recent videos he said a 65 year old can double their 401k in the next 7 years. First off the market is pretty stagnant and hasn't even reached the level of 2 years ago. Second what 65 year old is investing in high risk funds so close to retirement?
That’s Dave talking,,, show us the the math,,,😦
@@miketheyunggod2534 yeah “The S&P 500 was formally launched in 1957. Since then, the index has generated a compound annual growth rate (CAGR) of roughly 10.67%, including dividends. Adjusted for inflation, this number would be roughly 6.8%. “
@@raiden031at a 12% annual return, it would double in 7 years
That’s dangerous advice and could cause someone to lose lots of money in retirement.
You just described DR’s show/books in a nutshell.
Can you imagine the consequences on a retiree that has a nest egg of $250-$500,000 if he were to follow Dave’s advice and there is a downturn of 20% like there was last year
Not so good
He has millions but not much common sense. Shows his disconnect from most people.
Dave is hoping that people are stupid enough to take out 8% when the market is down 20%. He's implying when the market is good. You can't literally think Dave Ramsey means to always take our 8% even if the market is bad. That's just stupid.
Yeah it’s got to be a especially difficult to advise listeners to Dave’s program, because if you start talking about sequence of return risk, the need to balance stocks with bonds and other uncorrelated investments. I expect you get a lot of pushback, given the advice that comes out on his program.
But you can rebalance your portfolio, right? Why do people set it and forget it, and let their portfolio take on so much damage during a downturn?
So help me understand your comments
You said, why don’t people just rebalance them
So my question is at one point when they re-balance
After it went down 20% or more?
And remember, if you are on this site, you were probably keeping track of this on a regular basis perhaps monthly and you were one of the 5% of the people who do in order to be commended but what about the 95%
Just saying
Dave's 12% return and 8% withdrawal rate is a bit insane.
I don't recall him ever revealing WHICH funds have returned him 12% over the last 30-40 years (net, after fees).
And he won't. He won't give free marketing to certain funds and have the responsibility of people copying his funds. This is common sense. Dave is hoping people aren't stupid enough to take out 8% when the market is down bad. You can't literally think Dave thinks you should always take out 8%.
One of Dave's largest income streams is from financial advisors who pay him to get referrals from his community.
That's why he won't tell you which funds he's using. If you know which funds, then you no longer need to hire a financial advisor, and he stops getting paid for referrals.
That is because there are no mutual funds that have returned 12% annual for that time period.
@@ADRE3ZY420 I don't know if Dave expects that or not, but he is typically very hard-lined about his rules.
I think that, legally, he can't. But don't quote me on that...
This is a perfect example of the need for freedom of expression, and the open discussion of dissenting ideas. It’s okay to have differing opinions among friends. The only solution to bad speech and bad ideas is good speech promoting good ideas. Thank you Money Guys, you truly are a class act! You present your opinion in a convincing manner backed up by actual evidence.
Once you go with the name calling. You have already lost the agrument.
Deplatforming is also a solution
I'd say if people are basing their retirement on bad opinions, there's a bit more at stake than ideas
@@sportagus3 I don’t think we need to resort to such authoritarian solutions.
@@vulpixelful isn’t everything presented by TH-cam finance personalities just discussing different ideas? It doesn’t become concrete until we put those ideas into practice in our own portfolios. The responsibility is on the individual to look at the balance of evidence and decide what works best for them.
OK “Let’s round down to 11%”. What could go wrong? 🤷🏻♂️
THANK YOU FOR CALLING OUT THAT BS! I’m so sick and tired of dave’s mythical numbers that you won’t realize are incorrect until it’s too late
As much as Dave touts data, that's one of Dave's pieces of advice that can be proven wrong from actual data. The data is available for about 125-130 years.
Dave completely ignores data….over and over again
@@jeffmiller5252 Exactly. When it's convenient, or doesn't support his narrative.
But he interviewed a couple hundred boomers/greatest generationers!! 🥺
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This aligns perfectly with my desire to organize my finances prior to retirement. Could you provide me with access to your advisor?
Thanks a lot for this recommendation. I just looked her up, and I have sent her an email. I hope she gets back to me soon.
🤡🤡🤡
Remember that guy who called in to Dave Ramsey’s show and called him stupid? He was right.
We need that NEW 8% video... you know the one lol
Good luck finding that one. Ramsey folks pulled that video post haste. Dave came off looking like a petulent child with his little "rant" and a lot of people took offense to Dave throwing his employee George Kamel under the bus.
@@lkj0822gthe Internet never forgets. A couple dozen finance TH-camrs already reacted to it
Most people on the internet are Americans. Most Americans only have a memory that lasts a few days. @@thedopplereffect00
Haha I know what you speak of. What a tool.
Increasing tax rates are the reason I rolled over my 401k to a Roth. I don’t want to be 59 paying taxes on current income on withdrawals made from my retirement account.
Pre-tax contributions may help reduce income taxes in your pre-retirement years while after-tax contributions may help reduce your income tax burden during retirement.
Both have their perks but you can also save for retirement outside of a retirement plan, such as in an individual investment account or employing the services of a retirement planner/investment advisor.
I have thought about it, but haven't figured out how to get consultation, I don’t live in a big city.
Look for Monica Mary Strigle I am close to retirement with 1.4 M to my name outside of retirement accounts. I hired her services 3 years ago, she contributed immensely to my portfolio progress.
What is her fee structure like? Are her services available to about anyone? Can you share more details?
The (TACRS) estimates that the average Baby Boomer has $202k saved up for retirement. According to the 4% Rule, this would result in a $8k annual retirement income. do I pull cash from my 401k and buy a house, or spread my money in stocks for better cashflow?
My dad always said just when you think you have enough you probably don’t. Everyone’s enough is different.
I guess that's the kind of retirement advice one can expect from someone who is not retired....
also I can't believe he said "it's not hard to beat the S&P" with a straight face
Few investor firms can beat the sp500. Most cant ofcourse. But few can. Lets not act there arent firms here and there that cant
Majority cant. Some can.
Just like everything in life.
Wanna be ultra safe: index
Wanna go for more then find the few who can
In theory with a horizon long enough you can beat it either by factor investing or by leverage.
...but beating it using the same US large cap stocks is indeed pretty difficult
You guys do a good job of encouraging us to think dynamically and consider our individual circumstances!!!😊
I'm 45 years old and diversified my portfolio exactly how Dave recommends. Now I'm kinda rethinking that decision.
Dave Ramsey's advice on getting out of debt, investing, and a safe withdrawal rate in retirement reminds me of what the Brits said about Winston Churchill.
When he was right (which was most of the time) he was very, very, very, very right.
When he was wrong, well, my God.
Dave is NUTS for suggesting an 8% withdrawal rate.
Unless your investments are firing on all cylinders you end up wiping out your account balances. ESPECIALLY if the market tanks or stagnates like after the inflation of the 80's.
Another great video, guys! Thank you!
I followed Dave to get out of debt completely in 2019 (house, cars, ect.)
Now, I wish I would have invested that money, as I am now. I would have been even better off (even though I have paid myself first since February of 2015).
How Dave responded to George Kamel's video (seemingly half cocked and ill informed) should be embarrassing for him. George Kamel does videos with Dave's daughter, for the Ramsey company, and she even stuck up for George.
Dave is great at debt free. God bless him for that. He changed my life!
I watch y'all for my retirement goals!! Keep up the good work and Merry Christmas! :)
Dave Ramsey is great for people who are starting on their financial journey and need first step guidance. Safe withdrawal rate of 8%! WTF..I'm not doing 8% withdrawal..thanks for sharing.
The Money Guys gave good, solid advice on this matter. If this is the case hopefully the Ramsey team will take note and change their advice on this. DR is still great at motivating ppl to get out of debt following the plan and principles . It changed my life and I am truly grateful for his guidance. ❤
LOVE your reaction!
Great discovery this show. Cheers from Spain!
The money guys are sharp. I love the scenarios and data they show for all the speculation.
I wasn't financial free until my 40’s and I’m still in my 40’s, bought my third house already, earn on a monthly through passive income, and got 4 out of 5 goals, just hope it encourages someone's that it doesn’t matter if you don’t have any of them right now, you can start TODAY regardless your age INVEST and change your future! Investing in the financial market is a grand choice I made.
yeah investment is the key to sustaining your financial longevity but venturing into any legitimate Investment without a proper guidance of an expert can lead to a great loss too
I would highly recommend Professional Chrissy Barymoer his strategies are just great
I knew someone would mention Chrissy Barymoer, he is perfect in helping beginners grow. I would not recommend anyone else.
How's He contacted. I really need his assistance
Can anyone please assist with his contact details ?
You guys are the best!
1). Sequence of return risk.
2). Survivorship bias on mutual funds and looking at historical returns (the mutual funds that returned below the average didn’t survive).
3). Looking at US historical returns is rose colored because we lucked out on quite a few wars without our infrastructure being bombed out.
Ben Felix covers this expertly and concludes a 2.7% withdrawal rate is closer to being “safe.”
Dang it! Those darn goobers with calculators in their moms' basements and their sophisticated stochastic models again! ( oДo)
I disagree with Ben's rate because his argument is basically that the U.S. economy could devolve to the international average. Well, as long as we don't fall into full socialism like the rest of the world that shouldn't happen.
That’s exactly the point…the US is moving toward socialism. Death by a thousand cuts.
@@thedopplereffect00 yeah I didn’t quite agree with Ben’s assessment but it’s all valuable to get you thinking g about scenarios
Excellent show guys.
If you adjust the 8% "yearly" you will never technically run out of money. But you will end up withdrawing 8% of zip.
Soooooo cool. Love the commentary and I wouldn't have been so nice about Dave's comments.
It also depends on what other types of income you have in retirement. I intend to draw down early by retiring earlier as myself and my partner have defined benefits pensions. I have two. Our tax free savings will be our buffer and will likely grow as we will probably still continue to invest rather than deplete those investments
Could you imagine how scared you'd be if you retired 2 years ago using Dave's advice? Even if you timed the market and pulled out 2 years of income when the market was at an all time high, 8% + 8% and then inflation was 11% for those 2 years combined, so you're at 27%, and that's not even considering market losses. Using fidelity's index funds, small cap is down 25%, mid cap is down 14%, international is down 10%, and large cap is flat, so the portfolio would be down another 12%. So you have about 60% of your initial balance. Suddenly, your 8% withdrawal of your original balance is 13% of your current balance.
The way you guys responded to Dave was pure class. I’m fr tired of his “my way or highway” one-size-fits-all advice with zero nuance that he doubles down on
if you’re just getting into personal finance and you can spell S&P500 you’re better off listening to literally anybody else for advice that works better in the long run and is actually realistic
I’ll give Dave credit for inspiring me to use credit cards though, it was his videos where I learned how great they could be and next thing I know I’m flying first class on a flight paid for 100% with travel points without ever paying a dime in interest
Im surprised Dave has a show at this point.
Tbh, since im in a low income low cost of living situation im following Dave's principles because they're in line with my ethics of aggressively reducing my family needs to jumpstart additional giving.
I watch money guys for long term future motivation while im dealing with new babies and trying to do something right for them.
Caleb Hammer motivates me to do the next smart choice every week.
Dave gives me an achievable set of goals for my next decade. Making sure minimum payments don't eat my kid's grocery money.
Money Guys give me the long term dream after securing my present. Working into my 70s and having the power of compound interest on my side
Dave is very good for helping people get out of debt. He definitely has value. But his 12%/8% rules are a bit insane.
You're very lucky to have found something you want to do until you're 70. I'd say the return optimization strategy of The Money Guy Show is for the rest of us 😅
@@mbaker8492
But when you're living expenses are under $1500 a month, the percentage is irrelevant
Also keep in mind that a withdrawal rate isn't a permanent number. You don't have to enter a withdrawal rate into your accounts when you retire and bite your nails. You can adjust based on what the markets are doing if that is where you invest. There are so many other variables to consider...the withdrawal rate is just one piece of the game.
90% success rate to a ripe old age?....that is a bit conservative....if you are looking at the data. Again, depends on your desired result for your estate.
Seems like keeping your portfolio mostly if not all) invested in equities is the smart play since that showed the highest probability of success BUT the key being to vary withdraw rate. Average could probably come out to 8% but can’t pull a static 8% when market is down but could potentially pull more when market is up.
I like the strategy of keeping 3-5 years living expenses in low volatility vehicles (e.g., high-yield savings, CDs, etc.). When the market is high, you can reload as you go. When the market is low, you can let things ride for a while. Usually, the market recovers in about two years.
My financial planner reccomends keeping a portion in bonds in order to maximize gains when rebalancing.
Great stuff
Others have raised this point well... Would love to see Dave's investments and allocation % across them because things like that are reasons why credibility gets called into question.
Do you apply the 4% withdraw rate to any age in retirement? I would think the withdrawal rate could be increased based on someone’s age when starting retirement. Thx for another great show.
Very nice video, I appreciate the commentary.
1. So looking at the updated Trinity study chart you provided it does seem like Dave is correct that being in all stocks gives you the best chance of success for both withdrawal rates. Do you have data that shows that you have a higher chance of success with a diversified asset portfolio (say a portfolio that includes cash, bonds, real estate or other assets)? It seems that the higher rates of return on equity justify being in equities and that the added diversification from being in other assets isn't as helpful.
2. Is it really reasonable to assume a fixed withdrawal rate? I realize this is done for ease of math but if a retiree is willing to adapt to the times couldn't they sustain a higher withdrawal rate during good years and then reduce their withdrawal rate during down times? Are there studies done without a constant withdrawal rate?
3. It seems the danger of saving too much is that you don't get to enjoy your money while you're alive. Are there ways we can balance enjoying retirement without the danger of running out of money?
I think one of my favorite pieces of advice I love is from Bo. Save a little bit of today for tomorrow
Bo with a parting shot. Nice!
The problem with the 4% rule is that you start 4% of the initial value of your retirement portfolio and then increase the dollar amount of your annual withdrawals every year to account for inflation. You can run out of money doing this because the actual percentage of your portfolio that you are withdrawing each year increases. If you just take 8% of your portfolio's value each year (i.e. higher dollar amounts when the market goes up and lower dollar amounts when the market goes down) then you will never run out of money. If you retire with no debts including a paid off house, then you will have the luxury of being able to take fluctuating withdrawal amounts and can probably take 8% with no problems.
Is the Ramsey portfolio returns reflective of actively managed fund fees. In particular I like to see all his funds as American Funds as that is what he pushes. I did it for 7 years before becoming a Boglehead and learning about low cost index funds. Note, in the 7 years I was with American Funds with a very similar 4 fund portfolio that you showed for Ramsey I had an annualized return of 2.5% when when over the same time period the marker did north of 11% (2006-2013).
Huge Dave fan, except his pushing of American Funds and/or actively managed funds. Low cost indexing seems as though it is a great way for everyday people to invest over time and win.
Love the shade at the end. :)
Thank you!! I love Dave for getting out of debt. I don't love how he makes me feel stupid for listening to investing advice that makes sense.
The Trinity study looks at initial withdrawals followed by inflation-adjustments. Dave is talking about a percent of portfolio method (so 8% per year).
8% is too high in this case too but technically speaking, a percent of portfolio strategy will never run out of money but you could see your withdrawals shrink dramatically over time as your portfolio drops in value.
You're not technically wrong, but the idea isn't really to maintain a withdrawal rate, it's to maintain a lifestyle, of which the withdrawal rate is just an easy to estimate proxy. Maintaining a fixed withdrawal rate when your portfolio is down means cutting back on your lifestyle, possibly permanently if your portfolio never fully recovers.
@@Alan-jk1yi There’s no rule that says I need to maintain the same withdrawals. Percent of Portfolio is an equally valid strategy and I think it more closely mirrors what most people do in retirement. (ie. When the market’s down, cut back a bit and when it’s up, spend a bit more).
Percent of portfolio is an equally valid strategy and I think it’s made even better with some guardrails (E.g. 4% Per Year but don’t increase withdrawals by more than 5% compared to the previous year - like the Vanguard Dynamic Spending Rule).
You can add guardrails on the negative end too but I’d make them a bit wider (E.g. Don’t cut your withdrawals by more than 10% even if the market’s down further).
If you go on FICALC you can play around with the variables to see what suits you.
I looked back to see how an 8% withdrawal would have worked if you retired in 2007 with everything in the S&P 500 and it turns out you would have run out of money by around 2020. I understand that about half the time it would work out, but don't understand why he doesn't acknowledge that about half the time it would not.
When I withdraw 4% from my 401k, is that including the money to pay the taxes the withdrawal? For example, if I withdraw 4%, and the taxes on that withdrawal is 20%, I only have 80% of the withdrawal as spendable money. Is this right?
There is another problem. Some years the market will drop. When that happens you must continue the same withdrawal rate, you will have less money. If you take the same dollar value, the percentage withdrawal increases and, even when the market goes up, your capital base will not recover. How many people are prepared to drop their spending by 50% when the market dips?
You guys are awesome
Let's talk about what you can do...and do it the way Dave is suggesting...sort of:
You can take out everything above inflationary growth and set it aside in an after tax account that earns basic interest.
BUT THEN...In a down year you need to be ready to invest back in to cover your loss plus inflation.
Most people lack the discipline or stomach to do this.
So i did some math on this and i suspect Dave might be talking about taking annual distributions of 8% based on the annual account balance, whereas the 4% rule is to take 4% of the first years balance and adjust for inflation each subsequent year. If I'm right, then sequence od returns risk doesnt matter, but then his 8% withdrawals from year to year can be wildly different as the market fluctuates.
Dave is financial education 101. If you can grasp that information and even follow it for awhile, then you meet the prerequisites for 102, which is The Money Guy show
Money Guy show is atleast 201 or 301, if it's 102, it's still level 100
You're being too generous. I would say Ramsey is the remedial class in personal finance for those folks who can't balance a checkbook and don't understand compound interest.
@dec1slh personally, I believe that 200 series includes a couple other techniques and 300 series involves not wning anything in personal names
@@LasVegasCollectibles 101 and 102 are on the same level, you would typically choose a 101 or 102 course not both. Money Guy Show is definitely a level above Ramsey, in terms of who will grasp the concepts and use them. You lost me at 300 level being not owning anything in personal name..I kinda get where you are going but seems way off base.
101 and 102 classes are supposed to be done concurrently...@@dec1slh
I don’t know about these particular funds however, I know Dave Ramsey tells people to use front loaded funds. I put my rollover 401(k) into an IRA with a Ramsey advisor and I’m in a 3.5% frontload with similar results not keeping up with the S&P 500 your analysis is spot on except for the fact you forgot to include the millions of people who use frontloaded fees, the funds because that’s what Dave Ramsey told them to use so the numbers are actually worse than what you show
So looking at the charts, if you have any cushion at all, like 1 year emergency fund in cash, what is the case for ever having less than 50% stocks? I've been 95% stocks for a long time, I keep 50K in cash/CD's, but I lose more sleep over taking 2-3% Bond/CD returns watching all the better options.
Even without considering sequence of return, 8% is way too high (and a really irresponsible thing for him to say). Double what is ‘safe and sustainable’ as studied. Let alone for early retirement which I believe George was discussing when he suggested 3%. I plan on retiring early and will absolutely factor in taking less than 4% for the first few years until things settle down a bit. Nice video as always and well explained thanks
Yeah retiring at thirty might be something they even looked at...if you live to 85 and retire at 35 that's 50 years
JMGPX started in 2016. How can you start your analyst at 2003?
This episode is like a diss track to Dave. 😂 But I appreciate the Money Guy and the Ramsey shows.❤
@moneyguyshow
That closing comment from you Bo Hanson was pure Gold 🤣😂😅. I side with you having a CFP makes you more analytical & I am agreeing with you that a 4% is realistic & conservative.
Guys please keep the fantastic work with backing up your views with analytical breakdown of the numbers and wonderful slides you show !!!
Bo Hanson, thanks for a good laugh 😃
@themoneyguyshow can you guys please speak a little bit towards how the trinity study data suggests 100% stocks is more effective than a blend of stocks and bonds for retirement success rates? It seems like most retirement planners want to creep into bonds as they approach their retirement years, but the trinity data in that graph seemed to suggest otherwise. Thoughts?
There's no one glove fits all answer because there's no reason to have as high of an income as the 4% projects in retirement either. With my planned retirement spending's, my planned nest-egg gets me to 30 years alone with 0% return. But planning to retire early, way earlier than 30 years of life left.
Could you do a video of small business owners that want to start another business and the pros and cons of using leverage. I.e. my wife and I want to start an automated car wash business and still have our current jobs. We would have to leverage some equity to do so.
I listen to both, Ramsey and you guys. It’s up to the individual to gather his/her own data.
It’s funny that the same chart you used to disprove Dave’s 8% withdrawal rate also disproves your recommendation to make your portfolio more conservative in retirement. I only saw you use the chart to make one of those points though. 😉
Very professional way to cover this, especially after recently collabing with George. Dave owes him an apology for calling him a moron on air.
I humbly apologize for some comments I made here when I was starting my personal investment path. I have learned a lot since then, and I now understand the amount of value you bring to this space, and how hard it is to find people as qualified as you sharing your thoughts with the broad public. Happy 2024
You are forgiven 🙌🏻
I think Dave's numbers will work OK for him, at 8 digit portfolio. and obviously he isnt actually drawing down any of it when he retires, he wont need to
Thank you for this reaction. I was a long time Ramsey follower but recently stepping away and have learned a lot from your videos. Dave taught us how to pay off debt but his investing advice just doesn’t seem accurate. That being said, he’s confidently stated that HE has returned 12%. Does that just mean he’s happened to pick better stocks than the average person? Or do you think he’s overlooking even his portfolio?
From other podcasts I've listen to, I don't think he even pays attention to his investment portfolio to know what's going on. He probably has an advisor do it all for him. He makes most of his money in real estate and the company.
Daves investing advice BLOWS.
There's a mutual fund that I personally own shares of that since it's inception in 1934 has averaged 11.95% a year for the past 90 years
Love you guys and Dave as well. You guys spell out the withdrawal rate with good data. I would love to see y’all on Dave’s show to break down the numbers together and see his response to the data. Perhaps a new Pharisee would be discovered? 😂
I don't listen to Dave. His 8% withdraw rate is just one reason why. My son does listen to Dave, and that makes me worry for him. The rant he went on last week during his podcast about the 8% was stupid crazy.
Seems to me, the best thing to do is to have enough liquid funds to cover 2 years of down markets. Use this money when market is down to avoid the sequence of returns risk that can take a chunk out of your portfolio. Otherwise, draw from your funds at a rate that works for your horizon. The short version is, only take money out when earnings are positive or not down too much.
11:43 Biggest takeaway for me here is the 100% stock allocation beats any diversified allocation in all cases. My whole life I've heard "you need to diversify to manage risk," and now I feel like I've been lied to, because "what risk?" Commentator says "you should get more conservative" as you move through retirement. Why?
Has anyone projected out historically what annual incomes look like if you just take an ACTUAL 8% chunk out every year? Like, not 8% to start then increase whatever that amount is by 2% for inflation - just a flat 8% of the total portfolio, year in, year out. I assume it's still bad, just a reduction in purchasing power over time and a shrinking nest egg, but I'm curious the backtested results.
Bo felt that insult by Dave to his core lol
What does the graph look like when you add in disbursements of 8%?
Listen to Dave up for paying off debt. Once you are debt free Stay as far away from Dave Ramsey as possible. His investment advice will leave you short changed.
new word perpetuation. All you need is two down years of 10% in years 1 and 2 with an 8% withdrawal rate and you'll already down 33% after two years That's the sequence of returns risk with taking that much out. Now you should have a really good return of the next few years after that, which would bring you back, but that is how you get the 25-40% chance of success over 30 years, is that type of start. Would be interesting to take different periods within the last 30 years to start and try this with that allocation.
Using the S&P 500 total return, taking 8% adjusted for inflation at the beginning of the year, all years between 1995 and 2007 have failed or will fail by 2025. Interestingly enough the same scenario of 100% equity has the 4% rule failing soon for someone retiring 12/31/1999. If they were 60/40 equity/bonds they would still be even - bond funds performed pretty well during 2000's down markets offsetting much of those loses.
The words always and never should set off alarm bells.
Based on the trinity study success rates graph, it looks like being invested in 100% stocks consistently had a better success rate than the other options. Am I reading that correctly? If so, then why should you diversify?
I’m at retirement in a more moderate portfolio. I assume 7% and leave 2%.. withdraw 5%. I see this as slightly risky but I’m not dependant on my registered funds as I have an indexed pension that covers all my expenses. But even I’m not as risky or optimistic as Dave and I don’t even really need that money.
Does anyone know the funds Dave invests in ? There`s only four to find.
Is Dave talking about taking 8% of the balance each year? You never run out of money if the 8% is on a new base each year. If your portforlio goes down, you take still 8% of the smaller amount.
I think Dave is coming at it from the standpoint of his formula where you own your own home. In other words, there’s an extra asset which is assumed but not actually figured in to the total picture. In this scenario, could you use your home equity as a buffer against the risk of a down-market, and thereby raising the chance of success of the 8% annual withdrawal plan?
Also, you clearly will not need the same amount of cash when you are 90, as you will when you are 69, (and most of us won’t even make it to 90), so it might still be reasonable to start your retirement withdrawals at 8%, knowing it won’t stay at that level for 30 years?
I’ve done both, but I prefer playing to win the game.
Might be a dumb question but when they mention portfolios being a certain percentage of “equities” - what exactly does that mean? What would the other 50% be? Thanks for any help.
Equities means stock - partial ownership of companies. Bonds (owning debt) are a traditional hedge in a retirement portfolio because they typically move opposite to the stock market. And were used in the Trinity Study that Bo is discussing in a 50/50 split. If you want to learn more about bonds, Jim Collins has a pretty good simple breakdown in his book "The Simple Path To Wealth." You should be able to take it out of your library.
The 8% is bullshit, I would never tell out listeners that. Just absolutely insane!
Great video!
Did you guys include DRIP in your historical analysis comparison with Ramsey's proposed four-fund portfolio?
Hottest topic in the culture right now :)
I like that 2 guys are challenging the pharaoh
Does Dave her mention what specific mutual funds he owns?
No, because then anyone could pull the data and easily prove him wrong.
No but you can pay his "smartvestors" some ridiculous %(5% I think?) to win or lose...
The thing i havent liked about that "Dave Rant" is that he clearly didnt understand the caller and didnt try to listen for clarification and they both completely misinterpreted what George Kamel's video was about. And there has been no apology to the aundience for going off about something he wasnt fully understanding. I would enjoy someone breaking down the original video+the callers question+daves misinterpretation. And someone clarifying the whole issue. Maybe George will do it on his channel. I think its good to have clarification on the retirement withdrawl rate. And by the time i retire the answer may be completely different
Retired ten years ago with $300K and withdrawal 10-15% and still going strong.
Had it been say 1999, how would you have done?
I’d be shaking in my boots to be in your situation.
My withdrawal rate is 3.5%, designed to last hopefully indefinitely
emphasis on _hopefully_
@@fsmoura I mean if it can’t last on 3.5% from an S & P 500 fund, we’re all screwed
@@fsmoura 😂😂😂
@@reaper-sz5tm10 years later we’ll be talking about 1.5 withdrawal rates 🤣