If you took financial guru Dave Ramsey's investment advice last month on NewsChannel 5, you've lost almost 19% of your holdings.
Ramsey told viewers that growth mututal funds were fine and that the stock market was still good for long-term investment. So if you put your money into the market, you've lost 19% of your investment. The Dow Jones Industrial Average has fallen from more than 11,600 when Daring Dave gave his advice to 9,447 today.
The stock market is headed toward trading below 9,000. There may be bounces above that floor, but trading below 10,000 is assured for the rest of the year. And that's a shocking truth a lot of analysts have tried to deny for most of 2008.
A big problem with taking Ramsey's advice is that bad economic times to come may force investors to seek some of the income from their investments to make ends meet or meet emergencies in health or to the household. But the income won't be there!
Then, the advice from the so-called experts -- for the much smaller amount of your holdings -- will be that you must NOT touch your money for the long-term; you can't take these kind of losses now, they'll cry. The result is that you're being held hostage because of bad financial direction in the first place.
And if you followed Ramsey's advice in your 401k, you can't get at your money anyway without a big penalty.
You won't recoup your losses for more than 10 years -- at the least. If you had instead put your money in a bank CD, you'd be much more ahead now and over the next 10 years.
Ramsey owes NewsChannel 5 viewers an apology for his reckless advice. A one-size-fits-all recommendation to everyone is wrong. That's why you need a certified financial planner to sit down with you over a series of meetings to make your investment decisions based on your age, employment and goals.
I wish investors, particularly older ones, would face better fortunes in the markets. They deserve it. But the hard truth must be acknowledged, even if Ramsey chooses to avoid it.
Subscribe to:
Post Comments (Atom)
1 comment:
Dave Ramsey is only an expert on making money for himself. He appeals to the uneducated. He projects himself as a "good christian" and these poor uneducated people follow his advice because he is a "good christian". I know one thing being a good christian does not make you smart. I am always very cautious when I deal with anyone who tells me that they are a good christian.
Post a Comment