Thursday, November 13, 2008

Take off the blinders: Here's some good financial advice for followers of Dave Ramsey; quit listening to him about investing in market, says DR grad

I received the following comment from a reader who has been following my posts on the financial advice guru Dave Ramsey has been giving to the American people after the stock market -- the Dow -- declined to 11,600 in September.

Ramsey said then that growth mutual funds were fine for people to still put their money in. And he attached the "long-term" label to his advice to cover his backside. Long-term can mean anything.

Right now it means that people who lost money in 2001 in growth mutual funds never recouped their losses by the time the market started falling last fall. It also means that some retirees have had to go back to work because their savings have been cut in half.

Here is what a reader had to say on the topic:

I am a DR fan and graduate of his course. He makes great sense concerning debt, mortgages (prefer 15 year etc.) but I found a blanket recommendation of mutual funds and his quoted average return of 12% misleading. He believes in faithfully investing with patterns of returns from Wall Street.

To continue to advice followers to invest hard earned money in mutual funds is shortsighted, especially if you're not among the wealthy.

I know people who paid off their homes after extensive renovations and are now exhausting their savings, looking at stock losses and can't sell those beautiful homes. They followed the DR pattern but are "broke" essentially.

He needs to stick to his core debt advice. Who knows he could be a spokesman for the mutual fund industry. You can't follow his advice blindly.

I agree. Ramsey should stick to his specialty on reducing debt and quit hurting people with his stock market advice.

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