Sara R Posted March 18, 2009 Share Posted March 18, 2009 Dave Ramsey: Taunting the Bear I listen to the Dave Ramsey podcast. I love his get-out-of-debt message, but his investment advice has been driving me batty for the past year. The blog post linked above explains why. Quote Link to comment Share on other sites More sharing options...
sassenach Posted March 18, 2009 Share Posted March 18, 2009 Thanks for posting this. Quote Link to comment Share on other sites More sharing options...
Ria Posted March 18, 2009 Share Posted March 18, 2009 I still think that the stock market is a very good place to put your money. However, one cannot be stupid about it. Know when to sell. Know when to buy. View your long-term investments from a 20-year perspective. If you know that you are going to be needing that money to live on within five years, take it out of the market. What Ramsey is saying is solid advice over the long-term, not short-term. 20 years. Ria Quote Link to comment Share on other sites More sharing options...
AuntieM Posted March 18, 2009 Share Posted March 18, 2009 I will be teaching Foundations of Personal Finance to high schoolers at our co-op this fall. The administrator has encouraged me to inspire informed thinkers, not just create Ramsey-ites (and I do agree with her on this point)! Your link was helpful. Quote Link to comment Share on other sites More sharing options...
Sara R Posted March 18, 2009 Author Share Posted March 18, 2009 (edited) No one knows the future, of course. But there are reasons why the next 20 years might not look like the last 20 years. (See Chris Martenson's The Crash Course; summary video here.) Japan's market recently reached 26 year lows, and their economic fundamentals are much stronger than ours. I think our assumptions about the normal "behavior" of the stock market has been based on an abnormally long boom. 1982-1999 was the longest bull market in history. Edited March 18, 2009 by Sara R Japan's stock market actually reached 26-year lows, not 20-year lows. Oops. Quote Link to comment Share on other sites More sharing options...
Scarlett Posted March 18, 2009 Share Posted March 18, 2009 Dave Ramsey: Taunting the Bear I listen to the Dave Ramsey podcast. I love his get-out-of-debt message, but his investment advice has been driving me batty for the past year. The blog post linked above explains why. Thanks for posting this. I know so little about investing that I couldn't really put my finger on what was 'wrong'....but I didn't feel quite right about some of the advice he has been giving. Not that it has harmed ME....since we don't have enough invested to worry about. Quote Link to comment Share on other sites More sharing options...
Jlynn Posted March 18, 2009 Share Posted March 18, 2009 I guess I partly agree with this. No, you can't look at where a stock or fund previously traded at, invest in it now, and see it as getting something at half price. Its previous value does not determine its future value. On the other hand...one who invests in the market regularily, putting money in monthly, hits both down cycles and up cycles and comes out with a good investment over time. The way this author writes the article might scare someone from ever investing even in Mutual funds and that's very poor advice I think. Quote Link to comment Share on other sites More sharing options...
TravelingChris Posted March 18, 2009 Share Posted March 18, 2009 I was reading earlier that people who held onto to stock pre-Depression had to wait until early 60's to get it back to profit. I don't claim to know what to do with stocks that have lost their value. I do think there are probably good bargains out there for people who didn't have anything invested and now what to invest. As to 10-12% returns, I think Bernard Madoff was promising those and delivering until his Ponzi scheme fell apart. Investing in the stock market is a gamble. The problem was that many people close to retirement age or in retirement had their nest eggs there. That was unwise and not what many advisors recommended. The standard recommendation I have always heard is invest more liberally when you are young and can afford risks, start being more conservative by mid 40's. Get completely conservative by retirement except for any extra funds you have. Quote Link to comment Share on other sites More sharing options...
Sara R Posted March 18, 2009 Author Share Posted March 18, 2009 On the other hand...one who invests in the market regularily, putting money in monthly, hits both down cycles and up cycles and comes out with a good investment over time. The way this author writes the article might scare someone from ever investing even in Mutual funds and that's very poor advice I think. In case you're interested, this same blogger examined 10 Years of Dollar Cost Averaging into the S&P index fund. I think the stock market will return again eventually. But in the current environment there's no way I would be investing retirement money into the market before at least paying off my mortgage. Dave Ramsey recommends saving 15% towards retirement in "good growth stock mutual funds," and saving towards kids' college (also with mutual funds, despite the fact that kids go to college in the medium term, not the "long term," at least as Ria defined it), before paying off the mortgage. I'd also want to wait till it looks like the economy is on a relatively solid foundation. Right now there is still too much, um, garbage in the system that hasn't been fully accounted for. Quote Link to comment Share on other sites More sharing options...
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