Mixing Bogle and Ramsey to build my portfolio

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flaman
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Joined: Thu Apr 08, 2021 3:22 pm

Mixing Bogle and Ramsey to build my portfolio

Post by flaman »

Hi Bogleheads,

Over the course of the last year or so, I've put in a significant amount of time watching Jack Bogle interviews and Dave Ramsey's shows on YouTube, absorbing as much information as I possibly could as it relates to personal finance and investing. Just as an FYI, I don't necessarily agree with everything that Ramsey has to say regarding investing, but I do find some of it to be useful. If I had to decide between following ones advice over the other, I would definitely side with Bogle. Having said that, I would like to share some key takeaways, if it should help anyone on their journey, and I welcome all feedback from more experienced investors.

Key takeaways from what I've learned:
1.) Avoid debt like the plague. (Ramsey)
2.) Keep three to six months of living expenses in cash savings as an emergency fund. (Ramsey)
3.) Invest in mutual funds according to this asset allocation: 25% Equity Income, 25% Growth, 25% Aggressive Growth, 25% International. (Ramsey)
4.) Invest in low-cost broad-market index funds. (Bogle)
5.) Increase bond allocation as you get older (Bogle)
6.) As market conditions change, don't react. "Don't do anything, just stand there." (Bogle)

In light of these takeaways, this is how I've constructed my personal portfolio:

For context, I'm 37 years old and married with two children.

Emergency Fund
Three months of living expenses in a High Yield Savings account
$15k

Taxable Brokerage
75% Total Market Index (VTI)
25% Total International Index (VXUS)
$35k

529 College Savings Plan
75% Total Market Index
25% Total International Index
$7k

Retirement
50% S&P 500 Index (FXAIX)
25% Extended Market Index (FSMAX)
25% International Index (FSPSX)
$332k

As you can see, my retirement allocation is a bit more aggressive than the standard Total Market Index. The 25% allocation to the Extended Market is essentially a push on small caps for "aggressive growth." Small caps have been shown to outperform the S&P over very long periods (decades). For me, it makes sense to incorporate this push on small caps when the investment is considered a 'life-long' endeavor. In contrast, I might need to pull money from my taxable brokerage at a moments notice, and so I dampen down the volatility of small caps by holding them by their market weight in the Total Market Index. Same goes for the 529 College Savings Plan, I don't necessarily have 'decades' to save for college.


As far as Bond Allocation is concerned, I've learned from this forum not to hold bonds in taxable or Roth. I agree with the notion that bonds are not necessary in the early stages of my wealth-building journey. As far as I'm concerned, equities are for building wealth and bonds are for preserving wealth.

This is my plan for adding bonds to my retirement accounts:
I plan to retire at age 65.
At age 37: 75/25/0 (us/int/bnd)
At age 55: 60/20/20 (us/int/bnd)
At age 65: 45/15/40 (us/int/bnd)

This is my plan for adding bonds to the 529 College Savings Plan:
Plan for college in 2034.
In 2021: 75/25/0 (us/int/bnd)
In 2028: 60/20/20 (us/int/bnd)
In 2030: 45/15/40 (us/int/bnd)
In 2032: 30/10/60 (us/int/bnd)
In 2034: 15/5/40/40 (us/int/bnd/mm) - here "mm" = money market

I'm particularly interested in getting feedback regarding my planned approach to bonds. Do most of you agree with it? Or have I missed something in my 'knowledge-building' journey.


Thanks for taking the time to consider my post :sharebeer
Visitor76
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Re: Mixing Bogle and Ramsey to build my portfolio

Post by Visitor76 »

Welcome to BH!

I must say your portfolio looks pretty sound and is structurally similar to my own. Except I don't have a 529 started yet.

You're wise to avoid bonds during your wealth building stage. As you mentioned, I see bonds as more of a wealth preserver and should be incorporated when you're close to reaching your FI number.

Does your health insurance qualify you for an HSA? If so I would add that to the mix for its triple tax benefits.

I would also see if you could find a Large Cap Growth fund to add to you Retirement allocation.
Wealth is not about having a lot of money; it's about having a lot of options.
Triple digit golfer
Posts: 10430
Joined: Mon May 18, 2009 5:57 pm

Re: Mixing Bogle and Ramsey to build my portfolio

Post by Triple digit golfer »

The portfolio is fine. That is not a Ramsey portfolio at all. Ramsey has you chasing performance. Ignore his investing advice.
backpacker61
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Re: Mixing Bogle and Ramsey to build my portfolio

Post by backpacker61 »

I don't see anything wrong at all with your plan.
“Now shall I walk or shall I ride? | 'Ride,' Pleasure said; | 'Walk,' Joy replied.” | | ― W.H. Davies
NativeTxn
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Re: Mixing Bogle and Ramsey to build my portfolio

Post by NativeTxn »

Triple digit golfer wrote: Fri Apr 09, 2021 1:11 pm The portfolio is fine. That is not a Ramsey portfolio at all. Ramsey has you chasing performance. Ignore his investing advice.
This.

I would also personally disagree with Dave's stance on avoiding all debt. As long as you don't abuse debt (particularly credit card debt), debt can be an extremely useful financial tool. I realize that a large majority of Dave's audience may have abused debt in the past, so avoiding it as much as possible is probably a good philosophy; however, certain types of debt can help you accelerate your financial well-being when used properly.
bogledogle
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Re: Mixing Bogle and Ramsey to build my portfolio

Post by bogledogle »

+1 on Ramsey dishes out some really terrible advice. I think you picked the better parts of his advice, so you are good as long as that's where you leave it.
hnd
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Re: Mixing Bogle and Ramsey to build my portfolio

Post by hnd »

I was in the same predicament as you for some time.

I taught FPU at our church, I set up our work plan as a boglehead approach. But when I opened up a roth, I kind of was like whoa some of these have loads. do i want to pay that? So it sent me on a journey which helped me discover John Bogle and build a portfolio that has changed a little bit, but only because I feel like i learn new things, and not because i'm chasing anything.

On investing, I'm 40 and I have residual bonds from a 2045 TDF and from PDSLX. Thats it. I do recognize I need something more stable as I get closer and closer to retirement but plan on evaluating that need in 10 years. Dave will never buy bonds because when you own millions and millions of real estate that earns you that stable income, why would you. So in a way I guess I'm a Ramsey guy when it comes to bonds.

On picking mutual funds, dave recommends active funds, load based products, and that you buy them from a Smartvestor pro. aside from the fact that SVP's pay him to be listed, I think the load recommendation is to A) keep you invested for a long period of time and B) so these SVP's don't fleece you with tons of fees. So i kind of get the idea.

Also everyone is pretty sure he is using American Funds who do have decent performance but most guess that after fees their alpha isn't that great.

When it came down to it, I was satisfied guiding my own diversified portfolio using a majority of index funds while also allowing myself an opportunity to see some alpha. To be honest, avoiding advisor fees and non loaded funds, i've been able to do it in this crazy bull market.

My parents have been investing in a dave ramsey portfolio for the past 25 years. after paying the load on a few funds and the management and fees (which are fairly reasonable to be honest) they have only began to beat a comparable index portfolio and only by a little bit. mostly American Funds mind you.
Carol88888
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Re: Mixing Bogle and Ramsey to build my portfolio

Post by Carol88888 »

I like it! You are on your way. Now just cultivate consistency in making your investments at a rate you have decided. That and a dollop of patience and you will surely get were you want to be.

I might add that I happy to see you avoided Ramsey's siren call to use his investment advisors who would have put you into active funds that performed much worse than what you have selected and cost much, much more. But hey, he has to make his money and his advisors would be taking their cut,too.

Or as the old adage goes, "Hey, the broker made money, the market maker made money. Two out of three is not bad."
backpacker61
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Re: Mixing Bogle and Ramsey to build my portfolio

Post by backpacker61 »

I consider Dave Ramsey one of the "good guys". He's helped a lot of people resolve their debt issues.

The advisors in Ramsey's network are required to take on any client, regardless of how much they have to invest. It's not how I choose to invest, but the reality is that there are a lot of people that benefit from some hand holding, to help them avoid behavioral mistakes. The people that have followed Ramsey's FPU process have often come from a pretty bad place re: money management, and could benefit from some individualized attention.
“Now shall I walk or shall I ride? | 'Ride,' Pleasure said; | 'Walk,' Joy replied.” | | ― W.H. Davies
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ruralavalon
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Re: Mixing Bogle and Ramsey to build my portfolio

Post by ruralavalon »

Welcome to the forum :) .

It's great to see that you are using very diversified index funds with very low expense ratios for your investing, primarily total market type index funds.

In my opinion 100% stocks is unwise. I usually suggest a bond allocation even for younger investors, starting with 20% of portfolio in bonds or other fixed income. This is expected to substantially reduce portfolio volatility (risk), with only a relatively modest decrease in portfolio return. Graph, "An Efficient Frontier: the power of diversification". Please see:
1) Wiki article Bogleheads® investment philosophy, part 3 "Never bear too much or too little risk";
2) Wiki article, "Asset allocation";
3) Morningstar (8/20/2019), "The Best Diversifiers for Your Equity Portfolio";
4) Morningstar (4/8/2020), "What's the Best Diversifier for Stocks?"
5) White Coat Investor (9/23/2016), "In Defense of Bonds"; and
6) Ben Carlson (8/2/2020), "Why Would Anyone Own Bonds Right Now?"


flaman wrote: Fri Apr 09, 2021 12:26 pm Hi Bogleheads,

Over the course of the last year or so, I've put in a significant amount of time watching Jack Bogle interviews and Dave Ramsey's shows on YouTube, absorbing as much information as I possibly could as it relates to personal finance and investing. Just as an FYI, I don't necessarily agree with everything that Ramsey has to say regarding investing, but I do find some of it to be useful. If I had to decide between following ones advice over the other, I would definitely side with Bogle. Having said that, I would like to share some key takeaways, if it should help anyone on their journey, and I welcome all feedback from more experienced investors.

Key takeaways from what I've learned:
1.) Avoid debt like the plague. (Ramsey)
2.) Keep three to six months of living expenses in cash savings as an emergency fund. (Ramsey)
3.) Invest in mutual funds according to this asset allocation: 25% Equity Income, 25% Growth, 25% Aggressive Growth, 25% International. (Ramsey)
4.) Invest in low-cost broad-market index funds. (Bogle)
5.) Increase bond allocation as you get older (Bogle)
6.) As market conditions change, don't react. "Don't do anything, just stand there." (Bogle)

In light of these takeaways, this is how I've constructed my personal portfolio:

For context, I'm 37 years old and married with two children.

Emergency Fund
Three months of living expenses in a High Yield Savings account
$15k

Taxable Brokerage
75% Total Market Index (VTI)
25% Total International Index (VXUS)
$35k

529 College Savings Plan
75% Total Market Index
25% Total International Index
$7k

Retirement
50% S&P 500 Index (FXAIX)
25% Extended Market Index (FSMAX)
25% International Index (FSPSX)
$332k

As you can see, my retirement allocation is a bit more aggressive than the standard Total Market Index. The 25% allocation to the Extended Market is essentially a push on small caps for "aggressive growth." Small caps have been shown to outperform the S&P over very long periods (decades). For me, it makes sense to incorporate this push on small caps when the investment is considered a 'life-long' endeavor. In contrast, I might need to pull money from my taxable brokerage at a moments notice, and so I dampen down the volatility of small caps by holding them by their market weight in the Total Market Index. Same goes for the 529 College Savings Plan, I don't necessarily have 'decades' to save for college.


As far as Bond Allocation is concerned, I've learned from this forum not to hold bonds in taxable or Roth. I agree with the notion that bonds are not necessary in the early stages of my wealth-building journey. As far as I'm concerned, equities are for building wealth and bonds are for preserving wealth.

This is my plan for adding bonds to my retirement accounts:
I plan to retire at age 65.
At age 37: 75/25/0 (us/int/bnd)
At age 55: 60/20/20 (us/int/bnd)
At age 65: 45/15/40 (us/int/bnd)

This is my plan for adding bonds to the 529 College Savings Plan:
Plan for college in 2034.
In 2021: 75/25/0 (us/int/bnd)
In 2028: 60/20/20 (us/int/bnd)
In 2030: 45/15/40 (us/int/bnd)
In 2032: 30/10/60 (us/int/bnd)
In 2034: 15/5/40/40 (us/int/bnd/mm) - here "mm" = money market

I'm particularly interested in getting feedback regarding my planned approach to bonds. Do most of you agree with it? Or have I missed something in my 'knowledge-building' journey.


Thanks for taking the time to consider my post :sharebeer
Do you have an IRA in addition to a work-based account (401k, 403b, 457b, TSP, etc.)? Does your spouse have any accounts? What is your tax bracket, both federal and state?

It's important to make maximum use of all available tax-advantaged accounts. That's normally a priority ahead of contributions to a taxable brokerage account. Wiki article "Prioritizing Investments", link.

How much (in dollars) do you contribute annually to each account?

Establishing a high rate of contributions is the most important investing decision you can make. Forum discussion link.
Last edited by ruralavalon on Fri Apr 09, 2021 5:38 pm, edited 1 time in total.
"Everything should be as simple as it is, but not simpler." - Albert Einstein | Wiki article link: Bogleheads® investment philosophy
esteen
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Re: Mixing Bogle and Ramsey to build my portfolio

Post by esteen »

Welcome! You are well on your way and ahead of 90+% of people out there with your knowledge and planning. There are always incremental ways to improve and frequenting the Bogleheads board will help you continue your journey.

Yes you'll get many Dave Ramsey critics on this forum and for good reason - he is a debt/money management guy, but much of his investing/retirement planning advice is off-base. Sounds like you have taken some of the best of both Ramsey and Bogle to heart, which is the way to go.

I don't see anything wrong in general with your plan. Yes, some will disagree with a 0% allocation in bonds - some won't. I'm split on the issue, I think it comes down to personal preference as long as you have had a good critical look at your willingness and ability to take risk (and you re-look every year or two via your own Investment Policy Statement).

Agree with ruralavalon that at this stage in life the most important variable in your financial success is how much you can put away for the future (which has the lovely double-benefit of teaching you to live on less).

-ES
This post is for entertainment or information only, and should not be construed as professional financial advice. | | "Invest your money passively and your time actively" -Michael LeBoeuf
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Re: Mixing Bogle and Ramsey to build my portfolio

Post by LadyGeek »

I removed an off-topic post and reply. As a reminder, see: General Etiquette
At all times we must conduct ourselves in a respectful manner to other posters. Attacks on individuals, insults, name calling, trolling, baiting or other attempts to sow dissension are not acceptable.
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gideon trumpet
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Re: Mixing Bogle and Ramsey to build my portfolio

Post by gideon trumpet »

flaman wrote: Fri Apr 09, 2021 12:26 pm 50% S&P 500 Index (FXAIX)
25% Extended Market Index (FSMAX)
25% International Index (FSPSX)
Re the above portfolio, VTWAX would provide similar returns and avoid the need for rebalancing. Although small-cap value, as a factor, has historically provided somewhat stronger returns in the long run (perhaps as high as 2%), I'm not sure I would consider FSMAX (U.S. market excluding the S&P 500) as the best vehicle for a small-cap value tilt. That is even more true with the above portfolio because by choosing the S&P 500 (FXAIX) instead of a total market fund, you are reducing your small cap exposure in that part of the portfolio. In other words, given that the total market is generally about 80% S&P 500 and 20% extended index, part of your extended market exposure is just turning your S&P 500 fund into a total market fund, rather than tilting the portfolio to U.S. small cap. Of the remaining portion of your extended index fund that is trying to tilt the portfolio toward small cap, only a fraction will do so, since most of the extended market index is not small cap value. If you switched to, say, 50% total market, 25% international, and 25% small cap value, you'd be more likely to see a boost if, in fact, the small-cap value factor does outperform in the long run. Even then, 2% outperformance on 25% of your portfolio would only amount to a 0.5% boost in your total returns (not bad, but probably not life changing).
averagedude
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Re: Mixing Bogle and Ramsey to build my portfolio

Post by averagedude »

I like it! Ramsey wouldn't like it because he is not getting a kick back from SmartVestor Pro.
BalancedJCB19
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Re: Mixing Bogle and Ramsey to build my portfolio

Post by BalancedJCB19 »

Triple digit golfer wrote: Fri Apr 09, 2021 1:11 pm The portfolio is fine. That is not a Ramsey portfolio at all. Ramsey has you chasing performance. Ignore his investing advice.
I'm not a fan of Ramsey's investing advice, but he does not have you chasing performance. His investment advice is pretty straight forward and consistent and not sure where you get the performance chasing aspect of it. This is his investment advice for the last 20 plus years below:

Growth and income: These funds create a stable foundation for your portfolio. These can be described as big, boring American companies that have been around for a long time and offer goods and services people use regardless of the economy. With growth and income, be sure to look for funds with a history of stable growth that also pay dividends. You might find these listed under the large-cap or large value fund category. They may also be called blue chip, dividend income or equity income funds.

Growth: This category features medium or large U.S. companies that are experiencing growth. Unlike growth and income funds, these are more likely to ebb and flow with the economy. For instance, you might find the company that makes the latest "it" gadget or luxury item in your growth fund mix. Common labels for this category include mid-cap, equity or growth funds.

Aggressive growth: Think of this category as the wild child of your portfolio. When these funds are up, they’re up. And when they’re down, they’re down. Aggressive growth funds usually invest in smaller companies. But size isn’t the only consideration. Geography can also play a role. Aggressive growth could sometimes mean large companies that are based in emerging markets.

International: International funds are great because they spread your risk beyond U.S. soil and invest in big non-U.S. companies you know and love like Trader Joe’s, Firestone and Gerber. You may see these referred to as foreign or overseas funds. Just don’t get them confused with world or global funds, which group U.S. and foreign stocks together.

I'm not a fan of the managed funds he suggests or the fact that he keeps it all equities throughout your entire life, but he does not tell people to jump in or out or trade or even buy individual stocks, he does tell you to stay invested at all times.

For the record, I'm strictly a Boglehead and hold the balanced index fund at 60/40 and will continue that for life.
Triple digit golfer
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Re: Mixing Bogle and Ramsey to build my portfolio

Post by Triple digit golfer »

BalancedJCB19 wrote: Fri Apr 09, 2021 6:25 pm
Triple digit golfer wrote: Fri Apr 09, 2021 1:11 pm The portfolio is fine. That is not a Ramsey portfolio at all. Ramsey has you chasing performance. Ignore his investing advice.
I'm not a fan of Ramsey's investing advice, but he does not have you chasing performance. His investment advice is pretty straight forward and consistent and not sure where you get the performance chasing aspect of it. This is his investment advice for the last 20 plus years below:

Growth and income: These funds create a stable foundation for your portfolio. These can be described as big, boring American companies that have been around for a long time and offer goods and services people use regardless of the economy. With growth and income, be sure to look for funds with a history of stable growth that also pay dividends. You might find these listed under the large-cap or large value fund category. They may also be called blue chip, dividend income or equity income funds.

Growth: This category features medium or large U.S. companies that are experiencing growth. Unlike growth and income funds, these are more likely to ebb and flow with the economy. For instance, you might find the company that makes the latest "it" gadget or luxury item in your growth fund mix. Common labels for this category include mid-cap, equity or growth funds.

Aggressive growth: Think of this category as the wild child of your portfolio. When these funds are up, they’re up. And when they’re down, they’re down. Aggressive growth funds usually invest in smaller companies. But size isn’t the only consideration. Geography can also play a role. Aggressive growth could sometimes mean large companies that are based in emerging markets.

International: International funds are great because they spread your risk beyond U.S. soil and invest in big non-U.S. companies you know and love like Trader Joe’s, Firestone and Gerber. You may see these referred to as foreign or overseas funds. Just don’t get them confused with world or global funds, which group U.S. and foreign stocks together.

I'm not a fan of the managed funds he suggests or the fact that he keeps it all equities throughout your entire life, but he does not tell people to jump in or out or trade or even buy individual stocks, he does tell you to stay invested at all times.

For the record, I'm strictly a Boglehead and hold the balanced index fund at 60/40 and will continue that for life.
He repeatedly says to find funds with a good track record of past performance that beats the S&P 500. He never acknowledges that the performance may not continue into the future. That's performance chasing to me.
JD2775
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Re: Mixing Bogle and Ramsey to build my portfolio

Post by JD2775 »

I listen to the Ramsey podcast quite a bit for entertainment purposes mostly.....

Ramsey for getting and staying out of debt
Bogle for investing

For the most part you can't go wrong with that combo, although Ramsey's advice to pay off all debt before investing in 401k even with a match is terrible
ivgrivchuck
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Re: Mixing Bogle and Ramsey to build my portfolio

Post by ivgrivchuck »

JD2775 wrote: Fri Apr 09, 2021 7:59 pm I listen to the Ramsey podcast quite a bit for entertainment purposes mostly.....

Ramsey for getting and staying out of debt
Bogle for investing

For the most part you can't go wrong with that combo, although Ramsey's advice to pay off all debt before investing in 401k even with a match is terrible
+1
25% VTI | 25% VXUS | 12.5% AVUV | 10% AVDV | 2.5% VWO | 25% BND/SCHR/SCHP
BalancedJCB19
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Re: Mixing Bogle and Ramsey to build my portfolio

Post by BalancedJCB19 »

Triple digit golfer wrote: Fri Apr 09, 2021 6:53 pm
BalancedJCB19 wrote: Fri Apr 09, 2021 6:25 pm
Triple digit golfer wrote: Fri Apr 09, 2021 1:11 pm The portfolio is fine. That is not a Ramsey portfolio at all. Ramsey has you chasing performance. Ignore his investing advice.
I'm not a fan of Ramsey's investing advice, but he does not have you chasing performance. His investment advice is pretty straight forward and consistent and not sure where you get the performance chasing aspect of it. This is his investment advice for the last 20 plus years below:

Growth and income: These funds create a stable foundation for your portfolio. These can be described as big, boring American companies that have been around for a long time and offer goods and services people use regardless of the economy. With growth and income, be sure to look for funds with a history of stable growth that also pay dividends. You might find these listed under the large-cap or large value fund category. They may also be called blue chip, dividend income or equity income funds.

Growth: This category features medium or large U.S. companies that are experiencing growth. Unlike growth and income funds, these are more likely to ebb and flow with the economy. For instance, you might find the company that makes the latest "it" gadget or luxury item in your growth fund mix. Common labels for this category include mid-cap, equity or growth funds.

Aggressive growth: Think of this category as the wild child of your portfolio. When these funds are up, they’re up. And when they’re down, they’re down. Aggressive growth funds usually invest in smaller companies. But size isn’t the only consideration. Geography can also play a role. Aggressive growth could sometimes mean large companies that are based in emerging markets.

International: International funds are great because they spread your risk beyond U.S. soil and invest in big non-U.S. companies you know and love like Trader Joe’s, Firestone and Gerber. You may see these referred to as foreign or overseas funds. Just don’t get them confused with world or global funds, which group U.S. and foreign stocks together.

I'm not a fan of the managed funds he suggests or the fact that he keeps it all equities throughout your entire life, but he does not tell people to jump in or out or trade or even buy individual stocks, he does tell you to stay invested at all times.

For the record, I'm strictly a Boglehead and hold the balanced index fund at 60/40 and will continue that for life.
He repeatedly says to find funds with a good track record of past performance that beats the S&P 500. He never acknowledges that the performance may not continue into the future. That's performance chasing to me.
Nope. He always states pick funds with long term track records, and he always states that he has funds where he can go look back 20 years. He also has said repeatedly not to look at the short term. How in the world is that performance chasing. I think you are taking this out of context. Performance chasing is if he tells you to change up your plan every year or try and time the market. He does not suggest that and never did. Are you a listener because it sounds like you really don't know his plan when it comes to investing. I do listen, and enjoy the callers that call in, but I don't agree with his investing advice and other parts of his baby steps, but let's be honest and say what his plan is and isn't and it definitely isn't performance chasing. And to call it such is absurd. He has been saying this for over 20 years, how is that performance chasing. SMH.
Triple digit golfer
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Re: Mixing Bogle and Ramsey to build my portfolio

Post by Triple digit golfer »

BalancedJCB19 wrote: Fri Apr 09, 2021 8:10 pm
Triple digit golfer wrote: Fri Apr 09, 2021 6:53 pm
BalancedJCB19 wrote: Fri Apr 09, 2021 6:25 pm
Triple digit golfer wrote: Fri Apr 09, 2021 1:11 pm The portfolio is fine. That is not a Ramsey portfolio at all. Ramsey has you chasing performance. Ignore his investing advice.
I'm not a fan of Ramsey's investing advice, but he does not have you chasing performance. His investment advice is pretty straight forward and consistent and not sure where you get the performance chasing aspect of it. This is his investment advice for the last 20 plus years below:

Growth and income: These funds create a stable foundation for your portfolio. These can be described as big, boring American companies that have been around for a long time and offer goods and services people use regardless of the economy. With growth and income, be sure to look for funds with a history of stable growth that also pay dividends. You might find these listed under the large-cap or large value fund category. They may also be called blue chip, dividend income or equity income funds.

Growth: This category features medium or large U.S. companies that are experiencing growth. Unlike growth and income funds, these are more likely to ebb and flow with the economy. For instance, you might find the company that makes the latest "it" gadget or luxury item in your growth fund mix. Common labels for this category include mid-cap, equity or growth funds.

Aggressive growth: Think of this category as the wild child of your portfolio. When these funds are up, they’re up. And when they’re down, they’re down. Aggressive growth funds usually invest in smaller companies. But size isn’t the only consideration. Geography can also play a role. Aggressive growth could sometimes mean large companies that are based in emerging markets.

International: International funds are great because they spread your risk beyond U.S. soil and invest in big non-U.S. companies you know and love like Trader Joe’s, Firestone and Gerber. You may see these referred to as foreign or overseas funds. Just don’t get them confused with world or global funds, which group U.S. and foreign stocks together.

I'm not a fan of the managed funds he suggests or the fact that he keeps it all equities throughout your entire life, but he does not tell people to jump in or out or trade or even buy individual stocks, he does tell you to stay invested at all times.

For the record, I'm strictly a Boglehead and hold the balanced index fund at 60/40 and will continue that for life.
He repeatedly says to find funds with a good track record of past performance that beats the S&P 500. He never acknowledges that the performance may not continue into the future. That's performance chasing to me.
Nope. He always states pick funds with long term track records, and he always states that he has funds where he can go look back 20 years. He also has said repeatedly not to look at the short term. How in the world is that performance chasing. I think you are taking this out of context. Performance chasing is if he tells you to change up your plan every year or try and time the market. He does not suggest that and never did. Are you a listener because it sounds like you really don't know his plan when it comes to investing. I do listen, and enjoy the callers that call in, but I don't agree with his investing advice and other parts of his baby steps, but let's be honest and say what his plan is and isn't and it definitely isn't performance chasing. And to call it such is absurd. He has been saying this for over 20 years, how is that performance chasing. SMH.
I've heard him say the same things you have. Call it whatever you like. Selecting a fund based on performance is very anti-Boglehead.
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Beensabu
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Re: Mixing Bogle and Ramsey to build my portfolio

Post by Beensabu »

flaman wrote: Fri Apr 09, 2021 12:26 pm 3.) Invest in mutual funds according to this asset allocation: 25% Equity Income, 25% Growth, 25% Aggressive Growth, 25% International. (Ramsey)
For this, perhaps go with "never bear too much or too little risk". The definition of that differs. Graham said between 75% equities / 25% fixed income and 25% equities / 75% fixed income. Other people say between 70/30 to 30/70. And someone interesting who has disappeared recently said between 60/40 to 40/60. Someone even more interesting of whom I was reminded by the recent interesting person said just stay at 50/50.

It doesn't matter which, as long as it works for you. But don't base your asset allocation on some cookie cutter recommendation. Go to the Wiki here, drill down, and see if you can figure out something that makes sense for you based on your actual personal circumstances and needs.
"The only thing that makes life possible is permanent, intolerable uncertainty; not knowing what comes next." ~Ursula LeGuin
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anon_investor
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Re: Mixing Bogle and Ramsey to build my portfolio

Post by anon_investor »

I do not think the investment philosophies of Jack Bogle and Dave Ramsey are compatable at all. One is about low cost, simplicity and passive index investing (Bogle), and one is about performance chasing, and active management with high expense ratios and front end loads and kickbacks (Ramsey).

Just VTSAX/VTI and chill.
Normchad
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Re: Mixing Bogle and Ramsey to build my portfolio

Post by Normchad »

ivgrivchuck wrote: Fri Apr 09, 2021 8:04 pm
JD2775 wrote: Fri Apr 09, 2021 7:59 pm I listen to the Ramsey podcast quite a bit for entertainment purposes mostly.....

Ramsey for getting and staying out of debt
Bogle for investing

For the most part you can't go wrong with that combo, although Ramsey's advice to pay off all debt before investing in 401k even with a match is terrible
+1
I agree whole heartedly with this. For those interested in the Dave Ramsay approach to investing, it is right there on his website. In addition to recommending the use of a financial advisor, here is an excerpt on picking the right funds:
Choosing the right mutual funds can go a long way toward helping you reach your retirement goals and prevent unnecessary risk. That’s why it’s important to compare all your options before making your selections. Here are a few questions to consider as you determine which mutual funds are best for you:

How much experience does the fund manager have?

Does this fund cover multiple business sectors, such as financial services, technology, or health care?

Has the fund outperformed other funds in its category over the past 10 years or more?

What costs are associated with the fund?

How often are investments bought and sold within the fund?

If you can’t find answers to these questions on your own, ask your financial advisor for help. It’s worth the extra time if it means you can make an informed decision about your investments.
So yeah, an approach that is quite contrary to the Boglehead approach. And something I would never recommend to anybody.
He also discourages people from considering bonds, CDs, etc etc.
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Re: Mixing Bogle and Ramsey to build my portfolio

Post by Fat Tails »

anon_investor wrote: Fri Apr 09, 2021 8:58 pm I do not think the investment philosophies of Jack Bogle and Dave Ramsey are compatable at all. One is about low cost, simplicity and passive index investing (Bogle), and one is about performance chasing, and active management with high expense ratios and front end loads and kickbacks (Ramsey).

Just VTSAX/VTI and chill.
+1
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Triple digit golfer
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Re: Mixing Bogle and Ramsey to build my portfolio

Post by Triple digit golfer »

anon_investor wrote: Fri Apr 09, 2021 8:58 pm I do not think the investment philosophies of Jack Bogle and Dave Ramsey are compatable at all. One is about low cost, simplicity and passive index investing (Bogle), and one is about performance chasing, and active management with high expense ratios and front end loads and kickbacks (Ramsey).
Bingo.
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Re: Mixing Bogle and Ramsey to build my portfolio

Post by kelway »

backpacker61 wrote: Fri Apr 09, 2021 3:55 pm I consider Dave Ramsey one of the "good guys". He's helped a lot of people resolve their debt issues.
I consider Dave Ramsey one of the very bad guys padding his pockets with ELP kickbacks etc while his fleeced followers enter front-loaded actively-managed funds...

EDIT: I see I'm not alone and promise I didn't copy the text from the post immediately above mine. Bad, bad, bad man...
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Re: Mixing Bogle and Ramsey to build my portfolio

Post by BalancedJCB19 »

Triple digit golfer wrote: Fri Apr 09, 2021 8:14 pm
BalancedJCB19 wrote: Fri Apr 09, 2021 8:10 pm
Triple digit golfer wrote: Fri Apr 09, 2021 6:53 pm
BalancedJCB19 wrote: Fri Apr 09, 2021 6:25 pm
Triple digit golfer wrote: Fri Apr 09, 2021 1:11 pm The portfolio is fine. That is not a Ramsey portfolio at all. Ramsey has you chasing performance. Ignore his investing advice.
I'm not a fan of Ramsey's investing advice, but he does not have you chasing performance. His investment advice is pretty straight forward and consistent and not sure where you get the performance chasing aspect of it. This is his investment advice for the last 20 plus years below:

Growth and income: These funds create a stable foundation for your portfolio. These can be described as big, boring American companies that have been around for a long time and offer goods and services people use regardless of the economy. With growth and income, be sure to look for funds with a history of stable growth that also pay dividends. You might find these listed under the large-cap or large value fund category. They may also be called blue chip, dividend income or equity income funds.

Growth: This category features medium or large U.S. companies that are experiencing growth. Unlike growth and income funds, these are more likely to ebb and flow with the economy. For instance, you might find the company that makes the latest "it" gadget or luxury item in your growth fund mix. Common labels for this category include mid-cap, equity or growth funds.

Aggressive growth: Think of this category as the wild child of your portfolio. When these funds are up, they’re up. And when they’re down, they’re down. Aggressive growth funds usually invest in smaller companies. But size isn’t the only consideration. Geography can also play a role. Aggressive growth could sometimes mean large companies that are based in emerging markets.

International: International funds are great because they spread your risk beyond U.S. soil and invest in big non-U.S. companies you know and love like Trader Joe’s, Firestone and Gerber. You may see these referred to as foreign or overseas funds. Just don’t get them confused with world or global funds, which group U.S. and foreign stocks together.

I'm not a fan of the managed funds he suggests or the fact that he keeps it all equities throughout your entire life, but he does not tell people to jump in or out or trade or even buy individual stocks, he does tell you to stay invested at all times.

For the record, I'm strictly a Boglehead and hold the balanced index fund at 60/40 and will continue that for life.
He repeatedly says to find funds with a good track record of past performance that beats the S&P 500. He never acknowledges that the performance may not continue into the future. That's performance chasing to me.
Nope. He always states pick funds with long term track records, and he always states that he has funds where he can go look back 20 years. He also has said repeatedly not to look at the short term. How in the world is that performance chasing. I think you are taking this out of context. Performance chasing is if he tells you to change up your plan every year or try and time the market. He does not suggest that and never did. Are you a listener because it sounds like you really don't know his plan when it comes to investing. I do listen, and enjoy the callers that call in, but I don't agree with his investing advice and other parts of his baby steps, but let's be honest and say what his plan is and isn't and it definitely isn't performance chasing. And to call it such is absurd. He has been saying this for over 20 years, how is that performance chasing. SMH.
I've heard him say the same things you have. Call it whatever you like. Selecting a fund based on performance is very anti-Boglehead.
I think the bigger anti-bogle thing Dave does is using managed funds with high fees.
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Re: Mixing Bogle and Ramsey to build my portfolio

Post by gblack »

Triple digit golfer wrote: Fri Apr 09, 2021 8:14 pm
BalancedJCB19 wrote: Fri Apr 09, 2021 8:10 pm
Triple digit golfer wrote: Fri Apr 09, 2021 6:53 pm
BalancedJCB19 wrote: Fri Apr 09, 2021 6:25 pm
Triple digit golfer wrote: Fri Apr 09, 2021 1:11 pm The portfolio is fine. That is not a Ramsey portfolio at all. Ramsey has you chasing performance. Ignore his investing advice.
I'm not a fan of Ramsey's investing advice, but he does not have you chasing performance. His investment advice is pretty straight forward and consistent and not sure where you get the performance chasing aspect of it. This is his investment advice for the last 20 plus years below:

Growth and income: These funds create a stable foundation for your portfolio. These can be described as big, boring American companies that have been around for a long time and offer goods and services people use regardless of the economy. With growth and income, be sure to look for funds with a history of stable growth that also pay dividends. You might find these listed under the large-cap or large value fund category. They may also be called blue chip, dividend income or equity income funds.

Growth: This category features medium or large U.S. companies that are experiencing growth. Unlike growth and income funds, these are more likely to ebb and flow with the economy. For instance, you might find the company that makes the latest "it" gadget or luxury item in your growth fund mix. Common labels for this category include mid-cap, equity or growth funds.

Aggressive growth: Think of this category as the wild child of your portfolio. When these funds are up, they’re up. And when they’re down, they’re down. Aggressive growth funds usually invest in smaller companies. But size isn’t the only consideration. Geography can also play a role. Aggressive growth could sometimes mean large companies that are based in emerging markets.

International: International funds are great because they spread your risk beyond U.S. soil and invest in big non-U.S. companies you know and love like Trader Joe’s, Firestone and Gerber. You may see these referred to as foreign or overseas funds. Just don’t get them confused with world or global funds, which group U.S. and foreign stocks together.

I'm not a fan of the managed funds he suggests or the fact that he keeps it all equities throughout your entire life, but he does not tell people to jump in or out or trade or even buy individual stocks, he does tell you to stay invested at all times.

For the record, I'm strictly a Boglehead and hold the balanced index fund at 60/40 and will continue that for life.
He repeatedly says to find funds with a good track record of past performance that beats the S&P 500. He never acknowledges that the performance may not continue into the future. That's performance chasing to me.
Nope. He always states pick funds with long term track records, and he always states that he has funds where he can go look back 20 years. He also has said repeatedly not to look at the short term. How in the world is that performance chasing. I think you are taking this out of context. Performance chasing is if he tells you to change up your plan every year or try and time the market. He does not suggest that and never did. Are you a listener because it sounds like you really don't know his plan when it comes to investing. I do listen, and enjoy the callers that call in, but I don't agree with his investing advice and other parts of his baby steps, but let's be honest and say what his plan is and isn't and it definitely isn't performance chasing. And to call it such is absurd. He has been saying this for over 20 years, how is that performance chasing. SMH.
I've heard him say the same things you have. Call it whatever you like. Selecting a fund based on performance is very anti-Boglehead.
Pretty loose definition of performance chasing. Don't we all invest in stocks and index funds because of they performed well (vs mutual funds and bonds/cash) in the past and we anticipate they will again do so in the future?

I don't follow Ramsey's advice, but I don't think people who do will do terrible. In fact, because he advocates 100% stocks, I imagine the majority will do better than an average boglehead if they can stomach the ride.
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Re: Mixing Bogle and Ramsey to build my portfolio

Post by Makefile »

BalancedJCB19 wrote: Fri Apr 09, 2021 6:25 pm
Triple digit golfer wrote: Fri Apr 09, 2021 1:11 pm The portfolio is fine. That is not a Ramsey portfolio at all. Ramsey has you chasing performance. Ignore his investing advice.
I'm not a fan of Ramsey's investing advice, but he does not have you chasing performance. His investment advice is pretty straight forward and consistent and not sure where you get the performance chasing aspect of it. This is his investment advice for the last 20 plus years below:

Growth and income: These funds create a stable foundation for your portfolio. These can be described as big, boring American companies that have been around for a long time and offer goods and services people use regardless of the economy. With growth and income, be sure to look for funds with a history of stable growth that also pay dividends. You might find these listed under the large-cap or large value fund category. They may also be called blue chip, dividend income or equity income funds.

Growth: This category features medium or large U.S. companies that are experiencing growth. Unlike growth and income funds, these are more likely to ebb and flow with the economy. For instance, you might find the company that makes the latest "it" gadget or luxury item in your growth fund mix. Common labels for this category include mid-cap, equity or growth funds.

Aggressive growth: Think of this category as the wild child of your portfolio. When these funds are up, they’re up. And when they’re down, they’re down. Aggressive growth funds usually invest in smaller companies. But size isn’t the only consideration. Geography can also play a role. Aggressive growth could sometimes mean large companies that are based in emerging markets.

International: International funds are great because they spread your risk beyond U.S. soil and invest in big non-U.S. companies you know and love like Trader Joe’s, Firestone and Gerber. You may see these referred to as foreign or overseas funds. Just don’t get them confused with world or global funds, which group U.S. and foreign stocks together.

I'm not a fan of the managed funds he suggests or the fact that he keeps it all equities throughout your entire life, but he does not tell people to jump in or out or trade or even buy individual stocks, he does tell you to stay invested at all times.

For the record, I'm strictly a Boglehead and hold the balanced index fund at 60/40 and will continue that for life.
Yeah. I agree that Bogleheads find three particular things about him pretty irritating--1. past performance indicates the reputation of a fund, 2. fees don't matter, 3. 12% expected return on stocks--but there's a lot more overlap than people give him credit for.

I'm not sure where those four categories come from--they seem more muddled than what Morningstar might use--but it's not just something he made up. I had a 401(k) at ADP that also classified all the funds in it with those labels. And even Vanguard has an active fund called a Growth & Income fund.

And "good mutual funds with long track records" means there is some performance chasing, but at least it isn't QQQ, ARKK, a sector fund, etc. Rumor has it that "growth" is Growth Fund of America, "growth & income" is Investment Company of America, and similar American Funds. And his recommended portfolio, if a bit tilted/unorthodox, is certainly closer to the mainstream than the "Permanent Portfolio" mentioned on the Bogleheads wiki (25% US total stock, 25% gold, 25% treasury bills, 25% treasury bonds).

One thing I don't know is how unbiased his local providers' advice is. If the 5¾% annual load on a max Roth IRA contribution ($345/year for an individual or $690/year for a couple) is the only fee paid to the provider and includes the provider recommending filling 401(k)s first (at least up to the match), counseling the investor not to pull everything out of retirement accounts as soon as they have an unexpected expense, not to go to cash in a crash, etc., then it really isn't that out of a realm of what an hourly fee-only provider might cost, right? But I bet this is optimistic. Presumably the providers aren't selling whole life, variable annuities, etc at least.

Ramsey has also mentioned that he uses index funds in taxable accounts and active funds inside retirement accounts to avoid capital gain distributions (although in the clip I just found he didn't state it exactly as clearly as this).
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Re: Mixing Bogle and Ramsey to build my portfolio

Post by BalancedJCB19 »

Makefile wrote: Fri Apr 09, 2021 11:14 pm
BalancedJCB19 wrote: Fri Apr 09, 2021 6:25 pm
Triple digit golfer wrote: Fri Apr 09, 2021 1:11 pm The portfolio is fine. That is not a Ramsey portfolio at all. Ramsey has you chasing performance. Ignore his investing advice.


I'm not a fan of Ramsey's investing advice, but he does not have you chasing performance. His investment advice is pretty straight forward and consistent and not sure where you get the performance chasing aspect of it. This is his investment advice for the last 20 plus years below:

Growth and income: These funds create a stable foundation for your portfolio. These can be described as big, boring American companies that have been around for a long time and offer goods and services people use regardless of the economy. With growth and income, be sure to look for funds with a history of stable growth that also pay dividends. You might find these listed under the large-cap or large value fund category. They may also be called blue chip, dividend income or equity income funds.

Growth: This category features medium or large U.S. companies that are experiencing growth. Unlike growth and income funds, these are more likely to ebb and flow with the economy. For instance, you might find the company that makes the latest "it" gadget or luxury item in your growth fund mix. Common labels for this category include mid-cap, equity or growth funds.

Aggressive growth: Think of this category as the wild child of your portfolio. When these funds are up, they’re up. And when they’re down, they’re down. Aggressive growth funds usually invest in smaller companies. But size isn’t the only consideration. Geography can also play a role. Aggressive growth could sometimes mean large companies that are based in emerging markets.

International: International funds are great because they spread your risk beyond U.S. soil and invest in big non-U.S. companies you know and love like Trader Joe’s, Firestone and Gerber. You may see these referred to as foreign or overseas funds. Just don’t get them confused with world or global funds, which group U.S. and foreign stocks together.

I'm not a fan of the managed funds he suggests or the fact that he keeps it all equities throughout your entire life, but he does not tell people to jump in or out or trade or even buy individual stocks, he does tell you to stay invested at all times.

For the record, I'm strictly a Boglehead and hold the balanced index fund at 60/40 and will continue that for life.


One thing I don't know is how unbiased his local providers' advice is.


I agree with what you said. Years ago I called one of his ELPs, they were called something different back then. The guy turned out to be a really nice guy and did not try to sell me anything. I told him, I'm in a simple balanced fund and I would have a hard time doing what Dave suggests. He said he things what I'm doing is very good and I shouldn't really change it. Now, from what I hear Dave says on the radio if he know that provider said that about holding bonds in my portfolio, he would have not been too happy and have someone from his company give him a call. I just thought the guy was super cool and very honest. Probably not the best fit to work with the Ramsey company. Ramsey doesn't seem to be very forgiven for those who disagree with him.
dan7800
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Re: Mixing Bogle and Ramsey to build my portfolio

Post by dan7800 »

I feel that Ramsey is good for VERY early investors and folks who need to be told not to buy a new Lexus every year when you're 50 and have no retirement savings.

Once you get to have no (or only "good" debt), then you've graduated from Ramsey and now it is time to take a class with Prof Bogle.
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Re: Mixing Bogle and Ramsey to build my portfolio

Post by awval999 »

Your emergency fund is too low for a young family of 4.
I'd bump it up to 5-6 months expenses and $25k-$30k.
awval999
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Re: Mixing Bogle and Ramsey to build my portfolio

Post by awval999 »

Ramsey has helped millions of people.

There are many roads to Dublin, and they don't all involve index funds.
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Re: Mixing Bogle and Ramsey to build my portfolio

Post by lostdog »

Dave Ramsey--> Get out of debt
Jack Bogle-->Investing

Using these will get you good results and you'll be in the top 10% of wealth in America with a high savings rate and patience. Even with an average salary.

Your portfolio looks great. Add bonds when you get closer to your goals. Your goal isn't based on age, it's based on your number.
Stocks-80% || Bonds-20% || VTI/VXUS/AOR
balbrec2
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Re: Mixing Bogle and Ramsey to build my portfolio

Post by balbrec2 »

NativeTxn wrote: Fri Apr 09, 2021 3:14 pm
Triple digit golfer wrote: Fri Apr 09, 2021 1:11 pm The portfolio is fine. That is not a Ramsey portfolio at all. Ramsey has you chasing performance. Ignore his investing advice.
This.

I would also personally disagree with Dave's stance on avoiding all debt. As long as you don't abuse debt (particularly credit card debt), debt can be an extremely useful financial tool. I realize that a large majority of Dave's audience may have abused debt in the past, so avoiding it as much as possible is probably a good philosophy; however, certain types of debt can help you accelerate your financial well-being when used properly.

borrow as little as possible for as short a time as possible at the lowest interest rate possible!
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Re: Mixing Bogle and Ramsey to build my portfolio

Post by Ivygirl »

Makefile wrote: Fri Apr 09, 2021 11:14 pm Yeah. I agree that Bogleheads find three particular things about him pretty irritating--1. past performance indicates the reputation of a fund, 2. fees don't matter, 3. 12% expected return on stocks--but there's a lot more overlap than people give him credit for.
There is a fourth thing about Mr. Ramsey that Bogleheads seem to find pretty irritating - 4. He is not a believer in the superiority of passivity.

Passivity in life is what got so many people in financial trouble. Engaging with their finances is what got them out.

The true proof, between the two philosophies, is who came out better in life. Right? I mean money itself is stupid, it's a better life we really want. If Mr. Ramsey's followers began to feel defrauded or lied to or worse off from his advice as the years (decades now) traveled on, why aren't they saying so? "I followed that Ramsey guy for years and all I have to show for it is this lousy paid-off house, useless college for my kid without student loans, and a measly retirement portfolio made up of stocks. Oh and I replaced my refrigerator when it died using my emergency fund, without having to borrow. What a scam that was. Oh and I gave a lot to charity and was generous with my family and friends. Now everyone hates me. Wish I'd sat in a room with a cold candle and waited for the power of compound interest instead."

If Mr. Ramsey's followers were scammed, why aren't they saying so? Is the unspoken assumption here that they are too dumb to know it?
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Re: Mixing Bogle and Ramsey to build my portfolio

Post by Ryzen »

Ivygirl wrote: Sat Apr 10, 2021 8:41 am
Makefile wrote: Fri Apr 09, 2021 11:14 pm Yeah. I agree that Bogleheads find three particular things about him pretty irritating--1. past performance indicates the reputation of a fund, 2. fees don't matter, 3. 12% expected return on stocks--but there's a lot more overlap than people give him credit for.
There is a fourth thing about Mr. Ramsey that Bogleheads seem to find pretty irritating - 4. He is not a believer in the superiority of passivity.

Passivity in life is what got so many people in financial trouble. Engaging with their finances is what got them out.

The true proof, between the two philosophies, is who came out better in life. Right? I mean money itself is stupid, it's a better life we really want. If Mr. Ramsey's followers began to feel defrauded or lied to or worse off from his advice as the years (decades now) traveled on, why aren't they saying so? "I followed that Ramsey guy for years and all I have to show for it is this lousy paid-off house, useless college for my kid without student loans, and a measly retirement portfolio made up of stocks. Oh and I replaced my refrigerator when it died using my emergency fund, without having to borrow. What a scam that was. Oh and I gave a lot to charity and was generous with my family and friends. Now everyone hates me. Wish I'd sat in a room with a cold candle and waited for the power of compound interest instead."

If Mr. Ramsey's followers were scammed, why aren't they saying so? Is the unspoken assumption here that they are too dumb to know it?
Of course people who post "I have 14 million dollars, can I upgrade from my 1994 Corolla and retire?" have no idea what its like to be in the situations that so many of Dave Ramsey's followers were/are in. Sadly, I think some people here forget that a significant portion of our society doesn't engage in the stock market, has significant debt, lives paycheck to paycheck, and yes they do spend money they don't have on clothes/restaurants/leased cars. Dave Ramsey's blunt advice is that living that way doesn't work. Calling him a bad man is hilarious.
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Re: Mixing Bogle and Ramsey to build my portfolio

Post by ivgrivchuck »

Ivygirl wrote: Sat Apr 10, 2021 8:41 am
Makefile wrote: Fri Apr 09, 2021 11:14 pm Yeah. I agree that Bogleheads find three particular things about him pretty irritating--1. past performance indicates the reputation of a fund, 2. fees don't matter, 3. 12% expected return on stocks--but there's a lot more overlap than people give him credit for.
There is a fourth thing about Mr. Ramsey that Bogleheads seem to find pretty irritating - 4. He is not a believer in the superiority of passivity.
Probably true. Although there is something more to it. His advice to put most of your money into "growth and aggressive growth mutual funds" is not really proper active management. I'd have a lot less issues with mr. Ramsey's investment advice if he was at least promoting sound active management principles.
If Mr. Ramsey's followers were scammed, why aren't they saying so? Is the unspoken assumption here that they are too dumb to know it?
Most of them were in deep financial trouble and he was the saving angel who pulled them out of that mess. These people were not scammed. And I give full credit to Mr. Ramsey for helping these people to get out of the mess.

There are a lot of people (rich and less rich) in the U.S. who are following unsound investment advice. Most of them either don't realize it or don't care.

Most of Ramsey's followers got into trouble, because of their inability to take control of their finances. Are they too "dumb" to understand that his investment advice is not fully sound? I'd say that's probably a fair assumption, yes. In any case it was probably good for them that they became his disciples, because otherwise most of them would still be deep in debt.
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ROIGuy
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Re: Mixing Bogle and Ramsey to build my portfolio

Post by ROIGuy »

Though I like many things about Dave Ramsey with his getting out of debt programs, he is of course promoting his programs. The idea of paying off debt is huge (especially high interest credit cards, which I don't think anyone will dispute). What bothers me is using money when a person is young to first buy a house. What he is missing is a "financial snowball".
If a person can get $10,000 saved in an index fund (Total Stock Market) and leave it for 40 years, the interest that original money will generate later on in life will be much greater then if that person waits another 10 years before starting to invest as they pay off their house. Using Dave's theory that funds will return 10% on average (yeah, I know it doesn't even make sense), but the difference on savings 40 years later is staggering for missing 10 years of compounded growth. 10% growth on a million dollar portfolio will get you an extra $100,000 a year. It's easy math.
stimulacra
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Re: Mixing Bogle and Ramsey to build my portfolio

Post by stimulacra »

You need “good growth mutual funds”: growth, aggressive growth, and growth and income.

It’s a little ambiguous how that would map out across Vanguard funds but a “Smartvestor Pro” will be glad to help out.
Last edited by stimulacra on Sat Apr 10, 2021 2:35 pm, edited 1 time in total.
roth evangelist
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Re: Mixing Bogle and Ramsey to build my portfolio

Post by roth evangelist »

Due to how bad his investing advice is, I don't think it's fair to give Dave Ramsey any credit on the get out of debt side. There's plenty of people offering good advice on both fronts and no need to justify him.
backpacker61
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Re: Mixing Bogle and Ramsey to build my portfolio

Post by backpacker61 »

I think the inconvenient truth is that a lot of people are miffed that Mr Ramsey has managed to become very financially successful while simultaneously helping people begin to take charge of their personal finances.

I don't invest the Dave Ramsey way, and have never had a financial advisor. But I think a person with no experience investing could do a lot worse than to engage one of the Smartvestor advisors (or similar). Many people do need coaching to avoid costly mistakes like selling during a market downturn. Even many readers of this board hit the big SELL! button last March when it looked like all heck was breaking loose, and some are likely still in cash a year later.

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Ivygirl
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Re: Mixing Bogle and Ramsey to build my portfolio

Post by Ivygirl »

ivgrivchuck wrote: Sat Apr 10, 2021 1:48 pm
Ivygirl wrote: Sat Apr 10, 2021 8:41 am
Makefile wrote: Fri Apr 09, 2021 11:14 pm Yeah. I agree that Bogleheads find three particular things about him pretty irritating--1. past performance indicates the reputation of a fund, 2. fees don't matter, 3. 12% expected return on stocks--but there's a lot more overlap than people give him credit for.
There is a fourth thing about Mr. Ramsey that Bogleheads seem to find pretty irritating - 4. He is not a believer in the superiority of passivity.
Probably true. Although there is something more to it. His advice to put most of your money into "growth and aggressive growth mutual funds" is not really proper active management. I'd have a lot less issues with mr. Ramsey's investment advice if he was at least promoting sound active management principles.
If Mr. Ramsey's followers were scammed, why aren't they saying so? Is the unspoken assumption here that they are too dumb to know it?
Most of them were in deep financial trouble and he was the saving angel who pulled them out of that mess. These people were not scammed. And I give full credit to Mr. Ramsey for helping these people to get out of the mess.

There are a lot of people (rich and less rich) in the U.S. who are following unsound investment advice. Most of them either don't realize it or don't care.

Most of Ramsey's followers got into trouble, because of their inability to take control of their finances. Are they too "dumb" to understand that his investment advice is not fully sound? I'd say that's probably a fair assumption, yes. In any case it was probably good for them that they became his disciples, because otherwise most of them would still be deep in debt.
What are "sound active management principles"?
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Re: Mixing Bogle and Ramsey to build my portfolio

Post by watchnerd »

Ivygirl wrote: Sat Apr 10, 2021 8:41 am Wish I'd sat in a room with a cold candle and waited for the power of compound interest instead."
This cracked me up.

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Re: Mixing Bogle and Ramsey to build my portfolio

Post by ivgrivchuck »

Ivygirl wrote: Sat Apr 10, 2021 7:46 pm What are "sound active management principles"?
1. Diversification. Active management doesn't mean throwing diversification out of the window. Don't put all eggs into the same basket. Take care that you money is allocated across multiple sectors, between value and growth, and geographically. You need to find the right mix of funds, appropriate for your situation, and understand to what extent those funds themselves are diversified.

2. Understand what you get in return for the fund fee. The fund manager is trying to beat the market and you are paying him some extra to do that. The fund needs to have a clear, easily explainable strategy how it plans to achieve this. Maybe it's searching for very highly quality companies at fair price. Maybe it's searching for companies which are facing temporary difficulties and are potentially under-priced. Maybe it's trying to identify companies that are close to technological breakthrough. There are a plenty of active funds where the only real distinguishing factor from the index funds is the fund fee, you don't want to buy any of those...
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Re: Mixing Bogle and Ramsey to build my portfolio

Post by absolute zero »

Triple digit golfer wrote: Fri Apr 09, 2021 8:14 pm
BalancedJCB19 wrote: Fri Apr 09, 2021 8:10 pm
Triple digit golfer wrote: Fri Apr 09, 2021 6:53 pm
BalancedJCB19 wrote: Fri Apr 09, 2021 6:25 pm
Triple digit golfer wrote: Fri Apr 09, 2021 1:11 pm The portfolio is fine. That is not a Ramsey portfolio at all. Ramsey has you chasing performance. Ignore his investing advice.
I'm not a fan of Ramsey's investing advice, but he does not have you chasing performance. His investment advice is pretty straight forward and consistent and not sure where you get the performance chasing aspect of it. This is his investment advice for the last 20 plus years below:

Growth and income: These funds create a stable foundation for your portfolio. These can be described as big, boring American companies that have been around for a long time and offer goods and services people use regardless of the economy. With growth and income, be sure to look for funds with a history of stable growth that also pay dividends. You might find these listed under the large-cap or large value fund category. They may also be called blue chip, dividend income or equity income funds.

Growth: This category features medium or large U.S. companies that are experiencing growth. Unlike growth and income funds, these are more likely to ebb and flow with the economy. For instance, you might find the company that makes the latest "it" gadget or luxury item in your growth fund mix. Common labels for this category include mid-cap, equity or growth funds.

Aggressive growth: Think of this category as the wild child of your portfolio. When these funds are up, they’re up. And when they’re down, they’re down. Aggressive growth funds usually invest in smaller companies. But size isn’t the only consideration. Geography can also play a role. Aggressive growth could sometimes mean large companies that are based in emerging markets.

International: International funds are great because they spread your risk beyond U.S. soil and invest in big non-U.S. companies you know and love like Trader Joe’s, Firestone and Gerber. You may see these referred to as foreign or overseas funds. Just don’t get them confused with world or global funds, which group U.S. and foreign stocks together.

I'm not a fan of the managed funds he suggests or the fact that he keeps it all equities throughout your entire life, but he does not tell people to jump in or out or trade or even buy individual stocks, he does tell you to stay invested at all times.

For the record, I'm strictly a Boglehead and hold the balanced index fund at 60/40 and will continue that for life.
He repeatedly says to find funds with a good track record of past performance that beats the S&P 500. He never acknowledges that the performance may not continue into the future. That's performance chasing to me.
Nope. He always states pick funds with long term track records, and he always states that he has funds where he can go look back 20 years. He also has said repeatedly not to look at the short term. How in the world is that performance chasing. I think you are taking this out of context. Performance chasing is if he tells you to change up your plan every year or try and time the market. He does not suggest that and never did. Are you a listener because it sounds like you really don't know his plan when it comes to investing. I do listen, and enjoy the callers that call in, but I don't agree with his investing advice and other parts of his baby steps, but let's be honest and say what his plan is and isn't and it definitely isn't performance chasing. And to call it such is absurd. He has been saying this for over 20 years, how is that performance chasing. SMH.
I've heard him say the same things you have. Call it whatever you like. Selecting a fund based on performance is very anti-Boglehead.
+1

He literally advocates picking funds based off which ones have done well in the past. That is textbook performance chasing. It doesn’t get much more cut-and-dry than that.
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Re: Mixing Bogle and Ramsey to build my portfolio

Post by absolute zero »

Ivygirl wrote: Sat Apr 10, 2021 8:41 am There is a fourth thing about Mr. Ramsey that Bogleheads seem to find pretty irritating - 4. He is not a believer in the superiority of passivity.
The 5th one is that he calls people stupid if they disagree with him. I’ve heard him claim on one of his episodes that most of the people who challenge his investment advice are 20 year olds that live in their parents basement and aren’t managing any real money. That he was investing money when everyone else was in diapers. So he’s right (duh!) and their wrong (losers).

I guess there are some listeners that admire this type of behavior. To me, it makes one sound unintelligent, insecure, and perhaps some other words that I won’t use on this forum.
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Re: Mixing Bogle and Ramsey to build my portfolio

Post by JBTX »

flaman wrote: Fri Apr 09, 2021 12:26 pm Hi Bogleheads,

Over the course of the last year or so, I've put in a significant amount of time watching Jack Bogle interviews and Dave Ramsey's shows on YouTube, absorbing as much information as I possibly could as it relates to personal finance and investing. Just as an FYI, I don't necessarily agree with everything that Ramsey has to say regarding investing, but I do find some of it to be useful. If I had to decide between following ones advice over the other, I would definitely side with Bogle. Having said that, I would like to share some key takeaways, if it should help anyone on their journey, and I welcome all feedback from more experienced investors.

Key takeaways from what I've learned:
1.) Avoid debt like the plague. (Ramsey)
2.) Keep three to six months of living expenses in cash savings as an emergency fund. (Ramsey)
3.) Invest in mutual funds according to this asset allocation: 25% Equity Income, 25% Growth, 25% Aggressive Growth, 25% International. (Ramsey)
4.) Invest in low-cost broad-market index funds. (Bogle)
5.) Increase bond allocation as you get older (Bogle)
6.) As market conditions change, don't react. "Don't do anything, just stand there." (Bogle)

In light of these takeaways, this is how I've constructed my personal portfolio:

For context, I'm 37 years old and married with two children.

Emergency Fund
Three months of living expenses in a High Yield Savings account
$15k

Taxable Brokerage
75% Total Market Index (VTI)
25% Total International Index (VXUS)
$35k

529 College Savings Plan
75% Total Market Index
25% Total International Index
$7k

Retirement
50% S&P 500 Index (FXAIX)
25% Extended Market Index (FSMAX)
25% International Index (FSPSX)
$332k

As you can see, my retirement allocation is a bit more aggressive than the standard Total Market Index. The 25% allocation to the Extended Market is essentially a push on small caps for "aggressive growth." Small caps have been shown to outperform the S&P over very long periods (decades). For me, it makes sense to incorporate this push on small caps when the investment is considered a 'life-long' endeavor. In contrast, I might need to pull money from my taxable brokerage at a moments notice, and so I dampen down the volatility of small caps by holding them by their market weight in the Total Market Index. Same goes for the 529 College Savings Plan, I don't necessarily have 'decades' to save for college.


As far as Bond Allocation is concerned, I've learned from this forum not to hold bonds in taxable or Roth. I agree with the notion that bonds are not necessary in the early stages of my wealth-building journey. As far as I'm concerned, equities are for building wealth and bonds are for preserving wealth.

This is my plan for adding bonds to my retirement accounts:
I plan to retire at age 65.
At age 37: 75/25/0 (us/int/bnd)
At age 55: 60/20/20 (us/int/bnd)
At age 65: 45/15/40 (us/int/bnd)

This is my plan for adding bonds to the 529 College Savings Plan:
Plan for college in 2034.
In 2021: 75/25/0 (us/int/bnd)
In 2028: 60/20/20 (us/int/bnd)
In 2030: 45/15/40 (us/int/bnd)
In 2032: 30/10/60 (us/int/bnd)
In 2034: 15/5/40/40 (us/int/bnd/mm) - here "mm" = money market

I'm particularly interested in getting feedback regarding my planned approach to bonds. Do most of you agree with it? Or have I missed something in my 'knowledge-building' journey.


Thanks for taking the time to consider my post :sharebeer
Seems like your plan makes sense.

My only question would be the 529. 60% equity six years out from school seems aggressive. Whether or not that make sense depends on how dependent you are on that money for college.
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Re: Mixing Bogle and Ramsey to build my portfolio

Post by Ivygirl »

ivgrivchuck wrote: Sat Apr 10, 2021 10:36 pm
Ivygirl wrote: Sat Apr 10, 2021 7:46 pm What are "sound active management principles"?
1. Diversification. Active management doesn't mean throwing diversification out of the window. Don't put all eggs into the same basket. Take care that you money is allocated across multiple sectors, between value and growth, and geographically. You need to find the right mix of funds, appropriate for your situation, and understand to what extent those funds themselves are diversified.

2. Understand what you get in return for the fund fee. The fund manager is trying to beat the market and you are paying him some extra to do that. The fund needs to have a clear, easily explainable strategy how it plans to achieve this. Maybe it's searching for very highly quality companies at fair price. Maybe it's searching for companies which are facing temporary difficulties and are potentially under-priced. Maybe it's trying to identify companies that are close to technological breakthrough. There are a plenty of active funds where the only real distinguishing factor from the index funds is the fund fee, you don't want to buy any of those...
I can just imagine the results of explaining all that on the radio, to unsophisticated investors.

We don't know this for sure, but it is strongly speculated that the funds Dave is invested in himself and uses for his model are American Funds. Do American Funds follow "sound active management principles"? Why not just buy those? What would $10,000 look like in 10 years if one did?
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Re: Mixing Bogle and Ramsey to build my portfolio

Post by Ivygirl »

absolute zero wrote: Sat Apr 10, 2021 11:04 pm
Ivygirl wrote: Sat Apr 10, 2021 8:41 am There is a fourth thing about Mr. Ramsey that Bogleheads seem to find pretty irritating - 4. He is not a believer in the superiority of passivity.
The 5th one is that he calls people stupid if they disagree with him. I’ve heard him claim on one of his episodes that most of the people who challenge his investment advice are 20 year olds that live in their parents basement and aren’t managing any real money. That he was investing money when everyone else was in diapers. So he’s right (duh!) and their wrong (losers).

I guess there are some listeners that admire this type of behavior. To me, it makes one sound unintelligent, insecure, and perhaps some other words that I won’t use on this forum.
That's called a "rant" and you either like a good rant or you don't.

Those who do, search for Top 10 Epic Dave Ramsey Rants, and enjoy.
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