The Only Three Investments Dave Ramsey Owns (Is This Smart?)
About this episode
The focus of this episode is on what Dave Ramsey refers to as the only three investments he owns.
"I have three investments: my business, paid-for real estate with no mortgages, and mutual funds," says Ramsey.
He goes on to emphasize that he doesn't play single stock, doesn't screw around with gold or Bitcoin, and that he doesn't need your stock tip from your "broke golfing buddy with an opinion."
Host David McKnight wonders whether Ramsey's investment model actually works in principle, and if parts of it can be replicated by everyday investors…
Ramsey's business functions in two powerful ways: it provides current cash flow so he doesn't have to draw down investments, and it represents a large future liquidity event – this alone dramatically reduces the pressure on the rest of his portfolio.
David highlights the fact that Ramsey doesn't pick individual stocks. Instead, he spreads his money across the entire global stock market using mutual funds.
Ramsey famously advocates an even split: 25% in growth and income funds, 25% in aggressive growth funds, and 25% in international funds.
David's recommendation is to "Invest 70% in a total U.S. stock market index, 30% in a total international stock market index, and 0% in bonds."
By doing that, you'll own the entire market instead of trying to outsmart it.
It is possible to adopt a 100% stock portfolio even if you don't own a business or don't have a paid off real estate throwing off residual income – David explains how.
You could have a guaranteed lifetime income annuity have the same role played by real estate in Dave Ramsey's approach.
Mentioned in this episode:
David's new book, available now for pre-order: The Secret Order of Millionaires
David's national bestselling book: The Guru Gap: How America's Financial Gurus Are Leading You Astray, and How to Get Back on Track
Tax-Free Income for Life: A Step-by-Step Plan for a Secure Retirement by David McKnight
PowerOfZero.com (free video series)
@mcknightandco on Twitter
@davidcmcknight on Instagram
David McKnight on YouTube
Get David's Tax-free Tool Kit at taxfreetoolkit.com
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