evanburnside12
New member
Dave Ramsey: But I can invest in the stock market and earn 12%!
This is a lie. In fact I suspect he knows this is false and says it anyway to get kick backs from the guys he recommends to manage money.
That 12% comes from looking at the average of the S&P going back decades. Here's the problem. The composition of the S&P is radically different than it was decades ago. Companies that went bankrupt get delisted from the S&P, so there is a strong survivorship bias. The market as a whole doesn't earn 12%. Not even close.
Average investors earn significantly less than the market. Forget average returns of the market. Look at average portfolio returns. They are far lower than average market returns. And this is before fees, taxes, etc.
So don't compare the 4-5% that you get from life insurance to 12%. 12% is an entirely fraudulent figure. Life insurance is a good place to park your money. The returns are reasonable and guaranteed. The stock market is risky and you never get the advertised returns.
This is a lie. In fact I suspect he knows this is false and says it anyway to get kick backs from the guys he recommends to manage money.
That 12% comes from looking at the average of the S&P going back decades. Here's the problem. The composition of the S&P is radically different than it was decades ago. Companies that went bankrupt get delisted from the S&P, so there is a strong survivorship bias. The market as a whole doesn't earn 12%. Not even close.
Average investors earn significantly less than the market. Forget average returns of the market. Look at average portfolio returns. They are far lower than average market returns. And this is before fees, taxes, etc.
So don't compare the 4-5% that you get from life insurance to 12%. 12% is an entirely fraudulent figure. Life insurance is a good place to park your money. The returns are reasonable and guaranteed. The stock market is risky and you never get the advertised returns.