{"id":528398,"date":"2026-04-13T11:37:10","date_gmt":"2026-04-13T11:37:10","guid":{"rendered":"https:\/\/www.newsbeep.com\/uk\/528398\/"},"modified":"2026-04-13T11:37:10","modified_gmt":"2026-04-13T11:37:10","slug":"dave-ramsey-vs-the-bogleheads","status":"publish","type":"post","link":"https:\/\/www.newsbeep.com\/uk\/528398\/","title":{"rendered":"Dave Ramsey vs. the Bogleheads"},"content":{"rendered":"

I’ve been a Boglehead since 2004. I’ve been listening to the Dave Ramsey Show from time to time for about as long. I’ve seen the Bogleheads rail against Ramsey’s work for years<\/a> and years<\/a> and years<\/a>. But only recently have I ever heard Dave push back on it, specifically mentioning Bogleheads.<\/p>\n

It feels like a bit of a family feud, as I think both entities are doing far more good than bad in the world. I’m a big fan of both the Bogleheads AND Dave Ramsey, so I don’t have a dog in this fight. But I think it’s worth parsing Dave’s recent discussion of the Bogleheads and then talking about what both parties get right . . . and what they get wrong. If you’d like to listen to it or watch it, you can find it in the following video from the 1:16:03 mark to about the 1:26:00 mark.<\/p>\n<\/p>\n

<\/a><\/p>\n

A caller basically asks Dave if he should fire his financial advisor because the advisor is dramatically underperforming the S&P 500. We, like Dave, are going to focus less on the answer to that question and more on the role of advisors and Bogleheadism. Here’s a transcript of the important stuff from the call. The bolding is mine.<\/p>\n

\u201cI don’t have any mutual funds with my financial advisor that I didn’t choose. Not because I’m Dave Ramsey, but because that’s what we teach people to do. Your financial advisor’s job is to be a teacher and say, \u2018Here’s some things you could do . . . here’s the historical data on this mutual fund and it’s one I might look at if I were you.’ And you go, \u2018Yeah, I like that,’ and I’m going to make the choice to make the purchase, based on having performed. Then if it doesn’t perform, I made the choice, not him. And it was just a miss. Because you picked some funds that, if they’re aggressive growth they ought to be outperforming the S&P substantially. Unless there’s some kind of, I don’t know what you picked, but I mean you could be in all kinds of sector funds or something else I don’t know what else you got into.<\/p>\n

But I want you to know what you’re doing\u00a0 . . . You’ve heard of these sports figures that lose everything? Like they make $10 million and then they’re broke or something? It’s because they turn it over to some guy and say, \u2018My guy is handling it,’ and they don’t even look at it. It turns out in that case the guy is a scam artist or whatever or he’s a doofus. One of the two. I think the guy just handed you some mutual funds, half-looked at them and you half-looked at them and you all chose poorly is what it sounds like. So, what I want him to do is to take up a new position if you’re going to keep him, I probably wouldn’t, and that is to have the heart of a teacher. And what I want you to do is not look for a babysitter but to have the heart of a teacher.<\/p>\n

You can go buy a Vanguard S&P and throw it all in there, and you would have made 17% [so far in 2025]. That’s called passive investing. What you’re paying [your advisor] to do is to show you mutual funds that are outperforming the S&P and then you decide if you think they’re going to continue to do that. I buy mutual funds through my investment advisor. There [are] 8,000 mutual funds. I grew up in this stuff, and I’m not going to comb through all that crap. That would drive me nuts. I’m not that big of a nerd. So, I call him up, I’m like, \u2018Hey, find me four funds in this category that are outpacing the S&P because I want to put some money in that area.’ Or in the case that you follow the Ramsey recommendations for your 401(k), put 1\/4 in growth, 1\/4 in aggressive growth, 1\/4 in international fund, and 1\/4 in growth and income. I would put 1\/4 in each in my retirement, and I want all three of those over a 10-year period of time to have outperformed the S&P. They’re hard to find, but you can find them. They’ve got the software to pull that up. And they pull up three or four, and we look at them together and we go OK, \u2018Which ones of these do we think . . .’ and then we talk about it together and then we make the choice together. I’m not paying him to be a stock picker. I’m paying him to help me manage my money.<\/p>\n

You manage your money with the help of an advisor, and yes you can outperform the market if you do that.\u201c<\/p>\n

Rachel Cruze (his co-host and daughter) then chimed in, saying, \u201cPeople aren’t wanting financial advisors; they’re just wanting to go and invest themselves, opening a Vanguard.\u201d<\/p>\n

Dave continued:<\/p>\n

\u201cThe S&P 500, the Bogleheads have been around forever, that’s not new . . . You don’t need a [financial advisor] to get in the space; you need one to maximize the space . . . People that have a financial advisor have a higher likelihood of staying in when Trump burps and the market goes down. They stay in. And the people that stay in are the ones who make money. And they have a higher probability of picking better mutual funds because they’re learning. Your SmartVestor Pro on RamseySolutions.com has to have the heart of a teacher, or we won’t put him or her in there. Most of them make a percentage of the amount under management. They usually get 1% or so. That’s about what they get paid. So, they need to be doing something that outperforms by 1% the market. Otherwise, they’re not worth their money, so to speak. So, you get in that.<\/p>\n

Bogle started Vanguard, and they’re called Bogleheads. His premise was correct\u2014he was a genius\u2014was that the S&P 500 outperforms more than half of the mutual funds. If you just go blindly pick a mutual fund, you would have been better off to pick the S&P 500. [That] was his point. And he started a no-commission, no-load S&P 500 at Vanguard, and it’s the famous thing in the stock market history. People say, \u2018I’m not going to think about this; I’m just going to dump it into S&P 500, and I’ll at least make what the stock market makes and I’ll outperform more than 50% of the mutual funds by doing that.’ Those are called Bogleheads, and they’re not new just because TikTok came along . . . I’ve heard Dave Ramsey is a crook for 35 years because I’ve told people not to do that and go pay a commission to outperform Bogleheads. And Dave Ramsey’s not a crook; I’m a genius.\u201c<\/p>\n

Performance Doesn’t Persist<\/p>\n

The first thing we need to do here is to point out the biggest thing that Dave Ramsey is getting wrong and what the Bogleheads get right. Dave is saying, \u201cFind some mutual funds that have beaten the stock market for the last 10 years and decide if you think they can keep doing that, and if so, buy them.\u201d It seems reasonable that a fund that has beaten the market for many years will keep beating the market, right? That might be reasonable and intuitive, but it isn’t true.<\/p>\n

The Bogleheads know that because Bogle knew that.<\/p>\n

It turns out that if you look at mutual funds, the only performance that reliably persists is poor performance. A 2020 paper<\/a> from Choi and Zhao concluded that \u201csignificant performance persistence does not exist in the 1994-2018 period.\u201d A graph from a Morningstar study makes this concept crystal clear.<\/p>\n

\"\"<\/a><\/p>\n

This graph says that if a mutual fund is in the top quartile (25%) of its category, it has a 29% chance of being in the top quartile in the next three months. But by the time you’re a year out, its chance of being in the top quartile is 25%. Ask yourself how many funds should, by sheer random luck, still be in the top quartile? The answer is 25%. So, even 29% isn’t very impressive. If performance persisted, that number should be 90%+, right? Not 29%, much less 25%. And at 3-5 years, it’s actually BELOW 25%.<\/p>\n

More information here:<\/p>\n

Why Performance Chasing Is an Investing Error<\/a><\/p>\n

How Our Portfolio Performed in 2025 (Including Real Estate!)<\/a><\/p>\n

90%+ of Actively Managed Mutual Funds Underperform an Index Fund Long Term<\/p>\n

Dave accurately says that more than 50% of mutual funds underperform an appropriate index. That’s true. What he doesn’t say is that it’s only a little more than 50% in the first year. As the years go on, that number becomes more than 90%. Now, you’ve got to ask yourself if you feel lucky, punk?<\/p>\n<\/p>\n

\"\"<\/a><\/p>\n

Want to see how lucky you need to be? Let’s take a look at the latest SPIVA data<\/a> (you don’t actually need the latest; it looks the same every year.)<\/p>\n

\"\"<\/a><\/p>\n

Look at that column on the far right. What it is telling you is that 85%-98% of actively managed funds in a given category underperformed the index over 20 years. That number is before taxes and before fees. Since actively managed funds typically have higher turnover, their tax cost is higher. And advisory fees have to come from your return; there’s nowhere else for them to come from. Sure, it seems reasonable to try to pick a fund that can beat the index for a year or three. But for 20+ years? I’m not going to bet that way when the index return is essentially guaranteed with an index fund.<\/p>\n

The hard part is not finding funds that beat an index in the past. The hard part is finding the ones that will beat it in the future. It turns out that neither past performance nor financial advisors helps with that task. Your best bet is actually to just choose the cheapest funds you can. Low costs are a better predictor of long-term performance than past performance.<\/p>\n

The Role of an Advisor<\/p>\n

Dave is also wrong about the role of a financial advisor<\/a>. Plenty of people get this wrong. If you think the job of your financial advisor is to beat the market, much less beat it by 1%+, you’re going to hire the wrong advisor. You’re going to mistakenly hire somebody who you think will beat the market in the future. Don’t you think if it were easy to beat the market that the mutual funds would hire somebody to do it with their billions? Surely the person who can do it isn’t the person trying to get you to let them manage your $500,000 portfolio.<\/p>\n

The role of an advisor is to make sure your investing plan is reasonable, help you stick with it, and mostly help you get the financial planning stuff right. Dave is right, however, that if the advisor can keep you in the market when you would otherwise bail, they’re probably well worth paying whatever you’re paying them.<\/p>\n

What Else Does Dave Ramsey Get Wrong?<\/p>\n

Dave’s biggest \u201cwrong\u201d<\/a> is that he doesn’t discuss (or maybe doesn’t see) nuance. Personal finance has plenty of nuance. The problem is that nuance is confusing. Maybe it’s confusing to Dave, I don’t know, but it’s definitely confusing to much of his audience. Maybe it’s better to just leave it out. Maybe it’s better to be mostly right and very simple than to be 100% right and so complicated that nobody does it.<\/p>\n

Dave is anti-debt all the time. That leads to some very interesting discussions. One of my favorites was when the show went directly from a segment celebrating an OB-GYN paying off $300,000+ in student loans in 16 months to a segment telling a pre-med not to go to medical school because she couldn’t pay cash for it. It was a wild juxtaposition.<\/p>\n

More information here:<\/p>\n

Physicians Quick-Start Guide to Personal Finance<\/a><\/p>\n

Your Crystal Ball Predictions for 2026<\/a><\/p>\n

What Does Dave Ramsey Get Right?<\/p>\n

If Dave Ramsey gets all that wrong, what does he get right? He actually gets all the important things right, but the Bogleheads don’t give him nearly enough credit for that. Dave frequently says that the way you get more money in your retirement accounts<\/a> is to put more money in your retirement accounts. Absolutely right. Compared to that, choosing an index fund over an actively managed fund is actually pretty small potatoes.<\/p>\n

Dave focuses mostly on behavior, not math. Personal finance is both personal and finance. But the behavior part is probably 90%, and the math part is probably 10%. Bogleheady engineer types tend to focus way too much on the math part and not nearly enough on the behavior part. That’s probably fine for them. Their behavior is fine for building wealth. In fact, it’s probably overly fine, and they’re all going to be the richest cheapskate in their graveyard.<\/p>\n

They assume the behavior part is easy. It’s not easy. It’s the hardest part. Dave recognized that long ago. I don’t know that he’s the genius he claims to be (Bogle certainly never claimed that), but if he is, he’s a genius at getting people to change their behavior and financial relationships.<\/p>\n

The Bogleheads give Dave a lot of crap for recommending commissioned advisors (or now apparently a bunch of people who charge AUM fees). I’ve got news for you. A good full-service (planning and asset management) financial advisor costs $7,500-$15,000 per year. How many people in Dave’s audience can pay that as a flat fee? Few, if any, of them.<\/p>\n

Financial advisors only work for rich people or people who will soon be rich. Most people who will serve the middle class and below are not charging flat fees. They charge commissions (loads) and tend to give conflicted advice. Maybe it’s better than what those folks will do on their own, maybe not. If they are fee-only, they probably charge an AUM fee (like most fee-only advisors). The advice will be much less conflicted.<\/p>\n

Bogleheads don’t like AUM-charging advisors because Bogleheads tend to be wealthy, and they say that 1% of $5 million = $50,000 per year is a rip-off. But 1% of $200,000 is $2,000 a year, a total steal for a financial advisor if you’re actually getting comprehensive, solid advice (which you’re probably not, because no one can afford to give it for that price).<\/p>\n

Dave also gets it right that you don’t want to hire a financial advisor to pick stocks for you and that Bogle really did something pretty amazing, even if he doesn’t seem to quite understand exactly what that is.<\/p>\n

Like anything out there (including this blog), take what you find useful and leave the rest. Don’t expect perfection from anything or anybody, including yourself.<\/p>\n

What did you think of this Ramsey Show segment? Why doesn’t Dave \u201cget\u201d index funds? How much nuance is important when teaching financial stuff?\u00a0<\/p>\n

\u00a0<\/p>\n

The White Coat Investor may receive compensation from White Coat Insurance Services, LLC; licensed in all states including MA and DC; CA license #6009217; NY license #1758759 (exp. 6\/2027); Registered address: 10610 S. Jordan Gateway, #200 South Jordan, UT 84095. This does not affect the cost or coverage of insurance.<\/p>\n","protected":false},"excerpt":{"rendered":"I’ve been a Boglehead since 2004. I’ve been listening to the Dave Ramsey Show from time to time…\n","protected":false},"author":2,"featured_media":528399,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[14],"tags":[48499,84,4176,4517,48500,4174,4175,4767,56,54,55],"class_list":{"0":"post-528398","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-personal-finance","8":"tag-attending-physician","9":"tag-business","10":"tag-finance","11":"tag-mutual-funds","12":"tag-new-attending-physician","13":"tag-personal-finance","14":"tag-personalfinance","15":"tag-stock-market","16":"tag-uk","17":"tag-united-kingdom","18":"tag-unitedkingdom"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts\/528398","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/comments?post=528398"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts\/528398\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/media\/528399"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/media?parent=528398"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/categories?post=528398"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/tags?post=528398"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}