Dave Ramsey: How To Invest For Beginners #Finance

you guys know by now that i’m a firm believer that the borrower is slave to the lender because your most powerful Wealth Building tool is your Income and when you haven’t committed your Income in the form of payments to

everybody else you can invest it and become wealthy really the average car payment in america today is 503 dollars that’s just cray-cray that’s nutty if you invest 500 in a decent growth stock mutual fund from age 30 to age 70 you’ll have over 5 million dollars that one thing will

make you worth 5 million isn’t that amazing and so i’ve become known for getting people out of Debt and it changes your life it changes your family tree it changes your retirement you retire with dignity you don’t have to buy that cookbook 72 ways to prepare alpo

and love it but you have to do it on purpose and getting out of Debt in order to invest is the shortest way and what is amazing to me is that almost the entire financial industry focuses on one part of the equation and that’s the investing part of the equation and they all

have a bunch of theories now i’ve had all the letters and licenses after my name i have a degree in Finance i’ve had all the licenses in the business it is

amazing the number of people in the financial world whether they’re financial advisors writers bloggers whatever they do that have opinions about money that don’t have any money and whose track record on teaching people to invest in getting them to invest sucks three percent of the

public is where all of those people make their money off wealthy people they make all their money off wealthy people and most of the advisors out there won’t fool with you if you don’t have some money they don’t want to sit down and talk to you and so we start teaching people of

course all these years ago how we invest and then as we’ve met with many many many thousands of millionaires over the years how did they invest what are they doing well we suggest and i personally invest in good growth stock mutual funds i spread it across four types growth and

Income growth aggressive growth and international and i buy mutual funds that have at least a 10-year track record well dave shouldn’t you just buy index funds well you can if you want index funds basically an s p 500 fund mirrors the market that basically is the

Stock Market and so you’re going to do exactly what the Stock Market does good or bad the mutual funds that i buy outperform the s p 500 and they’re really not that hard to find a lot of mutual funds don’t outperform the s p 500 so if you’re

going to buy that well that’d be dumb just buy an s p 500 but i buy mutual funds that outperform the s p 500 and my Portfolio mix that i just outlined as pretty much always beats the market because i buy funds that outperform the market it’s not that hard to do you open

up the prospectus and there’s two little lines on the graph one of them is the s p 500 if the mutual fund you’re looking at if that line is below that s p 500 line don’t buy that bun this is hard really not that much to this but dave you just tell people buy those loaded funds

yeah they’ll pay a commission that’s fine have somebody in your life helping you do the investing all the data says that you’ll continue to invest doing that but when you out there by yourself with all your theories and some idiot newscaster comes on the evening news predicting

the end of the world what do you do you cash out all your mutual funds at exactly the wrong time because you don’t have anybody in your corner saying don’t jump don’t jump instead you’re just out there with your own emotions in the newscaster and that’s how you pick

out when you jump in or out of the market and that’s just dumb so all the data says a decent Portfolio of good performing mutual funds wins and the big thing is actually putting money into the mutual funds actually investing one piece of research shows that 74 of the reason

of retirement success is doing it it’s called Savings rate the number of you that put money in versus talk about it and continually put money in year after year year after year year after year month after month week after week out of your check into your 401k over and over

and over and over and over again this is how you get wealthy it’s ludicrous i know a lot about mutual funds and let me tell you i pick mutual funds about 80 percent of the choice on my mutual fund 85 is based on its rate of return its track record if the track record’s tied and

i’m trying to look i look for the longest track record who’s been doing it a long time i like neighborhoods with big oak trees when i’m buying Real Estate you see what i’m saying i like a long track record something stable i don’t like risk i like to

make money risk equals not making money for me big risk anyway we said spread it across four types growth and Income growth aggressive growth and international let’s talk about those for a second because there’s all kinds of names for mutual funds and the name of the

mutual fund tells you what is in the fund okay a growth and Income fund is also called a large cap fund sometimes also called a blue chip fund now the blue chip is the most expensive chip on the poker table so that means these are big companies in this large cap is short for large

Capitalization large Capitalization means these are large companies and so your growth and Income funds are large companies boring of the four types of mutual funds that i put money into and i recommend this is the calmest if you were to chart this

volatility on this fund versus the Stock Market you would see it’s a lot calmer than the market and so it’s your friend when things are going down in other words it’s your stable it’s the big old dinosaur companies they’re boring when things are going

up by the way it’s also boring it’s not exciting when things are going up it’s a downer you look at that thing going why is it not doing well when the rest of the market’s going up because it goes slower than the market up and slower than the market down because it’s a

stable land a growth fund is right in the middle the s p 500 index fund would be considered a growth fund a growth fund is companies that are growing they’re kind of medium-sized companies so you might hear it call mid cap fund these are just standard growth stock mutual funds there’s a

whole lot of these out there ton of funds that fall in this area the idea is pretty simple the growth fund that’s kind of right there in the middle you want something in the middle it’s pretty much going to do about what the market does in terms of volatility but you can get mutual

funds that are growth stock mutual funds that outperform the s p 500 you can even get growth in Income funds even though they’re not as volatile that outperform the s p 500 then there’s the aggressive growth fund this is the wild brother okay it’s the crazy one

and so you might guess it’s going to be also called a small cap funds these are the small companies the startups a lot of tech companies would fall into there very crazy all the fun weird stuff is in there and that means some of it fails and goes to zero and so it’s a crazier mix

it’s gonna be much more volatile than the Stock Market is so it’s gonna go up faster than the market goes up but it’s going to go down faster than the market goes down small cap aggressive growth stock mutual funds also known in there as a merging market you would

call it that too as well international funds means that the stocks in it are overseas companies they’re not american companies it has a kissing cousin called a global fund if you think of a globe what is it it’s everything so that would have international and u.s companies in a global

fund and it would be a cousin to an international by the way american companies generally outperform other international companies by and large as a group and so your international fund will be your worst performing of the four over the last several decades and a global fund will outperform an

international fund because you put some spice in there you put some american companies in there usually and so they’re a little bit better but at least you got some stuff overseas you’re not a hundred percent betting on the american economy not that i’m anti-american i am not this

is not a patriotic thing this is a diversification thing and so you know you want to have some bmw and some mercedes in there you want to have some lg and some other stuff even though some of those things are made stateside those are foreign companies and so you look for companies that are overseas

based could be a french company could be whatever that are in an international fund and then you spread your investing across those four types very simple here the thing is do it that’s the thing everybody talks and talks and talks and talks and talks about investing the problem is nobody

does it people we talk to on the millionaire theme hour that are millionaires you know they got to be millionaires they did it and they never want to ask them how they became millionaires they never say oh man i hit the home run they never say that because it never happens oh dave i hit the home

run i got this mutual fund that went straight up and i made all my money and one goodbye you know my golfing buddy gave me a stock tip i don’t meet millionaires that did that i hear stories about it but a golfing buddy with a stock tip is like a golfing buddy with a fishing story the one that

got away i mean it’s just everybody’s got an opinion and it’s all a bunch of crap and so you just have to really stop and go slow and steady actually investing is the way it’s the way it’s the only way to go so growth and Income growth aggressive

growth international don’t chase the returns do not invest money in things you do not understand people get ripped off when they invest money in things that someone told them is good and they trusted the person instead of knowing what the flip they were doing you know all these athletes you

read about the nfl stars and they lost 10 million dollars or they made 100 million dollars and it’s all gone and you know you know how they lose their money because they give it to someone else to handle and they don’t even look at it and then they’re shocked to find out that

person was a crook that’s how you lose your money it’s your money it’s like it’s your kids which means you have to make it behave it’s like you have to make your kids behave you have to do that if you want good kids that’s how it’s going to happen if you

want money that’s how it’s going to happen you have to understand it now you don’t have to have a master’s degree in Finance this stuff is not rocket

science it is really not that difficult you really really seriously have to do this and you have to understand what the money is going into do not put money in that’s why when you’re buying Insurance when you’re getting a mortgage doing your investing in mutual

funds that’s why when you do all of that that you have to understand what you’re doing and the only way you’re going to do that is when you’re picking someone to help you in one of those areas you’re doing your estate plan if it’s complicated you’re doing

your Taxes if they’re complicated that kind of thing you need someone sitting on the other side of the table that is not a salesperson but they have the heart of a teacher not the heart of a salesperson i’m an easy sale once i understand something but until i understand

it i’m not putting a dime in it i’m not going forward with this it’s that simple