Comments on: Dave Ramsey’s 7 Baby Steps: Step 4 – Invest 15% Of Household Income

By: Seth L.

Seth L. — Thu, 30 Apr 2009 21:44:49 +0000

I notice that the fine print recommends front-end load funds…would you please comment on that or show the math behind why you believe that to be the best way to go? Thanks!

By: * Dave Ramsey’s Baby Steps Explained

* Dave Ramsey’s Baby Steps Explained — Sun, 26 Apr 2009 18:05:48 +0000

[...] in a Roth 401(k) at The Dough RollerPersonal Finance 101 – Saving For Retirement at Simple MomDave Ramsey’s 7 Baby Steps: Step 4 – Invest 15% Of Household Income at Bible Money MattersBaby Step 5: College funding for [...]

By: D. Mead

D. Mead — Tue, 17 Mar 2009 18:22:41 +0000

A 10% return. Please tell me where that is? Plus I have to pay tax on it, and that does not count inflation. The Stock market in the last 100 years has given us 5.3%( according to Warren Buffett) ,,,10% is a dream,,,on 3-15-99 the Dow was at 9958, yesterday it closed at 7281 down 2677 in 10 years, please show me the no load mutual funds Dave always talk’s about that even broke even over the last 10 years…I am waiting

By: Travis R.

Travis R. — Mon, 09 Mar 2009 14:31:07 +0000

My only problem is not putting the money away, but deciding in what to invest in with Roth IRA!!

By: threadbndr

threadbndr — Mon, 23 Feb 2009 20:47:42 +0000

thanks for the follow up, guys. My gut agrees with you – more is better *G*

So spending a bit more time on this step ….. OTOH, the house is already paid for! (We never moved out of our ’starter’ home. LOL)

By: Peter

Peter — Fri, 20 Feb 2009 14:27:50 +0000

for me short term is 5 years – long term 10+ years. I know this past 10 year period hasn’t been a good one, but I don’t think that precludes future growth. An interesting article on this topic of long term/short term investing in the Chicago Tribune. Quotes:

“The returns from any particular period are an unreliable anchor for long-term return expectations”

“In its best 10-year period, the S&P 500 chalked up average annual compounded gains of about 20 percent. Over 20 years, returns have ranged from average gains of 18 percent to 3.1 percent.

Yet, some investors mistakenly believe that “average” stock market returns are the returns they can expect consistently. When they don’t, many abandon stocks and miss out on strong gains that often follow down periods.

The average historical long-term return for the S&P 500 index is about 10 percent a year. But the index rarely comes close to returning 10 percent any particular year.”

By: saintseven

saintseven — Fri, 20 Feb 2009 13:49:48 +0000

I think you should define short term and long term. By most financial gurus definitions, 1-3 years is short term. 7 years+ is long term.
Do you have any idea what the average annual return is of the stock market over the last 10years? Find out, and then think again about your long term expectations, especially if you are planning on managing your investments yourself.

By: Peter

Peter — Thu, 19 Feb 2009 17:12:56 +0000

I think for the short term, 10% may not be realistic. If you’re retiring soon, you may want to be looking into your options.

However, I’m in it for the long haul and I don’t think over the next 30 years 10% is unreasonable. I’m not one of those who think that the economy and the markets aren’t going to recover (unless our government keeps up its spending and bailout craziness.

By: Robert Brown

Robert Brown — Thu, 19 Feb 2009 16:54:23 +0000

Assuming 10% return on investments is a very optimistic assumption, especially in these times. 4-5% is more realistic. Robert Browns last blog post..Martin Lewis is better than Obama

By: Jeff Rose

Jeff Rose — Thu, 19 Feb 2009 04:51:08 +0000

I have to agree with Pete on this one. I wouldn't include it, especially if you can afford the 15%. Part of my reasoning is this: 1. It's very well possible that the company match could be reduced or disappear. I've had several clients that their employer has reduced the matching portion recently. 2. If you get used to the 15% and can swing it, then the extra 4% match will be icing on the cake. You'll hopefully be able to realize your financial goals much sooner than you ever imagined. Stick with it and good luck! Jeff Roses last blog post..2008 Tax Guide