Episode summary
What is the Dave Ramsey Portfolio?
Ask The Compound
· · Hosts: Ben Carlson, Duncan Hill
Summary
The hosts focus on practical portfolio questions around outperformance, retirement spending, diversification, and college savings. On stock picking, they note that a surprisingly large share of S&P 500 names beat the index over both the 2016-2020 and 2021-present periods, but the bigger lesson is that mutual fund managers rarely keep winning once they have already outperformed. The host argues that buy-and-hold in individual stocks is probably a better bet than trying to jump in and out.
On retirement withdrawals, the discussion centers on the difference between a conservative “safe” rate and a more aggressive “die with zero” approach. The host says Bill Bengen’s updated work suggests 4.7% is the historical worst-case safe max, but that a retiree willing to take more risk might be comfortable closer to 7%, with flexibility to cut spending after bad market years or a recession at the start of retirement.
They also push back on the idea that the S&P 500 is always enough and on the idea that diversification is pointless. The host says the last decade has favored U.S. large caps, but that other decades have looked very different. On Dave Ramsey’s 25/25/25/25 fund mix, they see no major issue; the real challenge is sticking with an allocation and rebalancing. For 529 plans, they think de-risking five to seven years before college is reasonable, and they prefer doing it gradually rather than all at once.
Key takeaways
- About 41 S&P 500 stocks outperformed in both the 2016-2020 and 2021-present five-year windows, which the host says is higher than many investors expect.
- The host says mutual fund persistence is much worse than stock persistence, citing studies where only 2% of large-cap equity funds stayed in the top half over the next five years.
- For retirees who truly want to spend down to zero, the host says a withdrawal rate around 7% is a plausible but risky choice, while 4.7% is the historical safe max.
- The host says diversification matters because the U.S. has not always led global markets, even though it has dominated the last decade.
- On Dave Ramsey’s four-fund allocation, the hosts see no fatal flaw; sticking with the plan matters more than small tweaks.
- For 529 plans, the hosts think shifting out of 100% stocks five to seven years before college is reasonable, ideally in stages.
Notable quotes
“I think the takeaway here is just that buy and hold in individual stocks is probably your best bet”
“I think if if you really want to roll the dice, I think that's that's a pretty good spot to be in”
“the fact that the US has outperformed over the last 10 years, that doesn't happen all the time”
“I think this allocation is fine. I I think the biggest thing that matters with allocations”
How the episode opens
Welcome back to Ask the Compound, the show where you ask and we provide the answers. I am Ben Carlson. Let's say you have $3 million stashed away for retirement.
No heirs, no one to leave the money to. You want to spend it all and die with zero. What should your withdrawal rate look like?
How much should you spend each year? How much can you spend each year? We're going to answer these questions and more on the show today.
Stick around. All right, our email here is askthecompoundshow@gmail.com. Send in your questions if you're in the live chat on YouTube.
If you're in the live chat on Twitter, send us your questions there. We'll take them live. On today's show, we will be answering straight uh answering questions straight from our compound viewers about how many stocks outperform the market.
What should your spending rate be if you want to die with zero? How diversification works in practice? What do I think of the Dave Ramsey portfolio?
And then when should you begin diversifying your 529 account to spend for your kids college fund? Um, how much uh how much of an allocation to Beyond Meat does he recommend? Oh, for for my 529 plan?
No, no, no. For Dave Ramsey's portfolio. Yeah, negative 5%.
It's a put option. All right. Today's show is sponsored by Public.
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From the episode’s captions: roughly the first two minutes, lightly cleaned. Keep watching on YouTube →
Topics
- outperformance
- dying with zero
- beating the market
- dave ramsey investment strategy
- saving for college
Companies and tickers mentioned
- BKKT
- Public
- Bakkt Crypto Solutions
Watch the episode
Watch “What is the Dave Ramsey Portfolio?” on YouTube
Summary, takeaways and quote selection by Octagon. Quotes are short excerpts; the full conversation is in the episode.
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