Why does Dave Ramsey say not to invest in ETFs?

Dave Ramsey discourages ETFs primarily because their intraday trading encourages frequent buying/selling (overtrading), which goes against his buy-and-hold philosophy, leading to potential short-term capital gains taxes and less compounding, plus he favors long-term index mutual funds for easier automatic investing and less temptation to trade, often through his recommended commission-based brokers. He believes ETFs' stock-like trading can trigger emotional decisions and fees, making long-term investing harder for beginners, although many argue ETFs offer more choice and lower costs.

What does Dave Ramsey say about EFT?

One of the biggest reasons Ramsey cautions investors about ETFs is that they are so easy to move in and out of. Unlike traditional mutual funds, which can only be bought or sold once per day, you can buy or sell an ETF on the open market just like an individual stock at any time the market is open.

Why shouldn't you invest in ETFs?

ETFs aren't inherently "bad," but they have drawbacks like market risk, where they still fall with the market they track, potential for trading too often, tracking error, and risks in niche products (like leveraged ETFs or synthetic ETFs). They can suffer from low liquidity, concentrated sector bets, and a lack of control over underlying holdings, plus potential for price discrepancies from their net asset value during volatile times. 

What did Warren Buffett say about ETFs?

Warren Buffett strongly recommends low-cost S&P 500 index funds or ETFs, like the Vanguard S&P 500 ETF (VOO), as the best investment for most people, emphasizing simplicity, diversification, and long-term holding to beat the market over time, even outperforming professional money managers. He famously outlined this in his will, advising his wife's trustee to put 90% in a low-cost S&P 500 fund. 

Do billionaires buy ETFs?

With all that said, billionaires are currently betting on a BlackRock exchange-traded fund (ETF) that Wall Street analysts say could soar.

What Dave Ramsey Doesn't Like About Investing In ETFs

What if I invested $1000 in S&P 500 10 years ago?

If you invested $1,000 in the S&P 500 ten years ago (around late 2015/early 2016, based on 2025 articles), your investment would have grown significantly, potentially turning into roughly $3,300 to over $4,000, depending on the exact timing and if dividends were reinvested, demonstrating strong compounding and an annualized return often around 12-15% for that strong decade. 

Are ETFs money traps?

Most ETFs don't live up to the hype—many are expensive, illiquid, or overly complex, making them money traps. To avoid these pitfalls, focus on ETFs that are low-cost, highly liquid, and track broad, well-known indices.

What ETF does Buffett recommend?

Warren Buffett primarily recommends ultra-low-cost S&P 500 index funds or ETFs, specifically endorsing the Vanguard S&P 500 ETF (VOO), as the best investment for most people, even suggesting a 90% VOO / 10% Treasury bill ETF mix for his wife. He champions simplicity, diversification, and low fees, making VOO (or similar S&P 500 trackers like SPY) a core part of his advice, though some interpretations suggest other ETFs like the Vanguard 0-3 Month Treasury Bill ETF (VBIL) for the bond portion or even "Wide Moat" ETFs (MOAT) for broader quality exposure. 

What is the 4% rule for ETF?

The 4% rule is a retirement guideline: withdraw 4% of your initial savings the first year, then adjust that dollar amount for inflation annually, aiming for your money to last 30 years, often using a diversified portfolio including ETFs for simplicity and broad market exposure. While simple, its effectiveness with ETFs depends on the portfolio's asset mix (like a 60/40 stock/bond blend) and market conditions, with newer dividend-focused ETFs or customized strategies potentially offering alternatives for longer retirements or different income needs.
 

What are the 4 funds Dave Ramsey recommends?

And to go one step further, we recommend dividing your mutual fund investments equally between four types of funds: growth and income, growth, aggressive growth, and international.

Is Dave Ramsey a Trump supporter?

He has blamed politics for what he considers Americans' economic dependence, and has said presidents should do "as little as possible" about the economy. Ramsey supported Donald Trump in the 2024 United States presidential election.

What is Dave Ramsey's 8% rule?

Dave Ramsey's 8% rule is a retirement withdrawal strategy suggesting retirees can safely take 8% of their portfolio's starting value annually, adjusted for inflation, by investing 100% in stocks, assuming high average market returns (around 12%). It's a controversial method, contrasting with the traditional 4% rule, as it relies heavily on consistent double-digit market gains and carries significant sequence of returns risk, meaning poor early market performance can deplete the fund faster, making it riskier than diversified approaches.
 

What ETFs does Dave Ramsey own?

Dave Ramsey ETF Portfolio

• 25% Growth Stock Mutual Fund (e.g., Vanguard Growth Index Fund)
• 25% Growth and Income Mutual Fund (e.g., Vanguard Windsor Fund)
• 25% International Mutual Fund (e.g., Vanguard International Growth Fund)
• 25% Domestic Stock Mutual Fund (e.g., Vanguard 500 Index Fund)

What is the 70/30 rule ETF?

The 70/30 rule in ETFs refers to an asset allocation strategy, typically investing 70% in growth assets (like stocks/equity ETFs) and 30% in stability assets (like bond/fixed-income ETFs), balancing growth potential with risk, often suited for younger investors or those with a higher risk tolerance. It can also mean 70% developed markets (e.g., MSCI World) and 30% emerging markets (e.g., MSCI Emerging Markets) for global diversification. Investors use ETFs to easily achieve this split, often through a single fund or by combining specific equity and bond ETFs, following general guidelines like subtracting your age from 100 or 110 to find your stock percentage. 

Does Suze Orman like ETFs?

“Those two ETFs, if you were to invest, especially if you were to dollar-cost average into them, in the long run, I think they will make you far more money than anything else that you could be invested in,” Orman said.

Did Warren Buffett dump his ETFs?

Between Buffett dumping Berkshire's S&P 500 ETFs and other stocks, his retirement, plus his growing cash pile, investors may worry he's anticipating a near-term market crash.

What is the 70/30 rule Buffett?

The "Buffett Rule 70/30" usually refers to two different concepts: either his early investment split in 1957 (70% stocks, 30% corporate "workouts"/special situations) or a modern interpretation for general investors (70% stocks, 30% bonds/cash), though he also famously suggested 90% S&P 500 index funds and 10% short-term bonds for his wife's portfolio, emphasizing long-term, diversified, low-cost investing over complex rules. While the original split involved specific event-driven investments, newer interpretations focus on balancing growth (stocks) with stability (bonds/cash) based on risk tolerance, with the 70/30 ratio often seen as suitable for younger or more aggressive investors.
 

What is the 3:5-10 rule for ETF?

The 3-5-10 rule for ETFs refers to regulatory limits under the Investment Company Act of 1940 for "fund of funds" arrangements, restricting one fund (Acquiring Fund) from investing in another (Acquired Fund): no more than 3% of the Acquired Fund's shares, no more than 5% of the Acquiring Fund's assets in any one other fund, and no more than 10% of the Acquiring Fund's assets in all other funds combined. While not a direct investor guideline, some use a similar heuristic for expense ratios (3%), tracking error (5%), and turnover (10%), but the regulatory definition is the formal meaning. 

Why avoid ETFs?

ETFs aren't inherently "bad," but they have drawbacks like market risk, where they still fall with the market they track, potential for trading too often, tracking error, and risks in niche products (like leveraged ETFs or synthetic ETFs). They can suffer from low liquidity, concentrated sector bets, and a lack of control over underlying holdings, plus potential for price discrepancies from their net asset value during volatile times. 

Is there a downside to ETFs?

ETF disadvantages include potential tracking errors (not perfectly matching an index), liquidity issues for less popular funds (wide bid-ask spreads), market risk, and the inability to personalize investments like a single stock, plus trading costs and potential capital gains distributions, all while sometimes underperforming top individual stocks within the fund, says Invesco, Fidelity, and Investopedia.
 

How to turn $10,000 into $100,000 fast?

To turn $10k into $100k fast, you need high-risk, high-reward strategies like starting a scalable business (e-commerce, courses), aggressive stock/crypto trading, or creative real estate, as traditional investing takes years; however, investing in skills to boost income offers high, quicker returns, but it requires significant effort, risk tolerance, and a strong understanding of the chosen market. There's no guaranteed shortcut, so be wary of scams promising instant wealth. 

What is the 7 5 3 1 rule?

The 7-5-3-1 rule is a financial framework for Systematic Investment Plan (SIP) investors, guiding them with 7 years for compounding, diversifying across 5 investment categories, preparing for 3 emotional market phases (disappointment, irritation, panic), and increasing SIPs by 1 step (e.g., annually) for long-term wealth creation. It promotes discipline, patience, and risk management, helping investors stay committed to their goals despite market volatility, notes Bajaj Finserv AMC and The Economic Times.
 

What if I invested $1000 in Coca-Cola 20 years ago?

Investing $1,000 in Coca-Cola (KO) stock 20 years ago (around early 2006) would have grown to roughly $6,000 to $8,000 today (late 2025/early 2026), including reinvested dividends, with returns significantly boosted by consistent dividend payments, though it would have underperformed a broader S&P 500 investment over the same period. Your total value would depend heavily on whether dividends were reinvested and the exact purchase date, but it would provide substantial income and stable growth as a "Dividend King".