The following video covers the three reasons why I am not a big fan of Dave Ramsey’s advice on mutual fund diversification. While I disagree on this topic, I strongly agree with Dave’s programs for helping you manage your budget and become debt free.
1) Dave says put money equally into a growth fund, aggressive growth fund, growth and income fund and an international fund. But, all of these are stock funds, which is a high-risk choice.
2) Dave suggests that you buy actively managed mutual funds. But these pay commissions to financial advisors. For better returns, no cost no load index mutual funds are Brian’s preference.
3) With Dave’s recommendations, your portfolio is probably not as truly diversified as you think.