Financial Advisor Told Me To Invest Instead Of Paying Debt



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40 Comments on “Financial Advisor Told Me To Invest Instead Of Paying Debt”

  1. FOR YEAR I WAS A STAY HOME PARENT, AT THE SAME TIME I WAS GOING TO COLLEGE, COUPLE YEARS AGO I GRADUATED AND MY CHILDREN MOVED OUT. NOW IM READY TO WORK AND LOOKING FOR JOB BUT I CAN'T FIND ONE THAT PAYS MORE THEN MINIMUM WAGE BECAUSE OF LACK OF EXPERIENCE. SO HERE IM STOCK WITH $45K IN EDUCATION IN DEBT AND DEFAULT AND WITHOUT A JOB.

    I KNOW I HAVe TO PAY THE DEPT
    I KNOW I SHOULD GET ANY JOB
    MOVE to a bigger city (IT'S IMPOSSIBLE)
    and I CAN't AFFORD TO GET ANY PAYING JOB

    ANY ADVICE THAT I DON'T KNOW?

  2. What blows my mind is how you don’t have millions of subscribers. Then you go look at channels, while entertaining, provides nothing for your life With 10+ million subs. Anyway love your show!

  3. Dave you act like a super smart guy. Well, in this case – you are dumb. You should at first ask about cash flow and how much other assets do they have. And what is their experience with investing. Not just say this stupid note as – Fire him! Very unprofessional attitude. If the guy is ok with cash flow and has other assets, absolutely he should put money somewhere to invest. Also it depends on where he should need those money.

    You didn't know anything about his situation, acted like god and gave me advice.

  4. this video makes me so happy. I just had this conversation with my boss, but I knew I watched a video with Dave shooting the argument for investing instead of paying down debt. My boss just said his financial advisor told him it doesn't make sense to pay down debt, like a mortgage, that is only at 3.5% when the market can get much better returns. I didn't know how to answer, but just texted this video to my boss. Well see what he says. Love the videos, watch them all the time.

  5. Woooooow. Ramsay is totally wrong. So wrong. If the car note costs 3% and you earn 6% in the market (which is low) you net 3%. The same principal (leverage /borrowing) is what has made Buffet such a successful investor.

  6. There is also a huge psychological issue with debt. It is easy to concentrate on paying off debt, much harder to save and invest. The human factor of the emotions is where Dave is correct. The math shows a little more made going the investment route, not paying off loans. The reality is, psychologically the debt is easier to pay off.

  7. it works as long as the investment outperforms the debt. However, the debt is certain and the investment has inherent risk. In theory, you can 'win', but its risky behavior.

  8. NO DOUBT DAVE's METHODS WORK. THEY ARE JUST PAINFUL AND SLOW. I WOULD SAY IF YOUR INVESTMENT HAS A HIGHER RETURN THAN YOUR DEBT; Then Certainly, please invest. Just do proper research and projections…..HIGHER NET-WORTH sounds more attractive than being DEBT FREE in my books

  9. Don't agree with Dave on this. For one thing, he never asks what the interest on the guy's loan interest rate is at. If he has good credit it may be a s low as 2% (My current car loan I have myself is 2.1%). So, the stock market does 7-8% returns historically, they will easily beat out that low interest rate. If the guy has bad credit, and he has a much higher interest rate, he would be wise to pay it off as soon as possible.

  10. No Dave, the reason it clicked when you presented the scenario backwards is that people are more likely to say no if they have to give something up (hypothetical equity in a car) as opposed to facing a risk to lose something that they don't have (theoretical bad returns on invested future income).

  11. I'm not going the whole arguing route like a lot of folks have in these comments but I will share my thoughts and real life example on what seemed to be the right move for me. I recently paid off a vehicle after financing it for 3 years. I didn't make a single extra payment and ended up paying a little under a thousand dollars in interest over the life of the loan. The total financed amount was around 28K at 2.25 from my credit union. I had the money in the form of stocks to pay for this vehicle in full the day I purchased it. I chose to leave my 28K in my brokerage account and finance the vehicle. If I would've paid cash for the vehicle the day I bought it, I would've lost about 20K over the last 3 years as opposed to saving a grand in interest charges. Over the last 3 years I averaged about 21 percent return on those investments. If I was to have paid cash and then started making the roughly 800 dollar vehicle payment back into my stock account it would be worth about 3100 over the last three years considering it made the same 20-21% return. It's good to be debt free but I can't see for me personally removing that much money out of the market to buy something like a vehicle. That's my 2 pennies worth. Anyone else have any similar financing/investing example like mine?

  12. A few things here: 1. The caller is probably simplifying what his adviser told him. 2. He is right the financial analysis comparing rate of return on investment to rate being paid on debt needs to be risk adjusted. 3. He is totally wrong that you are not ready to invest until you have all of your debt paid down. By that logic no one should ever invest while they have a mortgage (which are usually 15-20 years). 4. He it totally wrong about waiting to buld an emergency fund until debt is paid off. The emergency fund should be used to to pay expenses in the case of unemployment, and or unforseen expenses. What are you going to do if that emergency arises before the debt is paid off, default on the debt? Go insolvent?

  13. well investing in mutual funds is pretty solid at 7% interest return. His math makes since to make money investing with a car loan. I dont understand all the risk dave is talking about though. Is it that risky investing in mutual funds? Or risky having a car payment? I dont follow

  14. you say debt is bad but how did you finance your house America is built on DEBT I've MADE MORE MONEY WITH MY REAL-ESTATE LOAN THEN anyother investment

  15. Same goes with Credit Monitoring. I have been working like a dog to pay off debts. Just paid off one credit card with 761$ balance. I get a notification that I paid off a balance. cool right?
    then it shows my credit score went down 23 points.

  16. This planner overlooks the psychological issue of paying off your debt. How bad would you feel if you skipped paying the debt and took a big drawdown on your investment. Once you get debt free life gets much simpler with much broader options. Just my 2 cents

  17. Now the caller shouldn't completely stop investing in the market just because he's paying off debt. There's a structured way to pay off debt. Would Dave Ramsey suggest pulling money out of your 401k or IRA to pay off a car loan? Hardly. And if he suggested it I would call him an ignoramus. But the so called Planner in Austin is not counting on the client getting a 1099 every year and paying taxes on the gains of his investment.

  18. Brian's "financial advisor" is not moronic, he's smart if he convinces uninformed clients who hand over their money to "invest" at 6% and maintain their loan debt at 3%, only because the "advisor" gets a commission for doing so. Unethical, but still smarter than the client who falls for it. There are so many unscrupulous persons who claim to be experts in EVERY field, especially in the financial and medical industries. All ripoffs.

    But have you ever had a financial advisor ever actually tell you WHAT that risk factor is, in real math numbers, when asked point blank? No.

  19. This interaction is asinine, not the supposed suggestion of the caller's adviser. Let's put it this way: If the caller could borrow money with an interest rate of 3%, and invest in a low-risk security with fixed-income yield of 4.5%, by what mathematics or soul-searching would the manoeuver be idiotic?

    Dave Ramsey's encouragement for people to consider their finances is appreciable. His outlandish, egomaniacal, dogmatic disposition, however, is not.

  20. Plus, if my financial advisor is talking about 6% like that's something to be excited about, that's dumb too!

    You'd have made an average of a 6% annual return if you put your money in the day before the '08 crash and left it in there until today. The second worst financial disaster in American history, coinciding with THE WORST possible timing still gives you 6%. No, 6% does not excite me.

  21. I still don't get it. If someone is 25 and has 25k in student loans at 3-4% interest and starts paying off the loans aggressively, depending on their income it could take 4-5 years right?

    Wouldn't that person be losing out by not investing anything? If the person doesn't invest from age 25-30(bc he has to pay student loans) isn't he losing out on 5 years of compound interest that he will never be able to recover?

    From what I understand, it's not the same when someone invests $1000 at 25 compared to age 30 bc they have time on their side to help that money grow right?
    Is someone able to explain this?

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