"Shut Up and Invest": How Most Millionaires Got Rich by Copying Their Neighbor's Strategy

Dave Ramsey's Message: Stop Talking, Start Investing

Dave Ramsey has a clear message for Americans who spend hours debating mutual funds versus index funds online: stop talking and start investing. The personal finance personality shared his thoughts on what he sees as one of the biggest mistakes would-be investors make during a recent episode of The Ramsey Show.

A caller questioned Ramsey’s long-standing recommendation to split retirement savings across four types of mutual funds rather than simply buying an S&P 500 index fund. Dylan, the caller, claimed that Ramsey has referenced the strong long-term returns of the S&P 500, so why not recommend investors simply buy the index and call it a day?

Ramsey acknowledged that fewer than half of individual mutual funds in the growth mutual fund sector outperform the market, but argued that people should “shut up and invest” since people who invest end up with more money than those who don’t.

In Ramsey’s view, some people are stuck in analysis mode while their wealth-building years slip away. “You got a lot of people that have an opinion out there that have no stinking money,” he said.

100% of People That Invest End Up with More Money

Ramsey cited Vanguard founder John Bogle as saying that long-term market outperformance by active fund managers is the exception and not the rule. Still, he added that investors can still find mutual funds that outperform the market, with his preferred strategy being to own a mix of growth-oriented large-cap, mid-cap, small-cap and international funds that have demonstrated long-term success relative to their benchmarks.

And while he believes that approach can generate slightly better returns than the S&P 500, he emphasized that the real wealth gap isn’t between active and passive investors. It’s between those that do and don’t invest.

“100% of the people that invest end up with more money than those that don’t every time,” Ramsey said. That’s why he has little patience for endless debates over whether a portfolio earns 12% annually instead of 13%.

According to Ramsey, those discussions become irrelevant if someone never gets money into the market in the first place. Based on the National Study of Millionaires done by Ramsey Solutions, he says a lot of millionaires are just regular people who “picked out their mutual fund based on what the guy in the cubicle next to them was doing.” The key was they were investing and not just talking about investing.

Getting Started with Investing

For beginners, getting started can feel intimidating. There’s endless financial news, market predictions and stock recommendations competing for attention. The good news? You don’t necessarily need to become a full-time analyst yourself. Focusing on quality investments and getting help when needed can make the process easier.

Platforms like Moby can help investors sort through the noise and identify potential opportunities. Their team of former hedge fund analysts and experts spends hundreds of hours each week sifting through financial news and data to provide you with breaking stock recommendations. In a way, their research can become the backbone for building your own market knowledge.

Moby’s success speaks for itself. The platform’s stock picks have outperformed the S&P 500 index by about 11.9% over the past four years. Even better, Moby offers a 30-day money-back guarantee so you can see if the service is right for you. And if you sign up for Moby Premium, you get one free top-stock.

Keep Trading Costs Low

When it comes to investing, small costs can add up in a big way. A few dollars in trading fees might not seem like much today, but over decades of investing, those expenses can slowly chip away at your portfolio’s growth. Even legendary investor Warren Buffett has emphasized that investment costs matter.

“If returns are going to be 7 or 8 percent and you’re paying 1 percent for fees, that makes an enormous difference in how much money you’re going to have in retirement.”

Trading using discount brokers like SoFi can help you save thousands of dollars on commission fees in the long run. SoFi’s easy-to-use DIY investing platform lets you buy stocks, ETFs and more with no commission fees and no account minimums. The platform is designed for both beginners and seasoned investors, with real-time investing news, curated content, and the data you need to make smart decisions about the stocks that matter most to you.

Plus, for a limited time, you can get up to $1,000 in stock when you fund a new account.

Strategies for Getting Started

If you’re ready to put your money where your mouth is, here are some strategies for getting started:

• Start with your workplace retirement plan if you have one. A 401(k) can be one of the easiest entry points into the market for new investors, especially if an employer offers matching contributions.
• Automate your contributions to take the emotion and guesswork out of investing by allowing your money to work in the background.
• Consider low-cost index ETFs tracking the S&P 500, which provide exposure to hundreds of companies without the higher fees often charged by actively managed funds.
• Focus on diversification by spreading investments across different asset classes and sectors instead of concentrating everything in a single investment.
• Consider your retirement age to determine the right mix of investments based on your timeline, financial goals, and comfort with risk.

Consulting a financial advisor can pay off. Research from Envestnet shows that those who consult financial advisors see 3% higher returns on average compared to those who don’t. Platforms like Advisor.com can help you find a FINRA/SEC-registered expert near you for free.

Finding the right advisor isn’t always easy — there’s no one-size-fits-all solution. That’s why Advisor.com lets you set up a free initial consultation, with no obligation to hire, to see if they’re the right fit for you.