Why Dave Ramsey’s 12% Return Isn’t Reality

Daniel Penzing
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Dave Ramsey is a wonderful source of financial advice for the everyday person. His somewhat abrasive, no-nonsense style of speaking can be a little unreal to the inexperienced ears, but after listening to him for a week or so, his message pierces my heart – his message of hope is an omnipresent light in the world.

However, when I first heard him say something about stocks averaging 12% a year, I was alarmed – would I hear someone on the radio every morning, I thought, talking about how investing in stocks was a sure way to make the big bucks… make a lot of money really quickly.

I used to believe that stocks can generate the huge returns that Ramsey claims and, if not, why not? And if they can’t, what does that mean for the future of the average retiree? Are they destined to live their final years on a meager income or, worse yet, out on the streets?

So, I did a fair amount of research to find the answers to these questions, and I’d like to share them here with you.