Are Financial Experts Wrong Or Just Lying To You | 631

What’s the deal with financial experts? Are they wrong, or are they just lying to you? Whichever the case may be, you always end up being the victim. Take Dave Ramsey and Suze Orman as examples. They are unquestionably two of the most popular of these financial gurus right now. But do their advice make any sense? Do they even practice what they preach? In this episode, Cash Flow Expert and Anti Financial Advisor Chris Miles talks about what the real numbers are and how it can make a big difference in your life. Be prepared for a shocker!

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Are Financial Experts Wrong Or Just Lying To You

My show is for you because you worked so hard for your money. You want your money to start working harder for you, not 34 years from now, but right now, so you can live that life you love with those you love. Most importantly, it is not just about being rich and living a rich life. As you are blessed financially, you can create a greater ripple effect in the lives of others. I am so excited to be able to create that ripple effect through you. I appreciate you and bingeing and sharing. Not only that, I appreciate you guys reaching out to us with questions. Even with saying, “I need to create a plan. How can we co-create this so we can be able to be one of the financially independent by 2030?”

Thank you so much for doing that. That is a reminder. Go to our website, MoneyRipples.com. Check out the Passive Income Calculator and see how much passive income you could create in the next 12 months. I want to go deep into what the deal is with financial experts. Are they wrong, or are they just lying to us? Which is it? If they are wrong, what is that doing to everybody else? How is that affecting your numbers? What if they are off by just a little on their numbers and all these assumptions they make? They say all these things about returns to the market and how your life is supposed to be financially.

If they are wrong, who becomes the victim? It ends up being you, doesn’t it? I want to talk about that and talk about what the real numbers are and how you can make a big difference. There was a Twitter post by Dave Ramsey. I have talked about it on the show before, but I want to expose it here. Dave Ramsey said on his Twitter posts, “Saving only $100 a month from age 25 to age 65 at 12% growth equals $1,176,000. Everyone should retire a millionaire.”

Is this true? I taught the same thing as a financial advisor years ago. I remember showing people that were like my age in our twenties, starting out, saying, “This is why you start out now because if you are 25 years old and you want to retire by 65, by saving $100 a month, you can be a millionaire.” It was more like $103. You will see why here in a second, but it would show 12% returns.

Is that real? Are there 12% returns in the stock market? Would we do this? First and foremost, question and run Dave Ramsey’s numbers. I ran the numbers here. I just use a simple interest calculator here on Calculator.net. I said $100 a month for 40 years, 12% right there. It is not $1,176,000. It is $979,000. He was off by $200,000. In fact, saving $100 a month does not make you a millionaire. It makes you just short of being a millionaire.

Many people are turning to experts like Dave Ramsey or Suze Orman for financial advice. And yet it’s apparent that they don’t know how to do math. So why are we assuming everything else they say is great? Click To Tweet

Problem number one, apparently Dave Ramsey does not know how to do the math. I tried all kinds of ways to do it. I had to put 41.6 years to get his numbers to work out. I do not know what he was thinking. I do not know what he is smoking, but apparently, he is not a good mathematician. This is where most people are turning to for financial bias. People are looking at him or Suze Orman for financial advice yet that is not even correct. Why are we assuming everything else is correct? Let’s question the other assumptions. What about his 12% rate of return? Does the market do that?

I have got the stock market, the S&P 500 all the way from previous World War II out in about 1940 all the way through 2022. I updated these numbers for the beginning of July 2022. The 20-year average is 6.9%, not even close to 12%. It is half of that. The 30-year average is 7.7%. These numbers are adjusting all the time. Jellies between 7% and 8% are pretty typical. Think about it. People were saying, “I can earn at least 8%.” Most people cannot earn 8% because if you are in the S&P 500, you are not even earning 8%.

Most people put their money on other mutual funds besides the S&P 500 index. Most people are putting them into a whole suite of stuff to be diversified. If you have a 401(k), it is even worse because you have other management fees that take away from this return that you do not even see. Let’s assume you are getting the highest return of just doing the S&P 500 index, low costs. Let’s say it is 7.5%, not 12%. Let’s see what the reality is here.

If you remember, we started at 12%. It was $979,000, not $1,176,000 as Dave claims. What if we made it 7.5%? It’s not even close. Even though it is only a 4.5% percent difference, it is not $1,176,000 like Dave Ramsey was claiming. It is $283,000. This is a quarter or 25% of what he was claiming, even though it was just 4.5% percent. Even though the numbers are a little off, that makes a big difference. Remember, financial advisors used to say the 4% rule. That has been disproven. The Wall Street Journal already said that in October 2021. I have been saying it for years.

3% is probably a more realistic number. Even then, that might be a little bit high if you are younger or older. 3% on $283,000 is less than $9,000 a year that you are living on. Do you think you want to be living on $9,000 a year? You might say, “It is not so bad.” Remember, Dave Ramsey’s would be quadruple that. His is going to be closer to almost $36,000 a year, which would seem more hopeful than saving $100 a month to live on $3,000 a month. It sounds amazing, but did he say anything about inflation?

Do you remember what $1 million was like back then in the 1980s for those who have been alive that long? It was a tremendously huge number. It seemed out of reach for most people. With inflation, there are a lot of people in the middle class who have a net worth of $1 million or more. What does that mean? What if we made inflation only 4%? I know the Feds say they try to go for 2%. Some people say that the average is 3%, but we all know that the government has manipulated the numbers over the years to be much less. It is probably closer to at least 5% to 7%.

I am going to be a horrible devil’s advocate and show a 4% inflation rate to prove my point. You are saving $100 a month. After those 40 years, you have the buying power, the total amount that is there of about $59,000 in dollars after inflation. Do the 3% rule on $59,000, and what do you have? Less than $1,800 a year you are living on.

“Chris, I save $1,200 a year. Now I am living on less than $1,800 a year?” That is exactly what I am saying. That is exactly it. If you guys have seen other shows where I talk about 401(k)s, people are contributing to that. If you are trying to retire in 30 years, that number gets smaller. A lot of times I have been telling people, “If you are lucky, whatever you are saving per year is what you are able to live on per year based on what inflation is doing and probably is going to do worse than.”

You are saving $20,000 a year in your 401(k). You might be living on $20,000 a year in tomorrow’s dollars in that 401(k) or maybe even worse than that, depending on what inflation, what returns you are getting, and the timing of the stock market, which is all the things out of your control. Do you understand the problem here? Everybody, all these financial experts have been shaming you for years, telling you it is your fault for not saving enough. I remember years ago, they say, “If you just saved 10% of your income, you are fine.” Several years later, it is 20% of your income and then you will be fine. Now, they are saying, “Save everything.”

Some will still teach the old rules of saving 10%. That stuff is already not working. We already know that whatever you are trying to save per year, if you save it in mutual funds, that is what you are going to be able to live on per year. If you want $50,000 a year, you better start saving $50,000 a year. If you want to live on a $100,000 a year lifestyle, you better start saving $100,000 a year now and let that compound for 30 or 40 years. Do you think that is going to be idealistic? No. It’s not even realistic.

Financial advisers have been shaming you for years that you're not doing enough, yet it's also their fault. But they aren't taking the responsibility for their own false numbers and false assumptions. Click To Tweet

For idealists, it would be amazing. A lot of times, people would tell me, “I want to live on $100,000 a year.” It is because it is pretty close to the income they have. Most people do not want a decline in their income when they move into retirement. They want to keep pretty close to the same lifestyle. They want to have that freedom. They are not doing that because if you are making $100,000 a year, you are not going to save 100% of your money into these accounts. It is not possible. It is not realistic. You are not going to be living homeless, trying to work, and making $100,000 plus a year. That is not going to cut it. That is my point. This is the problem we are dealing with.

This is the issue I have. They have been shaming you for years, saying you are not doing enough, yet it is also their fault. They take no responsibility, but they should not be. Why aren’t they taking responsibility for their own false numbers and false assumptions that they are giving and have no accountability for it? I have not seen people railing into Dave Ramsey, other than some obscure videos like mine where we might start saying, “I got to question that a little bit. I do not think that is the case.”

How about Suze Orman? People want to challenge her, but they will never come on her show to challenge her. When people like them invite people on their show, they make it seem like it is all nice and all, but the truth is they are going to rail into them. They are going to cut them off and make it a one-sided argument. They are going to make the other person sound like they are insane. Sometimes, those people do a crappy job doing it. However, the thing I noticed is that these people still are not being held accountable. Suze Orman is 71 years old as of this episode. She could be gone in ten years. By the time you figure this out, it is going to be too late. They are going to be gone.

Dave Ramsey is in his 60s. He will be gone. He will be dead. You are moving on to the next expert who is going to tell you the same old crap they have been telling you for years. Why are they doing this? This is the big question. Are they lying or flat-out stupid? It does not take a rocket scientist for me to go, look up these numbers, and do my own math and my own calculations to figure it out. I did not have to use a crazy calculator. I use the calculator that is for free on a website. I was able to use that, and it worked fine. I do not have to have my nice little calculator from high school that they gave us. We are trying to do our little Calculus-type stuff on there. You do not have to do that at all.

Everything is available to you. You have all the resources to be able to verify this information yourself. The big question is, “Why are they teaching this stuff?” Are they lying? I do not think so. Some of them are not lying. The guys like Dave Ramsey have a good heart. He is there to help people and has helped a lot of people, at least those that are buried under credit card debt or barely surviving. They are trying to figure out how to get in control of their finances.

Let him stay there. Let him stay in that lane. Do not let them go into the whole spectrum that he knows everything like he is the money god. He does not know squat when it comes to teaching people how to become wealthy. Remember, he became wealthy by selling you all this stuff. He is still buying real estate. He did not tell you that, though, does he? He is not telling you to buy real estate. He is telling you to put your money in your 401(k) in your mutual funds, yet he is buying lots of real estate himself.

I bet you. There might have been occasions you might have used that. Talk about a hypocrite. You take a look into his personal life and realize he is teaching something completely different than what he is doing. That is one thing that I cannot do. I cannot teach something I do not know. I sound like an idiot when I do that. I do not know how other people do it. Maybe they are just really good salespeople.

The truth is you should practice what you preach and help others do the same. It’s the same thing with Suze Orman. Did you know that only about 5% of her portfolio was in mutual funds? Most of it was in real estate bonds and her business. She is putting most of her money away from places that are telling them. When I tell you, “I am investing in real estate,” I am investing in real estate. I am not being shady. I am not telling you anything differently. I am doing the same thing. If I put money in my infinite banking policy, I do that. I am telling you exactly what I do.

A lot of our clients are doing the same things as I am doing. We are getting results. The one thing I can claim that they cannot is that we have people getting real results. They have millions of followers and think of those onesie-twosie people that come on their show. Half the time, it is about what is possible, not what has happened. Usually, with Dave Ramsey, it has always been about what he has done for people, having them pay off their debt and becoming debt-free other than their mortgage. They are not debt free according to their definition, but they are close.

He brings all those people. That is what he is supposed to be doing, but you will not see people come on his show saying, “I am financially independent. I quit my job. I stopped working. I am fine. I have no worries about ever running out of money again. I am being realistic when I say that. It is not just I am putting a blind eye to my money, and then I will panic later when I do run out of money.” You do not get those people very often. It is rare.

Dave Ramsey is not telling you buy real estate. He's telling you put your money in your mutual funds, yet he's buying lots of real estate himself. He's teaching something completely different than what he's doing. Click To Tweet

When you get on our show, we get clients all the time coming on about once a month, talking about their experiences and how they are already doing it here and now. Some of them were even out of the rat race completely already. Some of them are on the way. That is the beauty. It can work. Are they lying? I do not know if they are all lying. Some are, while others are turning a blind eye. That is more what they are doing. They are turning a blind eye because their own self-interest does not want them to say, “I was wrong.”

Can you imagine Dave Ramsey saying he is wrong? The guy’s head has gotten so big that he has gone bald. He had a full head of hair before he went on TV and on the radio. Now, look at him. I am going bald, too. What does it say about me? The point is they do not want to see that truth, especially if it contradicts their message for many years. It is something that they do not want to be accountable for. They are going to turn a blind eye and say, “It works.” If the majority of people believe it works, it does not matter. Even if it is a lie, if you say it long enough with enough passion, it is going to have to be the truth. That is what comes across, doesn’t it?

It is not true. I do not think they are lying flat out. Although I know some do. You should not be listening to money managers. Do not listen to anybody who has their own fund because they are going to want you to put your money into their fund. If they have self-interest, they say, “You should put money here, do that.” This is why I do not take any money from my clients, putting money into other investments. Let them put the money into investments. Let them make money. Let me take a consulting fee. That is what we do. We help align them with people that have been vetted. We helped them get into deals, but we are not getting compensation from those deals. We are not doing that stuff.

We are telling them, “Here is the suite. Here are some people that you could shoot, be talking to, and investments you could be doing. Here is what gets you the goals you are wanting, whether it is passive income, more growth, or both. These are the things you can do.” As a side note, you do not have to do infinite banking for this all to work. I had somebody bring that up. This works whether or not you use infinite banking. That gives you a little extra push, an extra boost, or a little extra nitro into your speed in your car there.

At the end of the day, this stuff works regardless of that. That is my point. You can follow the advice that has not worked. It has been proven not to work. As I shared before about my dad, he did everything right. He could have been Dave Ramsey’s father, yet my dad could not become financially free because he was following the same advice that they had been teaching. It’s the same advice that Suze Orman teaches. He paid off his house early, saved in his retirement accounts, and was penny-pinching to death, yet it was not enough.

I do not want you to be in that place where you say, “I do not have enough. What am I going to do?” You do not have to be there. If you have questions, we have answers. If you want to know how you can do that, check out our Passive Income Calculator to see if you guys should create passive income now, and then reach out to us at MoneyRipples.com. Go on and make a wonderful, prosperous week so you can have a prosperous life. We will see you later.

Important Links

• MoneyRipples.com
• Passive Income Calculator
• Calculator.net