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Discussion Starter #1 (Edited)
Hi,

I am new to all of these concepts. Recently ran into Dave Ramsey and I find most of the baby steps very straight forward. The one that I have most trouble with is baby step 4. This is probably because I am still very green to investing. Being 34 with only my mortgage debt (and more than I need in savings) I decided to start putting my money into some mutual funds. I used the smart vestor program and met with a local coach yesterday.

Yesterday I learned the difference between investing in a growth vs value mutual funds. As we all know, Dave Ramsey recommends to diversify ourselves between four groups. Growth fund, Growth & Income fund, Aggressive Growth fund and International fund. The coach I met with recommended that my portfolio would include mostly value mutual funds instead of growth. Here is where my questions comes in.

Is it because of my situation/age that I am able to take a higher risk by investing in value instead of growth?

Is there an issue investing on value vs growth?

Is this something that I need to reconsider/walk away from?

Should I take the risk or find another coach?

I have been searching since I got home and there are opinions that sway for each side. This is the area where most people don't necessarily agree with Dave. I am just trying to get some more insight on the situation in order to keep moving forward.

Thank you in advance for any advice. It is much appreciated.

Rafael
 

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Try "The Little Book of Common Sense Investing" by John Bogel, the founder of Vanguard. About $10 or $12 on Amazon. I found it to be a good concise description of what really works.

The law of investing - "risk and return are directly proportional". Most of us are given about 30 years for wealth-building and maybe 30 more years of wealth-preservation. An example would be to invest $5000/yr at 11%/yr (the generic US Market average), that equals $1,100,000. Or $2.2M if you invest $10k/yr, and so on. Then you transition to 'preservation' at age 60 or 65, that would be about 60% bonds and 40% equities, a mix that returns about 6% to 7%.

You're only 34, you should be 100% in equities, no bonds, no income funds - do that after you are old.
As for 'value funds' vs 'growth funds' - that is mostly in the eyes of fund sellers, not really an industry standard.

I became wealthy by owning the SP500 Index Fund - very low fees, a diversification of the 500 major US companies. Here is the history of the return.

https://politicalcalculations.blogspot.com/2006/12/sp-500-at-your-fingertips.html#.WuH9KJch2Ul

Select a few 30-year blocks of time and check the average return, in almost all cases it will be within a point of 11%/yr. If you learn to avoid trying to 'beat' the market, and resign yourself to 'accepting' the market you'll find that you can build a lot of wealth with 11%/yr. And you'll do better than 85% of the brokers, coaches, financial planners - only 15% of them consistently beat the SP500 Index. (And that makes sense, to get 11% net for you, they must earn about 14% - and it is very hard to return 14% from a population of 500 stocks that average 11%)
 
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Thank you for the valuable information!! I will be getting the John Bogel book. I really appreciate the words of wisdom. Thank you!!
 
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