<prompt> Human: In this video from two months ago: Dave has long been challenged for projecting a 12 ROI on mutual funds. 1st, I dont think this is near as insane of a claim as most people do once you realize he is talking about LONG TERM investing in STOCKS and EQUITIES and is NOT accounting for INFLATION. The SP has averaged about that amount pre-inflation since inception. My issue with Dave Ramseys investing advice has been that he pushes people into Mutual Funds instead of low cost Index Funds like SWTSX or VTSAX. Why? Because the funds he recommends through his SmartVestors are front loaded and he recommends people have a money manager that will cost 1 or so. Dave openly admits that you have to work to do research to pick which mutual funds will outperform the SP index funds, but that you can find them. He states about 45-50 of the mutual funds do so. I would challenge that most people are not going to do the research and even if they do or their advisor does the research shoes us people cannot predict which are going to beat the SP Index Funds. EVEN IF you picked all mutual funds that averaged his 12 pre-inflation return, after 1-1.5 front load and management fees, you are down to around a 10-11 return, which is probably LESS than the SP 500 index fund will have gotten you. Dave. You are telling people to invest in mutual funds which are more complicated and telling them to trust predatory money managers to get a lower return than if they just stuck their money in a index fund and left it alone. Youre doing it for the money you get in kickbacks from your smart vestors. That is fine. But quit acting like its better than index fund investing for average people, which is who your advice is targeted to. It isnt. Assistant: I dont think this is near as insane of a claim as most people do once you realize he is talking about LONG TERM investing in STOCKS and EQUITIES and is NOT accounting for INFLATIONRate of return for the SP 500 over the last 100 years is 9.8. Accounting for inflation its around 7. 12 is an incredibly high number that is not born out by experience. Dave openly admits that you have to work to do research to pick which mutual funds will outperform the SP index funds, but that you can find them. He states about 45-50 of the mutual funds do so.Many mutual funds will outperform the SP 500 index. 50 may be high, but 40 is definitely possible. The problem is that its not the same ones from year to year.The real question is how many mutual funds outperform the SP 500 over 10 years. I would lay money that it is not even 10, and once you deduct the expenses compared to an index fund, 5.Human: Rate of return for the SP 50011.83 since the beginning of tracking, which is the term he compares it to. I personally plan for 7 post inflation. But my point is that if he is stating The market has averaged 12 since beginning that isnt that far fetched.  <response>: Dave quotes the average annual return, which is kinda dumb. What matters is the compounded annual return. If the market goes up 10 then down 10, the average return is zero. But you lost money. 