'Shut up and invest': Dave Ramsey says most millionaires got rich copying the guy in the next cubicle — not with a perfect portfolio strategy

The caller, Dylan, 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”, but the key was they were investing and not just talking about investing.

Is it time to forget the ‘perfect’ portfolio?

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. Workplace retirement plans often provide tax advantages and can help investors build the habit of regular investing.

You can also open an individual retirement account to supplement your workplace plan or in lieu of one if it’s not offered. Both traditional and Roth IRAs come with different tax advantages you should consider before opening an account.

Automate your contributions

One barrier to investing is simply just getting started. Setting up automatic contributions removes the need to make repeated decisions and helps investors stay consistent through market ups and downs.

Focus on diversification

Most financial experts recommend spreading investments across different asset classes and sectors instead of concentrating everything in a single investment. Whether that’s done through mutual funds, index funds or target-date funds, diversification can help manage risk.

Consider your retirement age

Someone investing for retirement 30 years away is able to tolerate more market volatility than someone who is planning to retire in a few years. You can start off with an aggressive portfolio that becomes more conservative over time.

Whether you prefer actively managed mutual funds, index funds or a target-date fund, if you understand the risk and stay diversified, it could be worth your while to get your money invested instead of searching for the “perfect” portfolio. As Ramsey says, “Theory doesn’t matter until it’s applied,” adding, “I really don’t care what you think about swinging a baseball bat until you swing one, honey.”