Apparently Dave Ramsey advises against overfunding 529 because college bubble will burst and they'll have to "come home to roost". He advises no more than $20k in 529. But he's been saying a lot of silly things lately - cognitive decline due to age, perhaps? Personally, I'd rather overfund than underfund because then I have the option to transfer 35k (or more) to the kids Roth IRA , and then do the same for the grandkids with the leftover funds. For somebody who talks about generational wealth, he's sure missing the point in overfunding. Article: https://finance.yahoo.com/news/dave-ramsey-says-underfund-529-153635673.html
Dave Ramsay wants you to pump all your money into stocks, so he can keep his portfolio up. It’s only nerve tubes in his brain which have burst.
529 money is also invested on stocks
Profits aren’t taxed when used for education, so people tend to keep them longer. Traditional investment is more volatile to risks and financial analysts manipulate people into doing what suits their portfolio
How exactly 529 benefits if you are in state with no tax deduction? I am new to this and not sure how 529 helps vs putting money in some taxable brokerage account. I am in California.
The gains aren't taxed if used for education
And can now be transferred into Roth IRA iirc
He’s not wrong
No. He’s wrong. Even if the bottom falls out on education cost growth (big if), funding a 529 well below average cost of tuition is dumb assuming that you can and choose to fund your child’s education.
I prefer Roth over 529 plan for the flexibility it provides apart from same tax benefits. You can take out principle amount after 5 yr for any purpose. So if you are starting early than Roth
I exactly do that.. backdoor roth ira is way to go
Most tech folks make more than Roth eligibility limits.
To take advice from a person giving one size fits all advice regardless of personal circumstances is a bad idea in any aspect but especially finance It’s like taking medical advice from webmd or legal advice from a blog
What's wrong with Bob Loblaw's Law Blog?
Dave is a financial advisor for poor people. Are you poor?
Dave Ramsey advises are for people who are mostly doing minimum wage jobs. They are not for financially savvy tech people.
College bubble will burst, just like bitcoin will go to 0, just like real estate bubble will burst, just like tech bubble will burst.
Dave is there to enrich himself and get clicks, sell books, etc. His advice can best be described as okay, some of the time, for some people in certain circumstances. Sometimes it’s also just flat out bad advice. But financial advice is a bit like that, it needs to be unique to your own situation. And a lot of what I’d consider ‘bad financial advice’ could be good for people who lack discipline - for example, trends like cash stuffing are fundamentally really dumb, but if you need that in order to save maybe it works better than the alternative for you. I haven’t read his bit about 529’s but my guess is it’s his typical hot take click bait.
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Dave Ramsey is an idiot
Always has been.
Always will be