Why Is My Investment Portfolio Underperforming?

Summary

Ramsey Everyday Millionaires: Episode Summary

Episode Title: Why Is My Investment Portfolio Underperforming?
Host/Author: Ramsey Network
Release Date: June 2, 2025

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Introduction

In this insightful episode of Ramsey Everyday Millionaires, the Ramsey Network dives into the complexities of investment portfolio performance. Hosted by Dave Ramsey alongside esteemed co-hosts Ken Coleman, Rachel Cruze, George Kamel, Jade Warshaw, and Dr. John Delony, the episode addresses common concerns among investors striving to build and maintain wealth responsibly.

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Caller Inquiry: Portfolio Performance Concerns

The episode opens with a heartfelt call from Brian in Pittsburgh, who grapples with his investment strategy's effectiveness compared to his late brother's approach.

Brian (00:21):
"Recently, my brother passed away and left my brother and me an inheritance. We both paid off our mortgages and then invested. He invested in a typical average way, while I sought out more Christian-friendly stocks. After about six months, his investments yielded approximately 50% more than mine."

Brian seeks Dave Ramsey's guidance on understanding and improving his investment returns.

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Dave Ramsey's Analysis: Diversification is Key

Dave Ramsey responds by emphasizing the importance of diversification in investment portfolios.

Dave Ramsey (01:27):
"The way you've structured your portfolio is the thing. Just because he's investing differently, it's not about sin paying more—it's about how diversified his portfolio is compared to yours."

He explains that Brian’s approach of investing in a handful of stocks likely lacks the broad diversification that mutual funds offer. Ramsey suggests that a well-diversified portfolio, such as those managed by mutual funds like the Timothy Plan, can provide more stable and comparable returns.

Dave Ramsey (01:56):
"If you have ten or fifteen stocks, he's probably got three hundred. That way, even if we take out the ethical considerations, your diversification isn't there."

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Ethical Investing: Navigating Moral Considerations

The conversation shifts to the challenges of ethical investing, where investors seek to align their portfolios with personal moral standards.

Dave Ramsey (04:01):
"I do not want to do things with money that God gave me to manage that is dishonoring to Him."

Brian explains his commitment to Christian-friendly investments, prompting a discussion on the practicality and impact of such strategies.

Rachel Cruze (08:13):
"We do live in a broken world, and whatever you choose to focus on, there's going to be a rabbit hole. We can't carry all of those burdens all the time."

Dave Ramsey elaborates on the futility of attempting to exclude every unethical company, highlighting that purchasing stocks typically means buying from other investors rather than directly funding the companies in question.

Dave Ramsey (04:43):
"When you buy stock, you're buying it from someone else who's selling it, not from the company. So, the company isn't getting the money directly from your purchase."

He underscores the complexity of avoiding unethical investments entirely, suggesting that such an approach can lead to excessive legalism and unnecessary stress.

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Practical Advice: Focus and Portfolio Management

Ramsey advises Brian to focus on managing his portfolio effectively rather than getting bogged down by the ethical implications of each investment.

Dave Ramsey (07:46):
"How far down this rabbit hole are you going to go to measure everything and try to figure out who's doing what? It's too much legalism for me."

He recommends utilizing proven investment strategies and maintaining a diversified portfolio to achieve better performance. Ramsey encourages a balanced approach, where ethical considerations are important but should not overshadow sound investment principles.

Dave Ramsey (06:54):
"But I don't spend an inordinate amount of time trying to only find quote, unquote, ethical stocks to invest in."

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Rachel Cruze’s Perspectives: Balancing Ethics and Practicality

Rachel Cruze adds to the discussion by acknowledging the inherent challenges in ethical investing.

Rachel Cruze (07:01):
"Whatever you choose to focus on, there's going to be a rabbit hole. We can't carry all of those burdens all the time."

She highlights the importance of prioritizing areas that resonate most with one's values without becoming overwhelmed by every ethical dilemma.

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Conclusion: Balancing Ethical Concerns with Investment Strategy

In wrapping up the conversation, Dave Ramsey reiterates the importance of diversification and strategic portfolio management over exhaustive ethical filtering.

Dave Ramsey (09:05):
"I'm not gonna directly invest in a company that's doing harm to people... But it's not really some big boycott. It's more of just a temper fit."

He emphasizes maintaining a balanced approach to investing—respecting personal ethics while ensuring financial growth through diversified, well-managed investments.

Dave Ramsey (09:35):
"Ramsey Solutions is a paid non-client promoter of participating pros. Learn more @ramseysolutions.com SmartVestor."

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Key Takeaways

• Diversification: A well-diversified portfolio mitigates risk and enhances performance compared to concentrated investments in single stocks.
• Ethical Investing: While aligning investments with personal values is commendable, striving for complete ethical purity can lead to impracticality and reduced investment returns.
• Practical Focus: Prioritize sound investment strategies and effective portfolio management over exhaustive ethical considerations to achieve long-term financial success.
• Expert Guidance: Utilizing proven investment plans like the Timothy Plan can offer structure and consistency in building wealth.

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This episode provides valuable insights for investors seeking to balance ethical considerations with effective investment strategies. By focusing on diversification and leveraging expert-managed funds, listeners can strive for both moral integrity and financial prosperity.

Transcript

[Caller]

Foreign.

[Brian]

This episode is brought to you by SmartVestor. Connect with an investing pro near you at RamseySolutions.com SmartVestor Brian is in Pittsburgh.

[Dave Ramsey]

Hey, Brian. Welcome to the Ramsey Show.

[Caller]

Hello, Mr. Ramsey. Thanks for having me on.

[Dave Ramsey]

Sure. What's up?

[Caller]

So recently passed away and they're with the Lord and they left myself and my brother an inheritance. We both paid off our mortgages and then we both invested. He invested in a way, I'd say the typical average way. And I sought out like a Christian financial advisor and he wanted, or I invested in, I guess what we say, more Christian friendly stocks. And he invested around June last year. And so he had his money in about six months and he had made probably 50% more than what I had made with my stocks. And they had only been in there about three or four months. When I talked to his advisor then and told her how I was investing and she said, oh, she just, she didn't say it out loud. But basically what she was saying is I'm going to earn about half as much as he is if I invest that way. So I wanted to see what your thoughts were on that.

[Dave Ramsey]

Well, there are a couple of thoughts. They come number one that way is you've got a small portfolio of single stocks and you can't keep up with good mutual funds regardless of the ethical standards of the selection. So just because he's investing, he's more diversified across many, many stocks and mutual funds and so forth. I would assume, in other words, like you got 10 or 15 stocks, he's probably got 300.

[Caller]

Okay.

[Dave Ramsey]

So that way, even if we take out the ethical considerations of the selection of those companies, it's not there. And so it's not just that sin pays more. Okay. It's the way you've structured your portfolio is the thing. Now then, if you want to investigate a mutual fund that has done pretty well with that, the Timothy plan out of Atlanta has a long track record.

[Caller]

And they're in that one. Do what I am in that one. That's one of the. There's 10 different funds that I'm in.

[Dave Ramsey]

Oh, you're in funds you're not in. I thought you said you bought stocks.

[Caller]

I'm not really sure what it is. I just invested with them.

[Dave Ramsey]

So it's ding, ding, ding. Okay. Number one, don't put the money in things. You don't know what they are. Okay. And the Timothy plan just rung a bell because it was one of the things on your list. But you don't know much about it is what you're telling me because it has kept up pretty close to the S and P the last time I looked at it. And they are selecting stocks that are, I guess the best way to say it is anti sin stocks, if you will. So no alcohol, no tobacco, no drug companies that are doing the abortion pill. Anything that follows an evangelical belief system, no wines, you know, no alcohol of any kind, no tobacco of any kind, would be the two primaries. And then again, anything having to do with right to life, those sorts of things is that that's where Timothy's going to fall. All right. And then you can get into that. Now, I like the fact that your heart is telling you to try to do this. Okay. I do want to give you. Because my heart functions the exact same way. I don't want to do things with money that God gave me to manage that is dishonoring to him. And that's your approach, I assume, right?

[Caller]

Correct.

[Dave Ramsey]

Okay. Now once I did that, then I had to think through, okay, what is really happening here? All right, let me give you an example. If you disagree with something morally that Company A is doing and so you don't buy Company A's stock, that does not, if you did buy Company A's stock anyway, that company does not get the money. I'm buying that stock from Jade, who's selling it? Unless the company is doing a Treasury issue or an initial public offering, they're not getting the money when you buy the stock.

[Rachel Cruze]

That's a very good point.

[Dave Ramsey]

So you're not funding the thing that they're doing when you buy their stock. Now are you benefiting when they make money from the thing that they're doing? Yes, you would be. So that would be valid. But if I buy A, you know, like George posted the other day that his Tesla reached 200,000 miles. He was real proud the battery lasted that long and we made fun of him for it. And all this. Well, some of these lefties that are going berserk on Elon, all trash George in the columns because he has no ethics. George did not buy the Tesla new. He bought it from a guy named Whatever, Joe. Joe got the money, not Elon. So there's no ethical consideration for George buying a use Tesla, nor positive or negative. He did not support Elon or, you know, whichever side of that you want to come down on. So it's just stupid people posting in George's comments, which is generally who posts in comments anyway. But you know, and I was just laughing at him at lunch. He's telling me about this because he reads the comments, I don't read them. And he told me about this and I'm like, George, number one, stupid people. Number two, you didn't. You bought a used Tesla. Now Rachel bought a new Tesla. Okay, so Rachel, you could try. She supported and she didn't do it to support Elon, she did it because she wanted a car with a battery, so. Or whatever. And she didn't even do it for climate change. She did it because she thought it was cool. But anyway, so. But you see what I'm saying. So the deal, Brian, is if you're buying stock in one of these companies, you're buying it from someone else who's selling it, not from the company. That's the thing. The second thing I had to consider in my decision making period. And I'm not trying to talk you out of doing what you're doing, I think you can do what you're doing successfully if you'll manage your portfolio closer and do stuff like the Timothy Plan has done. They have proven it's doable. Okay. Now the second thing I had to decide is I also do business in other places with companies that engage in things I don't. So if you're anti alcohol and anti tobacco, I don't know where you're going to buy groceries because they sell tobacco.

[Rachel Cruze]

Well, I'm thinking about oil and they, how everything goes back to oil. Like you're hard to do anything.

[Dave Ramsey]

I don't know how you're going to support. I mean, you know your bank supports United Way, which supports Planned Parenthood, so they're doing abortions with your bank money. So. But how far down this rabbit hole are you going to go to measure everything and try to figure out who's doing what and which CEOs got a personal life you agree with and doesn't. I can't keep up with all of it. It's too much legalism for me. And so I don't, I mean there may be a Hustler magazine in the market inside when I bought gas out at the pub. And so I guess I supported pornography, I don't know. But I don't think that's not how my brain works. So like if I don't engage somewhere in the process, I don't have any influence anymore.

[Rachel Cruze]

Yeah.

[Dave Ramsey]

So I don't know. Those are some thoughts I went to. And so I quit worrying about it. Yeah, I'm not flipping about it. I'm not gonna directly invest in a company that's doing harm to people and If I can't stand what they're doing, I generally quit buying their products in general, just as a personal thing and makes me want to throw up, so I just don't do it. But it's not really some big boycott. It's not really some holiness thing on my part. It's more of just a temper fit.

[Rachel Cruze]

I think, Dave, what you said is exactly right. Unfortunately, we do live in a broken world, and whatever you choose to focus on, there's going to be a rabbit hole. I mean, if I say, Dave, who made that shirt? Where'd that come from?

[Dave Ramsey]

Was that rut row? I got no idea.

[Rachel Cruze]

You know what I'm saying? Like, you could pick anything and go down a deep rabbit hole. And as people, we can't carry all of those burdens all the time. We're not intended to. And. And that's where my brain goes. Because there's a. There's a cause and probably a very meaningful cause underneath every stone that you turn. If you go down deep enough, and I just think it's in a moment, what are you choosing to focus on? And I think, like, for him, if. If that has been a convicted area in his heart, like I said, I'm.

[Dave Ramsey]

Fine with going with it. I'm just telling you how I. Yeah, yeah. And I. And I don't. So I don't spend an inordinate amount of time trying to only find quote, unquote, ethical stocks to invest in.

[Rachel Cruze]

Yeah, it's just.

[Dave Ramsey]

And that's my reasoning, mainly because their company's not getting the money anyway. And I. And I don't think George benefit. Because I'm positive George did not benefit Elon by buying a used Tesla. Elon didn't get the money, stupid. That's how it worked. Come on. I mean, this is dumb. Well, it's ethical consideration. Who are you typing this on? An iPhone, you moron? It was made by a child in China. I mean, come on. Geez. You people in your mother's basement with an opinion. You drive me nuts.

[Brian]

Thanks for tuning in to Ramsey. Everyday millionaires. Need help with your investments? Connect with a smartvestor [e-mail] smartvestor or click the link in the show notes. Ramsey Solutions is a paid non client promoter of participating pros. Learn [e-mail] SmartVestor.