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Rick Kahler: Ramsey’s 12% investment return is unrealistic

Optimism and positive thinking are important assets in a great many areas of life. When it comes to investing, though, a healthy dose of pessimism may be a lot more useful.

This is especially true when it comes to estimating long-term returns and projecting the level of income you can expect in retirement. Any investment advisor who tells you to expect average returns of 10%, 12%, or more is either an unreasonable optimist or an opportunist. The actual numbers for past investment returns over time simply don’t support such high percentages.One of the consistent optimists when it comes to predicting investment returns is radio talk show host Dave Ramsey. His website contains some great advice when it comes to investing, such as maxing out 401(k) accounts first if you have them, not buying individual stocks, and investing consistently over time.

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