This episode is brought to you by SmartVester.

Connect with an investing pro near you at ramsysolutions.com slash smartvester.

Let's get to the question. It comes from Alex in California.

I'm 16 years old and I'm very interested in personal finance.

As an avid watcher of your show and a researcher of personal finance advice, I realize how important it is to have a good financial future, which includes planning for retirement. Currently, I'm investing $2,500 a month into index funds. However, I keep coming across articles and content from Ramsey advocating for actively managed mutual funds instead. I don't understand the benefit of investing in something with much higher fees. Can you please explain what I'm missing or what I am wrong on? Wow. I'm still 15 years old and they're investing $2,500 a month. Well, you to go, Alex. I assume this is real. I don't know if the team is trolling me, but that's a pretty insane 16-year-old who's crushing it. I don't know if they're even in school at this point. They're probably running a business full-time. You know, it's funny to me that you're that surprised by this. I absolutely am buying this. I think that a 16-year-old who may have a great side business or something, they're really crushing it, and they've got no expenses, and he's essentially probably investing almost everything you bring in.

This kid sounds like a young George Camel.

I wish. I mean, I was a knucklehead up until yesterday, so I'm just really impressed with this guy.

But, okay, let's talk about what he's after here. So we're talking about index funds versus mutual funds, which both are giant baskets of stocks, like 90 to 200 stocks and one fund.

He's hung up on the fees, it sounds like.

Hung up on the fees, which I understand.

If you just look at it on paper, you're going, well, index funds are designed to be passive,

and they just match what the market is doing. And actively managed mutual fund, on the other hand,

there is a team of professionals managing the fund, choosing which funds go in, which should come out

of it, which means they can be a little more expensive because there's fees involved. These people

need to make a living.

And so face value index funds are cheaper most of the time, but fees are not everything.

Performance matters more. So you're not just going to choose a car because of fuel economy alone.

You've got to look at all of the other factors. And so we do recommend actively managed mutual funds, especially in retirement accounts,

but we're not anti-index funds by any stretch.

I'll use those outside of retirement all day.

Dave Ramsey will do the same.

But within a retirement account, you don't have to deal with turnover, and therefore it's

...