Source — Daily Wire YouTube
Dave Ramsay is the real deal when it comes to personal finance.
He fought his way out of bankruptcy and millions of dollars of debt and then took what he learned to teach people methods of handling money.
He’s sharp.
And he’s old school, but you can learn a ton from him.
His motto in finance is all about budgeting, paying off debt, saving, and investing.
Ramsay has a reported net worth of $200 million and is a conservative guy with money. He hates credit cards like they’re going out of style, and his approach to investing is always slow and steady growth.
He’s not a fan of get-rich-quick schemes, and once said:
“The more boring something is, the more excited I get about investing”.
So, you can probably guess where he stands on Bitcoin.
Ramsay thinks there are better ways to become wealthy and is convinced that the American Dream of making yourself a millionaire is alive and well.
And it doesn’t involve investing in Cryptocurrency.
He believes most people who become millionaires do it through consistent investing, avoiding debt like the plague and intelligent spending.
No lottery tickets, inheritance, six-figure incomes, or buying Bitcoin.
To support his beliefs, his company, Ramsay Solutions, conducted the largest-ever study covering 10,000 U.S. millionaires to understand personal finance behaviours and attitudes that factored into their financial success.
The results of this study are astonishing.
No millionaire said that single-stock investing or Cryptocurrency was a significant factor in their financial success.
79% of the millionaires in the study didn’t receive any inheritance from their parents or other family members. They said that staying out of debt and watching expenses meant they could build their bank accounts instead of climbing out of a financial hole each month.
75% said regular, consistent investing over a long period is the reason for their success.
93% of Millionaires in the study were in mid-tier jobs that didn’t have high-paying salaries.
The top five careers for millionaires include engineer, accountant, teacher, management and attorney.
All entirely regular jobs.
(Source — National Study Of Millionaires)
Change Your Habits, and You’ll Change Your Life.
The study also showed when people became millionaires and didn’t have to worry about money anymore — they were still careful about spending.
On average, they spend $200 or less each month at restaurants.
This national study of millionaires shows a dramatic difference between how you think wealthy people earn and spend their money.
Or at least it did for me.
Ramsay discovered that most of the millionaires in the study said they earned their money through hard work and long-term investing.
He says it’s Clear the key to achieving wealth is not through quick and easy schemes but through consistent hard work and thoughtful financial planning.
The study also highlighted the importance of being mindful of spending habits, even when you become financially secure.
He says it’s a valuable lesson that regardless of your income, the key to financial success is to live below your means and make intelligent investments.
Millionaires in the study demonstrated financial discipline and restraint in their spending habits even after realising millionaire status.
Ramsay Says Your Best Route to Becoming a Millionaire Isn’t in Bitcoin.
According to Dave Ramsey, Bitcoin can be a tricky and confusing investment.
He even calls it “downright mysterious” on Ramsey Solution’s website.
And because it’s so volatile, it can either go up 300% in a year or lose much value.
Dave recommends sticking with investments with a long history of steady growth, like mutual funds.
He also mentions that buying Bitcoin can be risky because there’s no regulation in the cryptocurrency market.
Dave Ramsay — Source
“In case you missed the point, we’ll say it again: Never risk your retirement on an investment that’s too complicated or unreasonably risky just because it’s the new, trendy thing to do.
Build your wealth slow and steady by investing in mutual funds with a history of strong performance.”
Is This the Winning Formula for Everyone?
Ramsay’s defensive strategy of staying out of debt and investing in company-sponsored 401K plans, mutual or index funds is a winning formula.
It’s simple, and it’s effective.
Just spend less than you make, pay off debt, and invest the rest.
It’s a great strategy because the stock market has grown around 10% annually for the last 30 years, or 7% if you account for inflation.
And when you add in the compounding effects of your investment, you’re laughing all the way to the bank if you do it consistently.
If you’re not from a country where access to these financial tools is an option, you might ignore what Ramsay has to say and favour Bitcoin, provided you have a phone and an internet signal.
Let’s compare an accessible asset like Bitcoin to the performance of the S&P 500.
The S&P 500 is a stock market index that tracks the stock performance of the 500 largest companies in the United States.
Bitcoin is up 204% against the orange line of the S&P, and the S&P is up 42.82% over five years.
Two things stick out to me in the data.
The first is the volatility of Bitcoin and its outperformance of the stock market.
The second is the stability of the diversified S&P 500.
We’ve seen Bitcoin drop 800% from its all-time highs, while the S&P has seen 20% corrections followed by a period of trading sideways.
You could argue Bitcoin’s volatility is due to its steep climb up and speed of adoption. Over the last ten years, it has been the fastest-adopted technology, even faster than the internet. And it’s also been the best-performing financial asset.
Ramsay’s Baby Steps to Becoming Wealthy.
In today’s fast-paced world, getting caught up in the hype of the latest investments, like Bitcoin, is easy.
Ramsey believes in changing how you think about money and becoming debt-free.
It might mean cutting back on expenses and living off a bare-bones budget, like eating rice and beans, to put more money towards paying off debts.
He’s not playing around, either.
Dave Ramsay’s 7 Baby Steps Debt Snowball is a strategy that he says is helping millions of people to financial freedom.
TDLR:
The first step in his strategy is to save $1,000 for an emergency fund which will give you a cushion to fall back on in case of unexpected expenses.
Next, Ramsay says you’ll want to pay off your consumer debt, starting with the smallest balance and working your way up.
He says you’ll feel motivated to continue the plan once you start paying off credit cards and loans.
Once your debt is paid completely, it’s time to start building wealth, and this is where Ramsay’s investment suggestions come in.
He suggests investing in a mix of the index and mutual funds or your company’s 401K plan.
He says these investments have provided consistent returns over time, unlike Bitcoin, which is highly volatile and uncertain.
You Must Set Your Investment Goals With What You Believe Is Your Best Path to Becoming Wealthy.
Dave warns the callers to his show regularly against the dangers of trying to get rich quickly.
And recently shared a personal story from when he was 24 years old and made the mistake of buying nothing down real estate and gold futures in an attempt to become wealthy quickly.
Despite the allure of a potential big payout, he went broke.
He advises against you putting any money into a high-risk investment like Cryptocurrency.
Dave says you should proceed cautiously with crypto and be mindful of the potential risks of it being unregulated.
Getting rich quickly is a recipe for financial disaster.
According to Ramsay, a more measured approach is often a better way to achieve long-term financial success.
Dave Ramsay — Source
“I’m telling that story from 25 years ago to remind you that the allure of getting rich quickly can often lead to financial disaster.
Setting your investment goals and considering your best path to becoming wealthy before making any investments is important.
Proceed with caution when it comes to high-risk investments like Cryptocurrency, and remember that a more measured approach is often a better way to achieve long-term financial success.
In the case of Bitcoin, its volatility and uncertainty make it a risky investment.
It’s important to weigh the potential gains against the potential losses.
I would advise you not to put all your savings into Cryptocurrency; instead, consider diversifying your investments and only investing an amount you can afford to lose.”
Final Thoughts.
You cannot deny Ramsay’s success as a personal finance expert.
He’s world-class.
And he’s helped millions of people achieve financial stability with his invaluable advice.
Ramsay’s approach to investing is similar to the tortoise’s strategy in the famous race. He concentrates on long-term, gradual growth rather than quick returns.
I accept his strategy of investing in a mix of index and mutual funds, as proven. The market index has produced consistent returns over the last 100 years.
It’s not the only strategy.
We live in a rapidly evolving digital world, and the adoption of digital assets like Bitcoin is rising.
Cryptocurrency offers a unique solution as a store of value, independent of government control, particularly in developing countries.
There is no, either or here, both methods can work.
Diversifying your investments by allocating funds to the stock and crypto markets could be wise if you have the means.
This article is for informational purposes only; it should not be considered financial, tax or legal advice. You can consult a financial professional before making any significant financial decisions.
This article is for informational purposes only; it should not be considered financial, tax or legal advice. You can consult a financial professional before making any significant financial decisions.