Are There Any Good "Short-Term" Investments?

Summary

Ramsey Everyday Millionaires - Episode Summary

Episode Title: Are There Any Good "Short-Term" Investments?
Release Date: May 23, 2025
Host/Author: Ramsey Network

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In the latest episode of Ramsey Everyday Millionaires, the Ramsey Network hosts delve into the intricacies of short-term investments, providing actionable advice for individuals seeking to grow their savings without exposing themselves to significant risks. The episode features insights from Dave Ramsey, George Kamel, and a special guest, Carolyn, who shares her personal financial situation and seeks guidance on the best investment avenues available to her.

Guest Introduction and Financial Overview

00:15 – 01:25

The episode begins with an introduction of Carolyn, an 81-year-old widow residing in Cleveland. Carolyn reaches out to the Ramsey Network with a specific financial concern:

Carolyn: "I am trying to come up with the best way to take the money I do have and make a short-term investment. Because being at 81, I don't think I'd qualify for the S and P."
(00:21)

Carolyn details her financial standing, highlighting her available funds and income:

Carolyn:

• Checking Account: $18,000
• Savings Account: $17,000
• Cash on Hand: $16,060
• Yearly Income: $66,864
  (00:53)

She emphasizes that her savings are not intended for immediate living expenses, as her income sufficiently covers her needs:

Carolyn: "I usually take about $2,000 out of my monthly income and keep it to build up on my cash."
(01:25)

Advisor Insights: Dave Ramsey and George Kamel's Recommendations

01:25 – 03:09

Dave Ramsey and George Kamel engage in a discussion to provide Carolyn with tailored investment advice, keeping her age and financial stability in mind.

Risk Assessment and Investment Strategy

Dave begins by assessing whether Carolyn can afford potential losses:

Dave Ramsey: "I don't want you losing $4,000 in a week because the President is playing tariff games."
(03:09)

Given Carolyn's relatively modest savings of $40,000, Ramsey advises against high-risk investments like the S&P 500, which, while potentially lucrative in the long term, could result in significant short-term losses. Instead, he recommends more conservative options to preserve her capital.

High-Yield Savings Accounts

George introduces the idea of high-yield savings accounts as a safer alternative:

George Kamel: "Current rates are about 3.8. Oh, not great is what I've been seeing... That's still better than your 0%."
(02:17)

He acknowledges that while the returns aren't substantial, they offer better growth than traditional savings accounts without exposing Carolyn to the volatility of the stock market.

Dave concurs, albeit with some reservations about the terminology:

Dave Ramsey: "It's kind of a misnomer if it's only 3%. That's kind of like a low yield savings account..."
(02:31)

Despite the modest returns, Ramsey underscores the importance of capital preservation, especially for someone in Carolyn's stage of life.

Balancing Liquid Assets

Both hosts emphasize the importance of maintaining liquidity. They suggest that Carolyn should keep funds that she might need in the near future within her checking account, while allocating the rest to a high-yield savings account to earn some interest.

Key Takeaways and Final Recommendations

• Conservative Investment Approach: For individuals nearing or in retirement, preserving capital is paramount. High-yield savings accounts, despite their modest returns, offer a balance between earning interest and maintaining liquidity.

• Avoiding Market Volatility: Investments tied to the stock market can be unpredictable. For those who cannot afford significant losses, steering clear of such assets is advisable.

• Maintaining Liquid Reserves: Keeping a portion of funds easily accessible ensures that unforeseen expenses can be managed without disrupting long-term savings strategies.

• Understanding Current Rates: While high-yield savings accounts offer better returns than traditional ones, it's essential to stay informed about current interest rates and adjust strategies accordingly.

Notable Quotes

• Carolyn: "I really should take some of the money in checking and switch some of that over to my savings. Yeah, but I'm not getting anything on my savings or anything on my checking."
  (01:40)

• Dave Ramsey: "I can afford to take that hit. But you know that that's not that big a huge risk."
  (02:40)

• George Kamel: "It's going to be 1500 bucks a year."
  (02:31)

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Conclusion

In addressing Carolyn's query, the Ramsey Network emphasizes a cautious and informed approach to short-term investments, especially for those in retirement. By prioritizing capital preservation and liquidity, individuals can navigate their financial landscapes with greater confidence and security.

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Stay Connected:
For more insights and personalized advice, visit RamseySolutions.com.

Transcript

[George]

This episode is brought to you by SmartVestor. Connect with an investing pro near you at RamseySolutions.com SmartVestor Carolyn's with us in Cleveland.

[Dave]

Hi, Carolyn. How are you?

[Carolyn]

Good. How are you doing?

[Dave]

Better than I deserve. What's up?

[Carolyn]

Well, I'm a widow and I'm 81 years old. And I am trying to come up with the best way to take the money I do have and make a short term investment. Because being at 81, I don't think I'd qualify for the S and P. So I'm looking for suggestions from you as to where to put my $43,000.

[Dave]

Okay. Are you using the 43,000 for living?

[Carolyn]

Well, no. There's $18,000 in my checking account, $17,000 in my savings account, and I have cash on hand of $16,060. And my yearly income is 66,864. So the money that I saved.

[Dave]

So you can, you can live on the income you have coming in without touching this money?

[Carolyn]

Correct.

[Dave]

Okay, good.

[Carolyn]

In fact, I usually take about $2,000 out of it, out of my monthly income, and I keep it to build up on my cash.

[Dave]

Yeah, that's how you got all that money, in checking. Yeah. Okay.

[Carolyn]

Right. And I really should take some of the money in checking and switch some of that over to my savings. Yeah, but I'm not getting anything on my savings or anything on my checking. And so.

[Dave]

No, you're not. You probably just. But. But I don't want you taking a bunch of risk with it. Like you said, the S and P, you know, that's probably. I don't, I don't want that money to go down in value three weeks after you put it in there. That would scare me for you because you don't have a big pile of money. If you had 400,000 or something, we'd have a different conversation. But with 40,000, I would just use a high yield savings. And George, what are you getting on high yield savings these days?

[George]

Current rates are about 3.8. Oh, not great is what I've been seeing. They've been ticking down over the last few months, but that's still better than your 0%. And so I would put anything above your expenses that you need in that checking account. I would have store the rest in a high yield savings account.

[Dave]

It's, it's not making a ton. It's not exactly high yield. It's kind of a misnomer if it's only 3%. That's kind of like a low yield. Savings account, but it's going to be.

[George]

You know, 1500 bucks a year.

[Dave]

Yeah, you'll make a little bit, but you could lose that much in one week if you had it invested, say in S and P or, or something along those lines, or even a growth in income, something calmer than an S and P. But still could go, I mean, could go down. And we've had that experience in the last, well, the last week with the tariff stuff going on. The stock market's gone bananas, and so, you know, you could have lost $4,000 of your 40 in the last week in value.

[George]

So the key is, if you need.

[Dave]

It anytime soon, you don't have that margin. I don't want you losing $4,000 in a week because the President is playing tariff games. You can't do that. And so I can afford to take that hit. So I'll be in there. But you know that that's not that big a huge nistig. And so we don't want to lose 10% of your 40,000. So no, I think high yield savings and just hold your nose and you're not making much money on it, keep up with inflation, but such is life. And that's how it works, you know, so. Ouch.