I’m Nervous About My $1.1 Million in Stocks—Should I Sell?

Summary

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Ramsey Everyday Millionaires — Episode Summary

Episode Title: I’m Nervous About My $1.1 Million in Stocks—Should I Sell?
Date: September 12, 2025
Hosts: Dave Ramsey, Chris Hogan
Featured Caller: Michelle from Wisconsin

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Episode Overview

This episode centers on a call from Michelle, a widowed mother of two, who finds herself with $1.1 million in stocks, most of which are gains accumulated over five years since investing some of her late husband’s life insurance. Michelle expresses nervousness about her concentrated stock portfolio and seeks advice about whether to sell or hold. The hosts use her situation to illustrate fundamental investing principles, the risks of individual stocks, and the value of diversification, all while emphasizing disciplined, long-term wealth building.

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Key Discussion Points and Insights

1. Michelle’s Situation and Concerns (00:16–01:41)

• Background: Michelle, age 45, is doing well financially, is near mortgage freedom, and has been investing life insurance proceeds for about five years.
• Portfolio Performance:
  • Initial investment: ~$270,000
  • Current value: $1.1 million
  • Main concern: The bulk of this gain is concentrated in just four stocks out of a portfolio of 20, and she wonders if she should sell to lock in her gains given her unease.

2. The Danger of Concentration vs. Diversification (01:41–05:17)

• Hosts’ Guidance:
  • Chris Hogan warns against the risk of individual stocks, praising Michelle for her gains but highlighting the unsustainability and stress involved in this approach:

    "20 stocks is not a well-diversified portfolio. And four sure is the devil isn't. Diversification equals lowered risk." (03:06, Chris Hogan)

• Analogy: Hogan likens her current position to "the Karate Kid...standing on one foot hoping you can kick," emphasizing the instability of being dependent on a few winners.

3. The Case for Mutual Funds and Predictable Growth (05:17–06:04)

• Why Mutual Funds?
  • Growth stock mutual funds typically hold 90–200 stocks, and by holding multiple mutual funds across sectors (growth, growth & income, aggressive growth, international), investors might own stakes in up to 1,000 companies.
  • By diversifying, "one or two companies going up or down does not change your life." Instead, "it's the movement of the whole market that changes your life." (04:10, Chris Hogan)
• Risk Management:
  • Dave Ramsey underscores the importance of locking in gains and not risking a windfall:

    "It's akin to I hit on the roulette wheel and I'm up 200 bucks. So I'm walking away from the table and I'm leaving the casino while I'm up." (05:09, Dave Ramsey)

4. Tax Implications and Realistic Growth Expectations (05:17–06:04)

• Taxes:

  • There would likely be a significant tax bill (~$70–80k) upon selling, but given the scale of Michelle’s gains, it’s “big whoop” relative to securing her future.

    "You'll Likely have maybe, I don't know, 70 or 80 grand in taxes you'll pay which out of 1.1 big whoop." (05:17, Dave Ramsey)

• Long-term Growth:

  • Recommends transitioning to a diversified mutual fund portfolio projecting historical average returns (~10%), doubling capital every seven years (the Rule of 72).

5. Real-life Example of Concentration Risk (06:05–08:20)

• Memorable Cautionary Tale:

  • Dave Ramsey recalls a client with nearly $1M in her company stock in her 401(k). When the company faltered, her account lost nearly $400,000 in six months.

    "So as that company goes, so goes her future. So her almost million dollars went down by almost 400,000 in two months or in two quarters." (06:44, Dave Ramsey)

  • Message: Even “safe” big-name stocks can crash, and if you’re concentrated, it can devastate your wealth quickly.

• Foundational Advice:

  • "Diversification is a basic financial principle. The first thing they teach you in financial planning. Spread. The Bible says it, spread your portions to seven, yes to eight, for disaster may come upon the land." (07:49, Dave Ramsey)
  • "Money is like manure. Spread out. It grows things. Left in one pile. It stinks." (08:00, Dave Ramsey)

6. Wealth Building Wisdom and Final Thoughts (08:20–09:08)

• Slow, Steady Wins the Race:

  • Ramsey encourages slow, incremental wealth:

    "Wealth gained hastily will dwindle. Whoever gathers little by little, will increase it." (08:25, Dave Ramsey)

• Humorous Asides and Notable Quotes:

  • On single-stock speculation: "Unless you got a crystal ball or you're Nancy Pelosi, I would not be betting on any single stocks." (08:32, Dave Ramsey)
  • The hosts joke about government officials’ stock picking and Michelle’s “luck,” underlining that such outcomes are not replicable strategies.

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Notable Quotes

| Timestamp | Speaker | Quote | |-----------|--------------|---------------------------------------------------------------------------------------| | 03:06 | Chris Hogan | "20 stocks is not a well-diversified portfolio. And four sure is the devil isn't. Diversification equals lowered risk." | | 05:09 | Dave Ramsey | "It's akin to I hit on the roulette wheel and I'm up 200 bucks. So I'm walking away from the table and I'm leaving the casino while I'm up." | | 07:49 | Dave Ramsey | "Diversification is a basic financial principle. The first thing they teach you in financial planning. Spread. The Bible says it, spread your portions to seven, yes to eight, for disaster may come upon the land." | | 08:00 | Dave Ramsey | "Money is like manure. Spread out. It grows things. Left in one pile. It stinks." | | 08:25 | Dave Ramsey | "Wealth gained hastily will dwindle. Whoever gathers little by little, will increase it." | | 08:32 | Dave Ramsey | "Unless you got a crystal ball or you're Nancy Pelosi, I would not be betting on any single stocks." |

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Key Takeaways

• Diversification is essential to managing investment risk—don't let a few stocks determine your financial fate.
• Lock in gains and transition to diversified mutual funds; historical performance strongly favors this approach for long-term commitments.
• Avoid the temptation of “getting lucky” again—what worked once is unlikely to repeat, and fortune should be protected.
• Growth, patience, and consistency—building wealth “little by little” is far more reliable than chasing windfalls.
• Consult with a professional—work with an investment pro to rebalance a risky portfolio into something steady, safe, and scalable.

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Timestamps for Important Segments

• Michelle’s Story and Portfolio: 00:16–01:41
• Discussion: Risks of Stock Concentration: 01:41–05:17
• Why Diversified Mutual Funds: 04:10–06:04
• Real-life Example of Single-Stock Danger: 06:05–08:20
• Finance Wisdom & Closing Thoughts: 08:20–09:08

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Summary prepared so listeners can grasp the episode’s critical financial lessons and practical wisdom while enjoying the light-hearted, down-to-earth Ramsey Network style.

Transcript

[Dave Ramsey]

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

[Chris Hogan]

Hey, Michelle. How are you?

[Michelle]

I'm good, thanks. How about you?

[Chris Hogan]

Better than I deserve. How can I help?

[Michelle]

So I'm 45 years old. I am single, widowed, mom of two. My kids are 12 and 15. I do well financially. I get Social Security. I put all my money away that I can for HSA and retirement and everything. So I'm doing well. My only debt is my mortgage, and I should pay that off in the next 10 months. I have 15,000 left on it. I have a 3% interest rate on it, so doing well. So my question is, back at the start of COVID some friends told me I should invest money in the stock market because it had dropped. And they kind of helped me through it. I opened an account. I had some of my husband's life insurance money I put into it. Um, it was about $270,000. And over the last five years, I've done a little investing. Not a ton, but some. And now I am at 1.1 million. So I've done really well.

[Chris Hogan]

Yeah, way to go.

[Michelle]

Yeah. So I don't. I don't know. This year when I hit the million mark, I kind of got nervous about it. And I don't know if I should just keep going, if I should start to sell because I have over 500,000 and unrealized gains that, you know, could. So I just. I don't know, kind of what I should do with it.

[Chris Hogan]

Okay, so. Well, what we teach and what I have done personally is I invest in good growth stock mutual funds. I don't buy and sell single stocks. And the reason I don't is the data tells us that over time, what you've pulled off. Congratulations. Is not sustainable. The research tells us that that's, you know, for instance, people. You're not doing this, but people who are day trading, they're buying and selling all during the day. 97% of them lose money within a year. Okay, so that's an example. Okay, that's people that think they can beat the system. Now, you have not been day trading, but you have been trading a little bit.

[Michelle]

And I.

[Chris Hogan]

So, so where did. Where did these gains come from? Explain it to me.

[Michelle]

So I have 20 stocks, and probably most of that is within, like, four stocks that I've done really well on. Like, and one of them is Palantir that I bought more recently. And that's a good Portion of it. So it's kind of in four stocks. The rest are, you know, between 3 and 10,000 gains, which I'm not too worried about. I'm sure they'll continue to go up.

[Dave Ramsey]

The majority of the money you made was from the four stocks, not the 20.

[Chris Hogan]

Yeah, well, she invested in 20 and four of them hit. Yeah. And the other 20, the other 16 have done okay, but not. They're not the.

[Michelle]

I mean, they. They've done good.

[Chris Hogan]

Yeah. They're not the hockey stick, though. Up into the Right. The rest of us is. Yeah. Okay, that makes sense. So here's the thing. 20 stocks is not a well diversified portfolio. And four sure is. The devil isn't. Diversification equals lowered risk. Diversification means to spread around. And your risk is you're the Karate Kid. You're standing on one foot hoping you can kick. You follow me? Instead of firmly planted on two with a solid base. And so you've done well. I'm not besmirching that, but I'm not going to recommend that you keep doing that or that anybody do that. I'm glad for you. I'm happy that you've made it. But again, the data tells me that most likely you're not gonna continue this trend. And so it would scare me if I woke up and half of my fortune was in four stocks. Cause as those four companies go, so goes my fortune. And I wanna be spread out more than that. So a typical growth stock mutual fund has 90 to 200 stocks in it. And if you're in four different CATE categories of growth stock mutual funds, growth, growth in income, aggressive growth in international, that puts you in somewhere between 400 and 1,000 different companies. And so it's all spread out. And so one or two companies going up or down does not change your life. It's the movement of the whole market that changes your life when you're invested with a well diversified portfolio. Instead, you wake up every morning thinking about these companies more than they do. You have to. I mean, it would stress me. And so, you know, you called to ask, so what would I do? I would say, thank you, God, that this happened. I've got this money and I'm going to make it safe now so it doesn't slip away from me. And so it's akin. It's akin to I hit on the roulette wheel and I'm up 200 bucks. So I'm walking away from the table and I'm leaving the casino while I'm.

[Dave Ramsey]

Up, and you'll Likely have maybe, I don't know, 70 or 80 grand in taxes you'll pay which out of 1.1 big whoop.

[Chris Hogan]

Yeah. So I would sit down with a smartvestor Pro, go to ramseysolutions.com pick some good mutual funds and move this to a well diversified portfolio. And if it's making 10% average, it'll double every seven years. So seven years from now you'll have 2 million. 14 years from now you'll have 4 million. 21 years from now you'll have 8 million. Just as steady as a rock. Just as so predictable. It's sickening. And what instead of you're at the fair and you're on the roller coaster and then you got off and ran straight onto the tilt a whirl and you're going to throw up.

[Dave Ramsey]

I would not recommend that.

[Chris Hogan]

This is, I mean this again. I, I'm happy that you made some money. I'm a wee bit surprised that you made some money, but I'm happy you did. And just like if somebody says I, I went to Vegas and I made a million dollars, I put 275 on the roulette wheel and I made a million dollars, I'm happy for you. But I don't recommend that as a methodology to, to become wealthy because you'll end up with nothing. And yeah, I was counseling a, in the early days, I was coaching a lady that had $900,000 in her company for in her 401k and she was 60 or she was 69 years old. And it was a big time name brand company that anybody would know if I mentioned it. Household name. Okay. And a big, big company, major stock. And they made some mistakes in some of their product launches and their stock went down 38% in two quarters. Whoa. So she was investing in their stock. 100% of her 401ks in company stock. Oh man, she had one stock. So as that company goes, so goes her future. So her almost million dollars went down by almost 400,000 in two months or in two quarters. And she came to me, what do I do? And I'm like, I don't know what you do. We're not going to write it down. And then write it down. Then write it down. Hope when it comes up I'm going to cut my losses and get out of Dodge. And So instead of $1 million to work with, you know, we had 600,000 to work with. And because she wasn't diversified, but it was a name brand, predictable, experienced, boring company shouldn't have done that. But, you know, and it hadn't done that. It had gone up all these years. But then about the time she needs it, she hits retirement age. Boom, this thing goes down the dadgum hole. And so that's the kind of thing you're facing. And diversification is a basic financial principle. The first thing they teach you in financial planning. Spread. The Bible says it spread your portions to seven. Yes to eight, for disaster may come upon the land. Spread it out. Money is like manure. Spread out. It grows things left in one pile. It stinks.

[Dave Ramsey]

I like that. And the slower you grow it, the more likely you are to actually keep it and replicate that. You know, proverb says, wealth gained hastily will dwindle. Whoever gathers, little by little, will increase it. So unless you got a crystal ball or your Nancy Pelosi, I would not be betting on any single stocks.

[Chris Hogan]

Whoa.

[Dave Ramsey]

Sorry, Nance. She's been doing very well for herself.

[Chris Hogan]

Dropped it in there. Well, you just.

[Dave Ramsey]

I wonder if she's. If Sarah's. Maybe for Michelle was friends with Nancy. Maybe that's who told her to get on these stocks years ago.

[Chris Hogan]

Somebody. Somebody helped her pick.

[Dave Ramsey]

Somebody knew something.

[Chris Hogan]

Yeah, that's interesting. Yeah, I wouldn't accuse Michelle of that. Michelle seems like she's sweet lady. Just leave her alone. George. Don't leave. Don't be abusing the customers.

[Dave Ramsey]

Michelle alone.

[Chris Hogan]

Don't be abusing the customers.

[Dave Ramsey]

Well, see, now everyone else goes, well, if I just pick the right stocks, I can be like Michelle. That's the scary.

[Chris Hogan]

That's true. If you pick the right stocks, you'll be like Michelle.

[Dave Ramsey]

You go back in time.

[Chris Hogan]

That means four times out of 20 you hit. That's a pretty heavy failure rate. Four times out of 20 you hit. Think about it. The statistics. I mean, if you got four out of 20 answers on a test right, you would get an F.

[Dave Ramsey]

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.