The Secret To Building Wealth In Baby Step 7

Summary

Ramsey Everyday Millionaires: The Secret To Building Wealth In Baby Step 7

Release Date: February 21, 2025

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In the latest episode of "Ramsey Everyday Millionaires," hosted by the Ramsey Network, key financial principles are unpacked to guide listeners through Baby Step 7: Building Wealth and Giving. Featuring insights from George Kamel and Dave Ramsey, the episode delves deep into the strategies that ordinary individuals employ to amass extraordinary wealth. Below is a comprehensive summary capturing the essence of their discussion, enriched with notable quotes and structured for clarity.

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1. Introduction to Baby Step 7: Building Wealth and Giving

The episode begins with George Kamel setting the stage by referencing last year's successful "Investing Essentials" virtual event, emphasizing the importance of continuous learning in investing and real estate. He hints at upcoming events that will tackle current economic trends and actionable strategies for confident investing.

2. Understanding Baby Step 7

Dave Ramsey takes the floor to elucidate the transition into Baby Step 7 after achieving financial milestones:

Dave Ramsey [00:40]: "Baby step seven is build wealth and give. So now the 15% no longer applies. We just got to put money in investments and hopefully more than 15%."

This step marks a stage where individuals, free from debt and having paid off their homes (Baby Step 6), focus entirely on investing beyond the standard 15%, maximizing contributions to retirement accounts like 401(k)s and IRAs to secure financial independence.

3. The Power of Simple and Consistent Investing

Dave emphasizes that building wealth doesn't require sophisticated investment strategies. On the contrary, simplicity and consistency are paramount:

Dave Ramsey [02:00]: "Things do not have to be complicated to be correct... the vast majority, 90 plus percent, is devastatingly primitive, simple, but they understand it."

He highlights that most millionaires attribute their wealth to their high savings rate rather than the complexity of their investments. This straightforward approach involves steadily investing what one understands and maintaining discipline over time.

4. Compound Interest: Growth Beyond Contributions

George Kamel shares his personal experience with these principles, showcasing the formidable impact of compound interest:

George Kamel [04:00]: "You might notice that the end result might be $3 million. But if you look at your contribution, it might be 300,000."

This example illustrates how compound growth significantly amplifies the initial investments, underscoring that the true wealth lies in the growth generated over time rather than just the principal amount invested.

5. Distinguishing Between Investing and Speculating

A critical segment of the discussion focuses on clarifying the difference between genuine investing and speculative activities. Dave Ramsey strongly advises against conflating the two, as it can derail long-term wealth-building efforts:

Dave Ramsey [04:06]: "Investing is always long ball... You can not call it an investment if you're going to sell it inside of a year. That is speculating."

He explains that investing entails a long-term commitment with a focus on assets that have a proven track record, whereas speculating involves short-term plays with higher risks and uncertainties. Ramsey warns that mixing these can lead to financial instability and prevent the accumulation of substantial wealth.

6. The Importance of Professional Guidance

Both hosts advocate for seeking professional advice to navigate the complexities of investing. George underscores the value of having a "pro in your corner," while Dave elaborates on the qualities to look for in an investment advisor:

Dave Ramsey [07:04]: "You need to sit down with somebody... get somebody with investing that has the heart of a teacher."

They stress the necessity of finding knowledgeable, patient professionals who can educate and guide individuals through their investment journey, ensuring informed and confident decision-making.

7. Leveraging Resources: SmartVestor

Throughout the episode, George and Dave promote SmartVestor, a platform that connects individuals with vetted investment professionals. They encourage listeners to utilize this resource to find advisors who embody the educational and supportive qualities essential for successful investing.

Dave Ramsey [07:04]: "You can get them at ramseysolutions.com... interview two or three of them... they need to have the heart of a teacher."

8. Conclusion and Key Takeaways

As the episode wraps up, George and Dave reiterate the core message: building wealth is achievable through simple, consistent investing and by leveraging the expertise of dedicated professionals. They remind listeners that true financial growth stems from understanding and adhering to proven investment principles rather than chasing complex, high-risk opportunities.

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Key Quotes:

• Dave Ramsey [02:00]: "Things do not have to be complicated to be correct."
• George Kamel [04:00]: "You might notice that the end result might be $3 million. But if you look at your contribution, it might be 300,000."
• Dave Ramsey [04:06]: "Investing is always long ball... You can not call it an investment if you're going to sell it inside of a year."
• Dave Ramsey [07:04]: "You need to sit down with somebody... get somebody with investing that has the heart of a teacher."

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This episode serves as a potent reminder that financial success is within reach by following straightforward investment strategies, maintaining discipline, and seeking the right guidance. Whether you're nearing the culmination of your financial journey or just embarking on it, the insights shared offer a roadmap to building lasting wealth and achieving financial freedom.

Transcript

[A]

What's up guys? George Camel here. You're about to listen to a clip of last year's Investing Essentials virtual event. It was a two night deep dive into investing and real estate hosted by me and Dave Ramsey and we're gearing up to do this event again. But we'll be covering even more topics than before like what's going on with the economy and what you can do about it. You can watch it live on March 4th and 5th of 2025 and start investing with confidence. You can get your tickets today at ramseysolutions.com/events. Enjoy the clip. This episode is brought to you by SmartVestor. Connect with an investing pro near [e-mail].

[B]

SmartVestor so 201 is when you are debt free, 100%. You're investing now more than 15%. You, you've gotten to baby step seven. You don't have any debt now. Baby step six is you pay off the house. So baby step seven is build wealth and give. So now the 15% no longer applies. We just got to put money in investments and hopefully more than 15%. And you've maxed out your 401k, you maxed out your IRAs, you maxed out all things that you can do to keep the government's hands off. Now what are we going to do? Well, let's look at some wealth building, which is why you came tonight, some wealth building principles for that, number one, and this one will get you wealth building is not, it's not required to be sophisticated. As a matter of fact, I will tell you that almost all the people that we've talked to have unbelievably primitive investment plans. I know a few guys that have 50 to $200 million or even a billion dollars that are starting to do some wild and wacky sophisticated things. But the vast majority, 90 plus percent, is devastatingly primitive, simple, but they understand it. They keep doing what they understand. They're successful at it and they never stop. They just keep going and going and going and going and going and going. Things do not have to be complicated to be correct. And that is said in a culture where people don't know how to work all the stuff on their car. They certainly don't know how to work all the stuff on their phone. They don't know how to work all their stuff on anything. Because everything in our life is so stinking complicated and sophisticated and robust and whatever else. And the idea of just, just putting money in something steady over and over and over and over and over again sounds like it can't be right. And I'm telling you, from the data in the field with real wealthy people, the vast majority of wealthy people are boring with their investments. It's not sophisticated. Most millionaires attribute their wealth to what we call savings rate, meaning what percentage of my income am I putting into an investment? They do not attribute it to what the investment did they attribute it to. They steadily planted corn, and then they were not shocked that corn grew. It's that simple. And, George, you've got stories about investment strategy on this that are very interesting, I think.

[A]

Yeah. Because I've lived out these principles for a while now, Dave. And what's wild is that it is so much simpler than you thought. And I just leave it alone. I live on less than I make and I keep this up. And what's amazing is, as you do these calculations, if you use our investment [e-mail], you type in these numbers, you'll notice that the end result might be $3 million. But if you look at your contribution, it might be 300,000.

[B]

That's exactly what I was talking about earlier.

[A]

That's incredible. That actual compound.

[B]

Look at all growth. It's all growth. It's not what you put in.

[A]

You don't need to save $3 million here.

[B]

No. How am I possibly going to save $3 million? You're not. You don't need to. But you need to be putting money in. You need to be putting money in. You need to be putting. It's the steadiness. It's the tortoise that wins all the time. The next one is understand the difference between investing and speculating. Now this one is starting to drive me nuts, okay? Because this is where people. When you use the wrong words on things, you're setting yourself up for failure. And this is one of those examples. All right, let me help you with this. Investing is always long ball. You're always playing long term, and so you're always looking at a long track record. You can not call it an investment if you're going to sell it inside of a year. That is speculating. If you're buying something to flip, you're buying something to hold and roll it back over. There's nothing evil about that, nothing wrong about that. But that is not investing. Quit calling. You're speculating investing because it keeps you from investing. It gives you an excuse to not do real investing, which is long ball. I don't have to put money in my mutual funds Because I'm doing flips. Flips. House flips are not investing. They're speculating. You're buying that house to roll it back over. As a matter of fact, if a home builder builds a home that does not have an owner, a buyer yet, it's called a spec house because he's speculating or she's speculating that they're going to find a buyer for the stinking house. They're not building it to have renters in it for the next 20 years, they're building it to sell. Right now. It's a flip, they're doing it right. It's an inventory item. They're flipping it right now. It's inventory turnover. And they call them spec houses for that reason. They're speculating. And so when interest rates shoot up and people quit buying new houses and a builder's got 20 of these things and he's borrowed money on them, he's sitting there going broke because he had a plan to get rid of them and he can't get rid of them. So don't call your investing speculating and don't call your speculating investing. Keep that separate. And if you do that, what it'll tell you is I don't want a large portion of my money in speculation because that's a higher risk play. It's gambling. Not track record, it's not gambling, but it's a higher risk play. I got to turn the money right now. And if you bet everything on your short term plays, you're going to never build substantial wealth. People that build wealth, they might do some speculating, but they call it what it is and they do investing and they call it what it is and they let their investments be over here. They. And the speculating's just over here playing with the Tabasco sauce, the hot stuff. Right.

[A]

Well, when you do it yourself, you can fall into some of these traps. And that's why it's so important to have a pro in your corner who can help with this stuff and help you understand the differences.

[B]

Yeah, but just never do a short term play and say my investment. Because you're indicating not only your ignorance, but you're also giving yourself permission to not do real long ball investing. And that's where you're going to get screwed up big time. You need to sit down with somebody like George said and get somebody with investing that has the heart of a teacher that will walk with you, not tell you what to do and you don't do it. I got a man. Don't get a man, don't get a woman. You got somebody on your team that says, this is how this works. They're going to teach you something you didn't know. Oh, that's how that works. Okay. Now that I understand it, Dave says I can invest in it if I understand it right. And now we're ready to go on to the next level. That's why we have the SmartVestor Pros out there and that's why we require when we're vetting them that they have the heart of a teacher. And you can get them. At ramseysolutions.com, type in SmartVestor. There will be several of them in your area. Drop down. You can pick the one that you like best. Interview two or three of them, I don't care. But they need to have the heart of a teacher. And if you interview one and you don't and you feel like they're looking down on you and you're dumb when you leave and you feel intimidated, don't use that one. You need to get somebody that's, you know, they're right there with you and they're going, this stuff's not that hard. Here, I'll show you how. And then you'll feel like a pro yourself. And now you got some confidence and now you're ready to do some investing, maybe in something you didn't understand and it took two or three meetings to sit down with somebody to teach you.

[A]

Yeah, but that peace and confidence is. That's everything. 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.