Ramsey Everyday Millionaires: Episode Summary
Episode Title: This Is the Difference Between Investing and Speculating
Host/Author: Ramsey Network
Release Date: May 16, 2025
Featuring: Dave Ramsey, Jade Warshaw, Raquel
Introduction
In this episode of Ramsey Everyday Millionaires, hosts Dave Ramsey and Jade Warshaw address a listener's query about purchasing their first home amidst financial considerations involving speculative investments. The discussion delves into the critical distinctions between investing and speculating, the implications of borrowing from family, and strategies for building sustainable wealth.
Listener's Financial Dilemma
Raquel, a listener from Los Angeles, reaches out seeking advice on whether to accept a loan to buy a home or utilize their existing Bitcoin investment. At [00:23], Raquel explains:
"My husband and I are 33 and we are possibly considering buying our first home. We would like to put an offer in, but we have the possibility of borrowing $110,000 from my in-laws in order to not touch our last nest egg, which would be a bitcoin that hopefully will increase in value in the next few years."
She expresses concern over deciding whether to use the Bitcoin as a down payment or borrow money, aiming to preserve their primary savings.
Dave Ramsey and Jade's Initial Response
Dave Ramsey immediately addresses the listener's hesitation to sell Bitcoin, recognizing Raquel's familiarity with his perspectives:
"So you kind of expect me to tell you to sell the bitcoin." [01:09]
Jade Warshaw reinforces this stance by categorizing Bitcoin as a speculative asset:
"Bitcoin's not a great investment. We would never suggest it." [01:12]
Dave elaborates on the nature of Bitcoin, distinguishing it from traditional investments:
"It's like it's, you know, speculation at best. It's not an investment." [01:27]
Investing vs. Speculating
A significant portion of the discussion focuses on defining and differentiating investing from speculating.
Dave Ramsey outlines the characteristics of a true investment:
"Investing is when you have a five-year or ten-year time horizon with an investment that has a track record... something like a rental property or a mutual fund that's been open for decades." [02:17]
Conversely, he categorizes activities like day trading, house flipping, or holding Bitcoin for short-term gains as speculation:
"When you buy something for a short hold to flip it, that's called speculation. It's not called investing." [02:17]
Jade Warshaw echoes this sentiment, emphasizing the volatility and high-risk nature of speculative assets compared to steady, long-term investments.
Risks of Borrowing from Family
The conversation shifts to the personal risks associated with borrowing money from family members. Dave Ramsey discusses how such loans can strain relationships:
"The borrower is slave to the lender. When you borrow money from someone, you by nature change the quality and the texture of the relationship with them." [04:02]
He underscores the emotional and relational toll, noting how financial obligations can alter family dynamics, especially with in-laws.
Evaluating Current Financial Position
Raquel provides further details about her financial standing:
"We have $250,000 in gold and silver... The Bitcoin is just like $100." [05:27]
Dave Ramsey suggests leveraging their substantial savings to strengthen their home purchase without resorting to speculative investments:
"You could cash all this and have, like, $300,000 towards the property for the down payment." [05:39]
He advises using proven, stable assets to minimize risk and avoid jeopardizing their financial security on volatile investments.
Encouraging Diversified and Stable Investments
Both Ramsey and Warshaw advocate for a balanced investment portfolio prioritizing low-risk, long-term growth over high-risk speculation. Dave Ramsey stresses the importance of the "tortoise" approach—steady and consistent investing:
"The tortoise wins the race every time... the people that build wealth are not the ones that take as much risk as y'all are taking." [06:15]
He compares the unpredictability of Bitcoin, gold, and silver to the steady returns of mutual funds, reinforcing the value of patience and discipline in wealth building.
Final Recommendations
In conclusion, Dave Ramsey and Jade Warshaw strongly advise Raquel and her husband to:
- Liquidate Speculative Assets: Sell Bitcoin and any other high-risk investments to avoid unnecessary financial risks.
- Utilize Stable Savings: Use their substantial savings in gold and silver to make a significant down payment on their first home.
- Avoid Family Loans: Refrain from borrowing from in-laws to maintain healthy family relationships and financial independence.
- Adopt Long-Term Investment Strategies: Shift focus towards low-risk, long-term investments to ensure sustainable wealth growth.
Notable Quotes with Timestamps
-
Dave Ramsey:
- "It's like it's, you know, speculation at best. It's not an investment." [01:27]
- "Investing is when you have a five-year or ten-year time horizon with an investment that has a track record." [02:17]
- "The tortoise wins the race every time." [06:15]
-
Raquel:
- "We would like to put an offer in, but we have the possibility of borrowing $110,000 from my in-laws... about 250,000 in gold and silver." [00:23], [05:27]
-
Jade Warshaw:
- "Bitcoin's not a great investment. We would never suggest it." [01:12]
- "If you want to speculate on bitcoin, it would be a small percentage of your portfolio." [04:59]
Conclusion
This episode of Ramsey Everyday Millionaires provides invaluable insights into the perils of mixing speculative investments with significant financial decisions like purchasing a home. By emphasizing disciplined, long-term investing and the importance of maintaining clear and healthy financial relationships, Dave Ramsey and Jade Warshaw offer listeners a roadmap to building and preserving wealth effectively.
For more insights on building extraordinary wealth while living within your means, avoid debt, and invest responsibly, tune into future episodes of Ramsey Everyday Millionaires.