Dave Ramsey's 3 Rules For Investing

Summary

Summary of "Dave Ramsey's 3 Rules For Investing"

Episode Details:

• Title: Dave Ramsey's 3 Rules For Investing
• Podcast: The Ramsey Show Highlights
• Host/Author: Ramsey Network
• Release Date: March 31, 2025

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Introduction

In the episode titled "Dave Ramsey's 3 Rules For Investing," listeners are guided through essential investment principles tailored for individuals navigating significant financial changes. The episode features a conversation between Dave Ramsey, a renowned financial advisor, and Zach, a 30-year-old newly engaged individual who recently inherited a substantial sum of money following his father's passing.

Zach's Situation

Zach reached out to Dave Ramsey seeking advice on managing an inheritance of approximately $3.4 million in investments, over $200,000 in cash, and several properties. This financial windfall came after the unfortunate passing of his father due to brain cancer at the age of 77. Grappling with the responsibility of honoring his father's legacy and managing life-changing funds, Zach expressed his feelings of being "a little lost" and his desire to make prudent financial decisions.

Key Details:

• Age: 30
• Annual Income: ~$140,000
• Marital Status: Engaged, with a wedding planned for June

Dave Ramsey's 3 Rules for Investing

Dave Ramsey outlined three fundamental rules to guide Zach—and listeners—in making informed investment decisions:

1. Never Put Money into Something You Don't Understand

At [03:06], Dave emphasizes the importance of comprehension in investment choices:

Dave Ramsey: "Never put money in something you don't understand. I don't care if George Camel said to do it... Don't put money and stuff until you understand."

This rule underscores the necessity of thorough understanding before committing funds, regardless of who recommends the investment.

2. Go Slow – Take Your Time to Understand

At [03:33], Ramsey advises patience:

Dave Ramsey: "Don't make any big moves to prove that you know something that you don't know yet. Take your time till you understand."

The second rule highlights the value of gradual investment steps, allowing individuals to build confidence and knowledge without rushing into potentially risky ventures.

3. Surround Yourself with Financial Mentors Who Teach, Not Just Manage

Discussed at [03:53], Dave stresses the importance of having knowledgeable advisors:

Dave Ramsey: "Put people in your life... that have the heart of a teacher... do not turn this money over to someone else. God made it your responsibility."

This rule encourages individuals to seek mentors who are committed to educating them, ensuring that they remain in control of their financial decisions while leveraging expert guidance.

Implementation Steps

To effectively apply these rules, Dave Ramsey provided actionable steps for Zach:

1. Educational Investment Events:

   • Dave Ramsey: "George and I are going to be doing an investment, a virtual event... I'm going to give you a ticket. I want you to watch it." [04:34]
   • Attendees are encouraged to participate in events like Investing Essentials to deepen their understanding of investment strategies.

2. Selecting a Financial Mentor:

   • Dave Ramsey: "Find a SmartVestor Pro... that you have to walk out of there feeling like, this person's not greedy... you're hiring a financial mentor." [04:52]
   • Ramsey advises interviewing multiple advisors to find one that aligns with your values and offers genuine educational support.

3. Building a Support Network:

   • Incorporate various professionals such as tax advisors, estate planners, and real estate experts who possess the heart of a teacher.
   • Dave Ramsey: "In the multitude of counsel, there's safety, the Bible says. And that's what I did. I just built you a board of directors if you listen to me." [06:03]

Expert Affirmation

George Kamel, a financial expert affiliated with Ramsey Network, chimed in at [07:05] to reinforce Ramsey’s advice:

George Camel: "People who live and breathe this stuff every day. ... What this does is leapfrog you through the baby steps because you never have to touch a cent of debt for the rest of your life."

George emphasizes the long-term benefits of following Ramsey's structured approach, highlighting the avoidance of debt and the creation of a secure financial future.

Encouragement and Conclusion

Dave Ramsey concluded the discussion by commending Zach’s responsible approach:

Dave Ramsey: "You're a good man, Zach. You're going to do a great job. Your dad's already proud of you. I'm proud of you." [07:44]

He reinforced the importance of honoring one’s legacy through responsible financial management and the avoidance of rash decisions that could jeopardize long-term stability.

Closing Remark:

Dave Ramsey: "Create your free EveryDollar budget today. The simplest way to budget for your life."

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Key Takeaways

1. Understand Before Investing: Ensure clarity on any investment vehicle before committing funds.
2. Patience is Crucial: Avoid making hasty investment decisions; take time to build financial knowledge.
3. Seek Educational Support: Surround yourself with mentors who prioritize teaching and understanding over managing your investments.

By adhering to these principles, individuals like Zach can confidently manage their inherited wealth, honor their loved ones' legacies, and secure a financially stable future.

Transcript

[Dave Ramsey]

Brought to you by the EveryDollar app. Start budgeting for free today.

[Zach]

My father passed away in June and I inherited pretty large. Thank you. Large amount of money. And I just, I really, you know, I kind of want to do what's right by him, but I mean, it's life changing and I'd like to kind of get some advice, hopefully from you on how to proceed a little bit. I'm a little lost with it.

[Dave Ramsey]

I got you. How old was he?

[Zach]

He was 77.

[Dave Ramsey]

What happened to him?

[Zach]

Brain cancer.

[Dave Ramsey]

Oh, I'm sorry. Were y'all close?

[Zach]

Very.

[Dave Ramsey]

I'm so sorry. How old are you?

[Zach]

30.

[Dave Ramsey]

Cool. What do you make a year?

[Zach]

About 140 this year.

[Dave Ramsey]

Good for you. Are you married?

[Zach]

Engaged.

[Dave Ramsey]

Okay, Good. Fun. When are you getting married?

[Zach]

June.

[Dave Ramsey]

Okay. All right. One year later. Wow.

[Zach]

Yeah.

[Dave Ramsey]

Yeah. So how much. How much money was left to you, Sir?

[Zach]

Invested about 3.4. A little over 200 cash and couple properties.

[Dave Ramsey]

What's the 3.4 invested in?

[Zach]

Mostly funds.

[Dave Ramsey]

Mutual funds?

[Zach]

Yes.

[Dave Ramsey]

Okay. All right. Are you putting Money in your 401k now?

[Zach]

Yes.

[Dave Ramsey]

Are you putting in mutual funds?

[Zach]

Some, yes.

[Dave Ramsey]

How'd you pick the mutual fund?

[Zach]

Well, originally. You mean for my contribution to my own. So I kind of manage it a little bit myself. And right now it's kind of split between index funds. It's just with a fidelity. You know, I just put it in mostly an index fund last year and. Which did pretty well.

[Dave Ramsey]

But so my point of asking that is that you have already begun, before your dad's passing, to analyze and select investments. So doing that is not rocket science. You figured that out. It's a couple of three numbers you can look at and you can start to understand. And you made some decisions based on some things you read and you went index route for, and you looked at track records and you, you know, you've had your. It's not your absolute first time doing this. Agreed.

[Zach]

Agreed.

[Dave Ramsey]

Okay. So. But we do have 3.6 million reasons to get better at it.

[Zach]

Yeah.

[Dave Ramsey]

Yeah. So here's a couple of rules and if you'll follow these rules, you'll be okay. Number one rule, never put money in something you don't understand. I don't care if George Camel said to do it. I don't care if Dave Ramsey said to do it. I don't care if a guy in a fifteen hundred dollar suit said to do it. I don't care if a genius on TikTok said to do it. Actually, I care. Don't do that. But whatever he said don't do that. But you see what I'm saying? I mean, don't put money and stuff until you understand. Now, if you got that one, say yes.

[Zach]

Yes.

[Dave Ramsey]

Okay. That gives you great confidence then to go slow. That's number two. You don't have to make any big moves to prove that you know something that you don't know yet. Take your time till you understand. So go slow is number two, right?

[Zach]

All right.

[Dave Ramsey]

Unless you understand it, don't do it. Number two, go slow. Number three, put people in your life in the financial world that have the heart of a teacher that can help you understand and go slow. But we're not hiring someone to do our job. Your job is to understand and manage the money that your father blessed you with. So go slow, understand it. Get people to help you understand more. Because you have a. A level one understanding of mutual funds. And really, you probably need to get that up to about a level 5 or a level 6 out of 10.

[Zach]

Okay.

[Dave Ramsey]

Okay. It's probably not that big a deal, not that big a jump, but you do need to do a little bit of learning. George and I are going to be doing an investment, a virtual event. Investing Essentials Tickets are $199. I'm going to give you a ticket. I want you to watch it. It's on March 3rd and 4th. Okay?

[Zach]

Okay.

[Dave Ramsey]

We're going to go into a bunch of details so we can be one of your teachers. But then you take that information, and it'll help you make decisions about this portfolio. Then I want you to go to ramseysolutions.com once you click on SmartVestor and find a SmartVestor Pro, a mutual fund broker advisor in your area that we endorse, that has the heart of a teacher. And I want you to interview a couple of them and pick out one you like, that you feel good about. Your fiance feels good about. Take her with you. They have to pass the smell test. Okay. And they have to. You have to walk out of there feeling like, this person's not greedy. This person's not looking at me like a dollar bill. This person is looking at me like a young person who's a little scared, who needs to be taught. And they're. You're. You're hiring a financial mentor. You follow me?

[Zach]

Yes.

[Dave Ramsey]

Their job is to teach you. Their job is not to do it for you. Do not turn this money over to someone else. God made it your responsibility, not someone else's.

[Zach]

Okay.

[Dave Ramsey]

You can have. You can invest through someone, but they do what you Say to do after they taught you and you understand and you go slow and you felt good about it. Okay. That's true of your tax advisor that you need to get in your corner. That's true of a real estate person. If you've got some properties that you need to get in your corner, they have to have the heart of a teacher. Oh, and by the way, you're getting married. You need an estate plan because you're a multimillionaire. So you need an attorney in your corner that does estate planning with the heart of a teacher. So you understand, you learn from these people. I have attorney, a tax attorney. I have an estate planning attorney. I have smartvestor pros. I am a real estate expert. I've been doing real estate my whole life. So I don't have one of those. But, you know, I've got people in my life, and I'm freaking Dave Ramsey that teach me. Okay. And George and Whitney do, too. Right, George?

[George Camel]

Absolutely.

[Dave Ramsey]

Yeah.

[George Camel]

People who live and breathe this stuff every day. And that'll help you create some confidence that you're doing the right things to have people looking over your shoulder and helping you understand it. And so I love this plan. And really what this does is leapfrog you through the baby steps because you never have to touch a cent of debt for the rest of your life. What a blessing. And so I love that you're. You're taking this seriously, going, hey, I don't want to screw this up. This is a weight to carry. But it's a blessing as well. It's going to help kickstart your marriage. That might mean buying a reasonable home in cash one day. That it doesn't mean you're going to have lifestyle creep and go bunch of buy a bunch of nice toys. But it does allow you to have a very different life. That's an amazing legacy your dad left.

[Dave Ramsey]

Yeah, it's very, very cool. And you honor his legacy by being responsible.

[Zach]

Yeah, exactly. That's. That's why I'm making this call.

[Dave Ramsey]

I was going to say that's why. That's why you're a good guy. I knew that when you made this call. You've already honored his legacy. You already honored his memory. He's proud of you right now for just because you're saying, I don't know what to do. Somebody help me. That's the spirit. You approach this, but you don't. Somebody take this because I can't handle it. It's a hot potato. I'm going to pitch it to somebody else. That's what a lot of the pro athletes do. And then they retire broke after making 10 million a year, right? Yeah, because somebody screwed them over or some, you know. And let me tell you this, let me tell you from my experience, who screws you more than con artists is enthusiastic ignoramuses that have got some great idea for your money. Your brother in law who wants to open a pizza place, that's an enthusiastic ignoramus run, okay? There's an enthusiastic ignoramus on every corner. And they'll screw you a lot more. There's a lot more of them than there are con artists. So that's why, if you understand it, you're not going to get screwed. If you take your time, you feel peace and wisdom. Not erratic slashing and flashing about. Instead, you got good people in your corner. In the multitude of counsel, there's safety, the Bible says. And that's what I did. I just built you a board of directors if you listen to me. So. You're a good man, Zach. You're going to do a great job. Your dad's already proud of you. I'm proud of you. This is the Ramsey Show. Create your free every dollar budget today. The simplest way to budget for your life.