The 3 Most Important Investing Principles

Summary

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The Ramsey Show Highlights – "The 3 Most Important Investing Principles"

Date: May 27, 2026
Host(s): Dave Ramsey, Co-Host
Caller: Shane

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Episode Overview

This episode centers on investing fundamentals for those new to building wealth, sparked by listener Shane’s question: what should he do with significant savings accumulating after a recent income boost? Dave Ramsey and his co-host break down three timeless investing principles, offering practical, memorable advice for novices keen to make smart financial decisions.

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Key Discussion Points & Insights

1. The Situation: A Listener’s Dilemma

• Shane calls in, admitting inexperience with investing. Recent income growth means savings have ballooned, but he's unsure where or how to put his money to work.
  • Household income: north of $200k ([01:22])
  • Savings: $50k in the bank; $40k saved in last six months ([01:33])
  • Debt: $70k in vehicles ([05:01])
  • Investing so far: only basic company 401k

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2. The Three Most Important Investing Principles ([02:07]–[04:21])

1. Don’t Invest in Anything You Don’t Understand

• "Don’t ever put money in something you don’t understand." — Dave ([02:07])
• Anecdote: NFL player with $10M in CDs. Dave praises playing it safe over reckless risk:
  "That’s so much smarter than all the other people you play football with..." ([02:19])
• Don’t let TikTok trends, financial personalities, or flashiness sway you if you don’t truly get it.

2. Plan to Go Slow

• "The fastest way to get rich quick is don’t get rich quick. The tortoise wins the race over the hare every time… In investing you always win if you’re slow and steady." — Dave ([02:32])
• Reiterates the reliability of long-term, consistent investing over chasing quick wins.

3. Choose Advisors with the Heart of a Teacher

• "Don’t get financial people in your life…that sound like Charlie Brown’s teacher: ‘wa, wa wa, wa, wa, wa…’ If they can’t teach you, they’re just a salesman, not a financial person." — Dave ([03:33])
• If an advisor leaves you more confused, or if your gut feels off, don’t work with them.
• Ramsey Solutions’ vetted advisors must “have the heart of a teacher.” ([06:32])

Memorable Quotation:

• "If you sit down with a financial advisor and you and your wife and your wife says, ‘I’ve got a bad feeling about him or her,’ don’t go with them." — Dave ([04:17])

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3. Ramsey's Step-by-Step Path to Investing

• Follow the "Baby Steps":
  1. Pay off all debts except your home.
     • Shane has $70k in vehicles; Dave urges no investing until these debts are paid off ([05:04]).
  2. Build a fully-funded emergency fund (3–6 months expenses).
     • Only touch this for true emergencies ("not a 'go on a trip' fund") ([05:30]).
     • "Open up a high yield savings account… at least you’re getting 3–4% sitting there for your emergency fund." — Co-host ([05:50])
  3. Invest 15% of household income in retirement accounts.
     • 401(k), Roth 401(k), Roth IRA recommended. ([06:07])

Memorable Phrase:

• "Being out of debt and having the rainy day fund is foundational to keep your investments safe. Your investments otherwise will turn..." — Dave ([05:08])

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4. Simple, Proven Investment Vehicles ([07:27]–[08:46])

• Mutual Funds:
  • Prefer funds with a long, positive track record.
  • "You start investing in good mutual funds and they’re real easy to understand. It’s 90 to 200 stocks... you look at the track record… been growing at an average rate of 11%, 10%, 22%... for 32 years." — Dave ([07:27])
• No Flashy, High-Risk Strategies
  • No crypto, no day trading, no Airbnb flipping.
  • "You’ll find none of that because, again, it’s not exciting investing advice, but... the amount of baby steps millionaires that have done this and have built wealth slowly over time… it is the most stable way." — Co-host ([08:15])
  • "The difference is it actually works." — Dave ([08:44])

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Notable Quotes & Memorable Moments

• "The fastest way to get rich quick is don’t get rich quick…" — Dave ([02:32])
• "Don’t get financial people in your life… that sound like Charlie Brown’s teacher..." — Dave ([03:33])
• "...if you do all of that, you’re going to have so much stinking money. Because I got to tell you, one of the highest paid professions in the United States today is a good salesman." — Dave ([06:45])
• "It’s not super exciting, but it is... consistent." — Co-host ([08:25])
• "The difference is it actually works." — Dave ([08:44])

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Timestamps for Key Segments

• 00:07–01:33: Shane introduces his situation (income, savings, anxiety about investing)
• 02:07–04:21: Ramsey outlines the three investment principles
• 04:21–05:58: The "Baby Steps" approach — pay off debts, emergency fund, and why it matters
• 05:50–06:07: High-yield savings for your emergency fund
• 06:07–06:52: Begin investing 15% once debts and savings are handled; finding a good advisor
• 07:27–08:46: Simple, steady mutual fund investing, and why flashy trends are avoided

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Final Takeaway

Slow, steady, and informed wins the investing race. Don’t invest in what you don’t understand, avoid high-risk shortcuts, and surround yourself with advisors who teach and empower you—not confuse or sell you. The Ramsey approach may not sound exciting, but "the difference is, it actually works."

Transcript

[A]

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

[B]

So I've changed positions in the company that I've been working for for the last couple of years, and I'm making a significant amount of money over what I was making initially. And it's kind of just piling up in the bank. I haven't invested any of it aside from just the company, 401k, which comes out automatically. And I'm pretty illiterate when it comes to these things. So I've been back and forth reading different things online about what I should be doing with my money. Never really done anything with it thus far because I haven't had any professional advice, just what I've read online. So I'm hoping that you can maybe guide me in a direction of where I should be putting my money to work for me as opposed to earning less than 1% interest in a bank.

[A]

Good for you. Good for you. Well, the good news is it's not rocket science. It's not that hard. This is not like learning a foreign language. It's much easier. Okay. And so it is a bit of a foreign language, but you just have to learn the vernacular and then you'll know what to do. What do you do for a living?

[B]

So I'm in sales.

[A]

Good. What do you make?

[B]

By myself or my wife as well.

[A]

Your household income. Why is this money piling?

[B]

Probably just north of 200k gross, between my wife and I.

[A]

Good for you. Well done, sir.

[C]

How much money do you have saved, Shane? You said it's just sitting in the bank and piling up.

[B]

Yeah. So right now I have about 50,000 in the bank. I've only been in sales for the last 6 months, and I probably had 10,000 when I started, so I probably have saved 40k in the last.

[C]

It's amazing.

[A]

Good for you. Okay, well, as far as investing goes, there's two principles that if you'll follow these two principles, you'll find your way through and do just fine. Okay. Actually, there's three, but I'll give you two. I'll give you all three of them. Principle number one, don't ever put money in something you don't understand.

[B]

Okay.

[A]

You have not violated that. Congratulations. You've done very well. I met with an NFL player one time and I sat down with him and his wife and. And he said, dave, you're going to kill me. And I'm like, what did you do? Did you blow all your money? And he said, no, I got $10 million. I'm like, what is it? Why am I going to kill you? You got $10 million. He said, it's all in CDs. It's horrible. And I went, that's not horrible. That's so much smarter than all the other people you play football with because they've all blown theirs or put it in their brother in law's pizza company that went broke, you know, so, you know, very smart. Don't put money and stuff until you understand it. So I don't care how flashy the TikTok thing is or what Dave Ramsey says or what Rachel Cruz says. You understand it before you put money. Principle number one. Principle number two, plan to go slow. The fastest way to get rich quick is don't get rich quick. The tortoise wins the race over the hare every time. I read the book, okay? And I've read it a bunch of over and over. He always wins. And investing you always win. If you're slow and steady wins the race. That's the Aesop's fable, okay? And then the third thing is, don't get financial people in your life of any kind. Real estate, insurance, investing, tax, whatever. That sound like Charlie Brown's teacher. Wa, wa wa, wa, wa, wa wa wa. I have no idea what you're saying. You might as well speaking German to me, okay? And if they can't speak to you in such a way that they can teach you, they don't have the heart of a teacher, then they're just a salesman. They're not a financial person. And financial people are the world's worst. Because a lot of us are nerds and we like being impressive with our nerd knowledge more than we are concerned that you learn.

[B]

Sure.

[A]

And that goes back to the first one. Don't put money in stuff you don't understand. So if you sit down with a financial advisor and you and your wife and your wife says, I got a bad feeling about him or her, don't go with them. Or if you sit down with them and you leave more confused than when you went in, don't go with them.

[B]

Okay?

[A]

They might be okay, but they're not okay for you. Now, now that we've established that, we can start talking about some of the cool stuff you could do for investing. Now we teach a process for building wealth that we've taught for 30 years plus, called the baby steps. You probably heard of that, right?

[B]

I do. I have. I actually have your total money makeover book.

[A]

Okay, so you know then that we're going to have. You have an emergency fund and have all your debts paid off except your home before we start investing. Do you have any debt other than your home?

[B]

Yeah, so just my car or my truck and my wife's car.

[A]

And how much is all that

[B]

total? Probably 70,000.

[A]

Okay, we're gonna pay all that off before we do any investing then.

[B]

Okay.

[A]

That's what we call baby step two, if you remember the book. And then once that's done, I want you to set aside three to six months of expenses in for an emergency fund. Being out of debt and having the rainy day fund is foundational to keep your investments safe. Your investments otherwise will turn. You'll pull money. I'd stop your 401k temporarily and knock those car debts out. Take all that 40k and throw it at the smallest car debt. Let's get it all cleaned up. So if you got no payments but a house payment and you got, I don't know, in your case, 30,000 bucks sitting there in a money market account only to be touched for emergencies, it's not a I want to go on a trip fund.

[C]

Yeah, that was one change. I was going to say open up a high yield savings account. Fairwinds Credit Union's amazing, but they have a great smart bundle. Put it not in a traditional savings account but in a high yield savings account. Because it goes from negative, I mean basically not even 1% to at least you're getting 3 to 4% sitting there for your emergency fund.

[A]

For your emergency fund. Right. And then with no payments now you start really stacking money. You start putting 15% away in your 401k and Roth IRAs and Roth 401ks. And you can talk to one of the smartvestor [e-mail] and they can help you. They will have the heart of a teacher. They don't get the Ramsey name put on them on our website unless they have the heart of a teacher. We won't put our name beside somebody. And if we find out someone of them is doing the Charlie Brown's teacher thing, we fire them and get them out of the system because we are hardcore about this. So if you do all of that, you're going to have so much stinking money. Because I got to tell you, one of the highest paid professions in the United States today is a good salesman.

[B]

Yeah, it's, it's, it was pretty night and day. It's about three times what I was making with this same current company prior to this position. And it's just had a lot of nights where I didn't really know what we were going to do for certain things. Read through your book. Paid off some debts, credit cards, medical bills.

[A]

Good. Well, you're on the way.

[B]

Now it's. And now we're just at a point where I have too much money. I don't know what to do with it based off of, you know, my own ignorance with finances, with investing.

[A]

You start investing in good mutual funds and they're real easy to understand. It's 90 to 200 stocks. You look at the track record of the fund that was mutually funded by you, me and a bunch of other people together, and you go, okay, that group of, that pile of money has been growing at an average rate of 11% or 10% or 22% or whatever it is. And you look at, oh, it's done that for 32 years. Oh, okay. I feel pretty good about that. That's like buying a house in a good neighborhood.

[C]

Yeah. And Shane, when you get to that, that 15%, honestly, the investment advice as you, if you dig into more of what we talk about, it's not going to be a lot of flashy stuff. I mean, honestly, the 15% into retirement, 401ks, Roth IRAs, you know, the standard. And then anything beyond that is just mutual funds. I mean, index funds. Like, it's, it's nothing. There's no day trading, no crypto. Like, there's nothing big and flashy real estate. Airbnb, you know, Airbnb investing. Like, there's, you'll find none of that because again, it's, it's, quote, unquote, not exciting investing advice. But the amount of baby steps, millionaires that are at it have, have done this and have built wealth slowly over time because it is the most stable way to build wealth versus all the flashiness. So again, it's not, it's not super exciting, but it is, it's consistent.

[A]

The difference is it actually works.

[C]

It works. Yep.

[A]

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