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When a caller told Dave (1)Ramsey (1) he had managed to save roughly $40,000 in just six months after moving into a higher-paying sales role, he expected to discuss investments. Instead, Ramsey spent much of the conversation explaining what not to do.<\/p>\n
\u201cThe fastest way to get rich quick is don\u2019t get rich quick,\u201d Ramsey told the caller.<\/p>\n
Top Picks <\/p>\n
In other words, when you come into money quickly, the pressure to use it can feel immense. But rushing financial decisions can zero a once-in-a-lifetime change of fortune. Making money is just the first step. Keeping it growing while protecting yourself is the next one.<\/p>\n
The caller said his household income had climbed above $200,000 a year and admitted he felt overwhelmed by the amount of investing advice available online. Aside from contributing to a workplace 401(k), most of his growing savings remained parked in the bank while he tried to figure out his next move.<\/p>\n
Rather than recommending a hot stock, cryptocurrency or real estate strategy, Ramsey laid out three investing principles he believes can help investors avoid costly mistakes and build wealth over time.<\/p>\n
Here are the three investing principles Ramsey says every investor should follow.<\/p>\n
Principle 1: Know your investments <\/p>\n
Ramsey\u2019s first principle was simple.<\/p>\n
\u201cDon\u2019t ever put money in something you don\u2019t understand,\u201d he said.<\/p>\n
The advice came after the caller admitted he had largely avoided investing because he didn\u2019t feel confident enough to make informed decisions.<\/p>\n
Rather than criticizing the hesitation, Ramsey praised it.<\/p>\n
To make his point, he shared the story of an NFL player who had accumulated $10 million and kept it entirely in certificates of deposit (CDs). The player called it \u201chorrible.\u201d<\/p>\n
\u201cThat\u2019s not horrible,\u201d Ramsey argued. \u201cThat\u2019s so much smarter than all the other people you play football with because they\u2019ve all blown theirs or put it in their brother-in-law\u2019s pizza company that went broke, you know?\u201d<\/p>\n
CDs are low-risk savings accounts where you agree to lock your money away for a fixed term of your choosing \u2014 from six months all the way to five years. In exchange, the bank pays you a fixed interest rate that is generally higher than you would have earned from a typical savings account.<\/p>\n
Some investors like CDs; others think they\u2019re too conservative. Ramsey argued it was far smarter to avoid chasing risky opportunities that the NFL player didn\u2019t fully understand.<\/p>\n
According to Ramsey, investors should be skeptical of flashy social media trends, complicated financial products and investment opportunities that seem too good to be true. Before investing a dollar, he believes people should understand how an investment works, how it makes money and what risks they\u2019re taking on.<\/p>\n
Chasing flashy, complex day-trading or short-term trends rarely ends well for retail investors. According to Quantified Strategies (2), a massive 72% of day traders end the calendar year with net financial losses.<\/p>\n
Even worse, long-term tracking indicates that only 1% of day traders remain consistently profitable over a five-year period. In short, fast trades don\u2019t always equal fast money.<\/p>\n
Read More: Here\u2019s the average income of Americans by age in 2026. Are you falling behind?<\/a><\/strong><\/p>\n Get reliable growth <\/p>\n For those seeking predictable, reliable growth, a platform like CD Valet<\/a> can help you find higher-yield options that work for you \u2014 regardless of your status in the NFL. They can be used for both medium-term savings and building a cushion for the long haul.<\/p>\n CD Valet tracks over 40,000 verified rates from FDIC-insured banks and NCUA-insured credit unions nationwide<\/a>. Unlike other websites, they show every publicly available rate, ensuring you have a comprehensive view of the market.<\/p>\n To help you save smarter, CD Valet provides free, specialized tools:<\/p>\n Earnings calculator: See exactly how much interest you\u2019ll accrue by the end of your term. Adjust different rates and terms to see how much you can earn with a 12-month vs. a 24-month CD.<\/p>\n<\/li>\n CD rates map by state: See real-time offers of the best CD rates across the country. Many institutions allow you to open an online account, so you can take advantage of a great CD rate without being located in that state.<\/p>\n<\/li>\n<\/ul>\n Plus, their CD rates are updated continuously, so you can shop, compare and open CDs with ease<\/a>.<\/p>\n Learning can be an investment, too <\/p>\n Ramsey\u2019s advice wasn\u2019t to avoid investing indefinitely. His point was that investors should understand what they\u2019re buying before they buy it.<\/p>\n For those looking to improve their investing knowledge, Moby<\/a> provides research, market analysis and stock recommendations designed to help investors make more informed decisions.<\/p>\n In four years, and across almost 400 stock picks, their recommendations have beaten the S&P 500 by almost 12% on average. They also offer a 30-day money-back guarantee. That way, you can make sure Moby\u2019s advice aligns with your investment philosophy.<\/p>\n Plus, their reports are easy to understand for beginners, so you can become a smarter investor in just five minutes<\/a>.<\/p>\n Instead of relying on social media influencers or market hype, investors can use research to better understand companies, sectors and long-term investing opportunities.<\/p>\n Principle 2: Take it slow <\/p>\n Ramsey\u2019s second principle challenged one of the most common investing temptations.<\/p>\n He compared investing to the classic story of the tortoise and the hare, arguing that slow, consistent investors often outperform those who constantly chase the next big opportunity. To tie it back to an old adage: time in the market beats timing the market.<\/p>\n Later in the conversation, Ramsey and co-host Rachel Cruze emphasized that building wealth doesn\u2019t usually involve day trading, meme stocks, crypto speculation or other fast strategies.<\/p>\n Instead, they pointed to retirement accounts, mutual funds and index funds as the types of investments that have historically helped ordinary Americans build wealth over decades.<\/p>\n The slow-and-steady approach isn\u2019t just Ramseyian theory. According to the long-running Quantitative Analysis of Investor Behavior (QAIB) (3) study by DALBAR, the average equity fund investor consistently trails the market due to emotional buying and selling.<\/p>\n Using 2024 as an example \u2014 the S&P 500 surged by 25.02% (4), yet the average retail equity investor took home just 16.54%. This massive 8.48% \u201cbehavior gap\u201d often occurs because investors abandon slow, diversified strategies to chase the next big thing. Then they lock in losses by timing the market poorly.<\/p>\n Now, the slow approach may not generate exciting headlines, but the Aesopian fable of investing is that consistency beats excitement in the long run.<\/p>\n Automate your investing habit <\/p>\n One of the easiest ways to embrace a slow-and-steady investing approach is to automate the process. This also taps into dollar cost averaging, which aims to smooth out the peaks and valleys of investing by making regular contributions regardless of market performance.<\/p>\n Acorns<\/a> helps investors do exactly that by rounding up everyday purchases and automatically investing the spare change into diversified portfolios of ETFs managed by leading firms such as Vanguard and BlackRock.<\/p>\n For example, a $3.25 purchase can be rounded up to $4, with the extra 75 cents invested automatically. While each individual investment may seem small, the habit of investing consistently can compound over time.<\/p>\n You can start by investing in a dividend ETF with as little as $5 \u2014 and, if you sign up today, Acorns will add a $20 bonus<\/a> to help you begin your investment journey. All you need to do is set up a small monthly contribution to boost your investing.<\/p>\n Principle 3: Work with teachers, not just experts <\/p>\n Ramsey\u2019s final principle had less to do with investments and more to do with who investors trust for advice.<\/p>\n He warned against working with financial professionals who leave clients confused.<\/p>\n \u201cFinancial people are the world\u2019s 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,\u201d Ramsey told the caller.<\/p>\n He added, \u201cIf they can\u2019t speak to you in such a way that they can teach you, they don\u2019t have the heart of a teacher.\u201d<\/p>\n According to Ramsey, investors should never feel intimidated by financial jargon or leave a meeting feeling more confused than when they arrived. A good advisor should be able to explain recommendations clearly and help clients understand why certain strategies make sense for their situation.<\/p>\n Finding an advisor who can actually teach isn\u2019t always easy.<\/p>\n As Ramsey pointed out, some financial professionals seem more interested in showing off their expertise than helping clients understand how their money works. But when it comes to your retirement, investments and long-term financial goals, working with the wrong advisor can be a costly mistake.<\/p>\n That\u2019s where Advisor.com<\/a> comes in.<\/p>\n Advisor.com helps connect you with a qualified expert<\/a> based on your unique goals and circumstances. Instead of spending hours researching advisors on your own, the platform does much of the legwork for you, evaluating advisors based on factors such as experience, client ratios and regulatory history.<\/p>\n Even better, Advisor.com\u2019s network is made up of fiduciaries \u2014 professionals who are legally required to put their clients\u2019 interests ahead of their own. Plus, Vanguard research (5) found that working with a financial advisor added 3% to net portfolio returns over time.<\/p>\n Getting started is simple. Just answer a few questions about your finances, investing goals and retirement plans, and Advisor.com\u2019s matching tool will connect you with advisors who may be a good fit for your needs.<\/p>\n You can also schedule a free initial consultation<\/a> with no obligation to hire.<\/p>\n After all, Ramsey\u2019s advice wasn\u2019t just to find an advisor \u2014 it was to find someone who leaves you feeling more confident, informed and in control of your money. And that level of comfort can lead to a long-term financial commitment.<\/p>\n You May Also Like <\/p>\n Join 250,000+ readers and get Moneywise\u2019s best stories and exclusive interviews first \u2014 clear insights curated and delivered weekly. Subscribe now.<\/a><\/strong><\/p>\n Article Sources <\/p>\n We rely only on vetted sources and credible third-party reporting. For details, see our editorial ethics and guidelines<\/a>.<\/p>\n The Ramsey Show Highlights\/ YouTube (1<\/a>); Quantified Strategies (2<\/a>); Dalbar (3<\/a>); Slickcharts (4<\/a>); Vanguard Canada (5<\/a>)<\/p>\n This article provides information only and should not be construed as advice. It is provided without warranty of any kind.<\/p>\n","protected":false},"excerpt":{"rendered":"Moneywise and Yahoo Finance LLC may earn commission or revenue through links in the content below. 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