George Kamel - You're Investing in the Wrong Order — Here's What to Do Instead

Episode Date: May 14, 2025

💰 Get Ramsey’s Complete Guide to Investing for free. In this episode, find out the proven order for investing so you can avoid making rookie mistakes that drain your wallet. Next Steps:  • 🖊️ Take this audience survey for a chance to win a $250 gift card! • 🎥 Watch my video Avoid These Investing Traps at All Costs. • 📈 Are you on track with the Baby Steps? Get a free personalized plan. • 💸 Plug your numbers in to the Retirement Calculator. • 💵 Start your free budget today. Download the EveryDollar app! Connect With Our Sponsors: • 🔒 Get 20% off when you join DeleteMe. • 💸 Learn more about opening a high-yield savings account with Laurel Road. Explore More From Ramsey Network:   🎙️ The Ramsey Show   🍸 Smart Money Happy Hour 💸 The Ramsey Show Highlights 🧠 The Dr. John Delony Show 💡 The Rachel Cruze Show 🪑 Front Row Seat with Ken Coleman 📈 EntreLeadership   Ramsey Solutions Privacy Policy Learn more about your ad choices. Visit megaphone.fm/adchoices

Investing can be intimidating. What accounts do you need? Where do you start? Stocks, real estate. Maybe a little crypto? Slow down there, Cheetah. There's a right order for investing, and doing it wrong could cost you millions.

So in today's video, I'll break it down so you can build wealth the right way. But before we dive in, how's about you invest in this channel by clicking those like and subscribe buttons? I'll see myself out. Get there! Alright, first things first. Before we get to the optimal order of investing,

what accounts to use, when to use them, we need to get the foundation right. So before you start investing anything, make sure you're financially ready. What does that look like? Two things. First, you should be out of any and all debt with the exception of your mortgage. And here's why. If your income is tied up in monthly debt payments, it's going to be really hard to build wealth.

Kind of like trying to fill a bucket with Mountain Dew Code Red when there's a hole in the bottom. Now, why would you try and fill a bucket with Mountain Dew Code Red? That's between you, your God, and American Eagle. None of my business. It's America, dude. Learn the rules. Now, once you're debt free, you're not done yet. Here's part two. You should have three to six months of expenses saved up in a fully funded emergency fund.

So once you've checked off those boxes, now you're ready to start investing. But before we talk about where and when to invest, we need to talk about how much to invest, because your savings rate will affect which accounts you'll be using. Now, I recommend investing 15% of your gross household income into retirement. And 15% is a sweet spot. It's enough to build some serious wealth while still leaving enough margin for other money goals, like saving for college and paying off your home. And if 15% is a struggle right now, you've got to cut some economic.

expenses or get your income up. Okay, now that we've covered the prerex to investing and how much to invest, where do you actually start investing? It's easy. One word. Camel coin. We'll take 20. I'm kidding.

Camel coin is not a thing. And if anyone messages you from a fake George Camel account telling you to invest, report them to Elon ASAP. He'll know what to do. You will not be sorry. Or maybe you will. The real answer for where you start is really simple with a good old boring retirement account like a company 401k or a Roth IRA.

But whatever type of account you have or used, here's the five-word investing strategy to help you remember where to put it. Match beats Roth, beats traditional. Let's break it down. First, take all the company match you can get through your employer's retirement plan if you have one. For many of you, that's a 401k plan. If you're a federal employee or member of the military, it'll be a thrift savings plan or TSP for short. If you're a teacher or a nonprofit employee, maybe it's a 403B plan.

Any match they offer is a 100% return on your investment, so that trumps everything else. Second, we're going to go to Roth. So do all the Roth you can at work or as an individual through a Roth IRA. The Roth option just means that you're using after-tax dollars to invest, which then grows tax-free. So you're paying taxes on the money now, so you don't have to pay taxes when you use it in retirement. If you've exhausted the options above and you still haven't hit 15% of your income, go back to the traditional tax-deferred plan through your employer until you hit 15%. Now, a side note here, if your employer doesn't offer a retirement plan,

you still may be able to invest through an IRA or a non-retirement investment account. And if you're self-employed, look into options like a solo 401k or a SEP IRA. And side note here, if your employer retirement plan has a Roth option with solid funds, you can invest your entire 15% there and be done. Simple. But remember, these retirement accounts, they're just empty tax-advanted shells. You've got to choose investments within those accounts to purchase. And sometimes people get overwhelmed and confused at this point because of all the options you could invest in.

Like when you're at sannaic and you can't decide between a dirty Dr. Pepper slush or a bubble gum water with nerds. And again, that's between you and your god and American Eagle, LLC. Anyway, allow me to free you from paralysis by analysis. The only investment you need to build wealth is mutual funds. A mutual fund pulls together money from a bunch of investors to buy a diverse range of stocks in different companies. So if one stock doesn't work out, no problem. You've got plenty of others to balance it out. And we're talking stocks from 90 to 200 or more companies in each of these funds.

So look for growth stock mutual funds with long track records. These are funds that focus on companies expected to have above average growth. So think stocks, growth, growth, growth stock mutual fund. Now, they may be more volatile in the short term, but they also have the potential for higher returns over the long haul, which makes them a great option for retirement investing. And to add one more layer of risk reduction, it's wise to diversify evenly across four types of these mutual funds.

First, growth and income funds, which you might see listed as large cap. These are large, boring, stable, steady companies like Microsoft, McDonald's, and Walmart. Second, growth funds. These are mid-cap companies like Facebook, Google, and Uber. Next up, you have aggressive growth funds, which might be listed as small-cap, like Roku, GoPro, Sonos, Yeti, Dutch Bros, Krisp, Kris, Planet Fitness. By the way, I would gladly take a gift card from any small-cap company if they're watching.

Don't count on it, chum. And lastly, international funds. This might be companies like Toyota, Nestle, an Indianapolis, Nintendo, Volkswagen, Samsung, LG, the list goes on. So, between those four funds, you would allocate 25% to each to get to 100%. And this is the same portfolio that I have in my retirement accounts that Dave Ramsey has in his retirement accounts and that plenty of other millionaires have in theirs. Because when it comes down to it, none of us can accurately predict the markets.

In fact, when we studied over 10,000 millionaires, we found that most of them are average investors at best. And that gives me hope that even an average George like me can do this stuff. And believe it or not, you don't need a huge income to retire a millionaire. In fact, a third of the millionaires we studied never had a six-figure income in their working career. So let's use an example here using this investment calculator. Let's say you make $50,000 a year and you invest 15% of that into a Roth 401k through your employer. And we're going to start at age 28, and we're going to take 15% of that 50,000, which is, wait for it, 7,500 a year or 625 a month. So from age 28 to age 62, we have still.

Start with zero, $625 a month. We're going to use an average rate of return of 10%. $2.1 million. And that's if you make $50,000 for your entire life and never get a raise. So what if you're a bit of an overachiever and you want to start investing more than 15%. Well, hold your horses, Mr. Moneybags. First, you got to knock out a few more things. One, saving for your kids college.

Now, obviously, you can skip this one if it doesn't apply to you and if you don't have kids, but if you do have children, I recommend doing this with a $529 plan, or an education savings account. And the purpose of this is simple. It allows you to save for education with great tax advantages using the power of compound growth. And the amount you save will depend on how many kids you have, where they go to school, how much time you have

until they go off to college. But the goal here is to help your kids go to college completely debt-free without crippling student loan debt. Next, pay off your home early. In that millionaire study I mentioned, the average millionaire pays off their home in 10.2 years. I know this sounds daunting, but the people following the Ramsey Baby Steps,

which is the plan I teach on this channel, they do it even faster in about seven years. And just imagine life with no mortgage payments, your biggest expense gone. Now you have this massive cash flow engine, and this is where things start to get crazy in a good way. So at this stage, you've paid off all of your debt, you have an emergency fund,

you've started investing 15%, you've saved for your kids' college, and you've paid off your home. So now you can crank up that wealth building to an entirely new level with some more advanced investing strategies, starting with a backdoor Roth IRA. If you're a high-income earner,

you might not be able to contribute to a Roth IRA because of the IRS's income restrictions. But fear not, there's a legal loophole called a backdoor Roth IRA. Here's how it works. First, you contribute after-tax dollars to a traditional IRA. Then you quickly convert that to a Roth IRA. Bada-bing, bada-a-boom. The next option if your high-income earner is the mega backdoor Roth 401k. Pause.

How we doing, America? Who's coming up with these? Did they hire a seven-year-old to go, hey, what's better than, a backdoor rock. Mega backdoor. Okay. All right, bud. Thanks for being here.

That ends the marketing meeting. Why are they getting these kids to name these financials? And the 401... Are you 4-01? Okay. Can I go play in the playground now? No, we need to name more things, kid.

My best friend, Roth, said he's coming over today to eat pizza. Making fun of Lisp's every day. It's fine. It's fine if they grow out of it. If it's a lifelong issue, I'm sorry. I was not trying to make fun of you.

But it is very cute. That concludes the rabbit trail. Oh, thank God. I was getting bored. Let's talk about this. What is a mega backdoor Roth 401K? Well, this lets you contribute after-tax dollars to your 401k beyond the regular limit. And then you can immediately convert those after-tax contributions to a Roth 401k or a Roth IRA.

So very similar to the backdoor Roth IRA, but it's expanded, which makes it, say it with me, mega. Now, I'm flying over these. There's a lot more to it. So do your research and consult with an investment pro to make sure this is the right option. for you. All right, next investment to max out in the optimal order is a health savings account or an HSA. This is a special kind of savings account that lets you pay for medical expenses completely tax-free. And HSAs are one of the greatest tools out there because they are triple tax-advantaged. So your contributions are tax-deductible. The growth is tax-free and withdrawals are

tax-free when you use the money for qualified medical expenses. And you can also use it as a stealth retirement account. You see, once you've contributed a certain amount, usually a thousand bucks for the threshold, you can start investing above that through an investment account with the HSA. So it becomes sort of a health IRA, if you will. And if you invest wisely now, with the help of compound growth, this account will turn into a big old pot of money that will help you cover the cost of medical expenses in your later years, which can get pretty pricey. And here's the cool part.

Once you turn 65, you can take money out of your HSA and spend it on whatever the flip you want, like a ball of yarn, maybe a Werther's original, or a turtle-themed snow globe from Cracker Barrel. Now you're talking my language. Now keep in mind, if you don't, you don't. use it for medical expenses, you'll have to pay taxes on that money like you would, a traditional 401k or a traditional IRA. But still, pretty sweet deal and a great little bonus retirement account. And speaking of sweet deals, I want to give you the hookup with Delete Me, one of the sponsors of

today's video. I love what they do. Delete me fines and removes your personal info from all of these data broker websites out there, which helps you prevent phishing emails, text, calls, and other unwanted spam. They do the work for you, which is great, because honestly, I don't want to spend hours filling out all the forms it takes to have my info removed. Trust me, I've tried. That's precious time I'll never get back. So let Delete Me do the heavy lifting, and to show their work, they'll send you an easy-to-read report with all the sites they've removed your info from and how much time they've saved

you. And you can get 20% off any DeleteMe plan by going to join DeleteMe.com slash George, or click the link in the description below. Okay, the next kind of investing account you could utilize is a taxable brokerage account. These are investment accounts that you open directly with a bank or brokerage firm, and they allow you to purchase basically any time. type of investment, stocks, bonds, mutual funds, or exchange-traded funds. Now, side note, stay away from single stocks and stick to index funds and mutual funds if you're going to invest in this type

of account. With a brokerage account, there is no contribution limit. There is no income limit. You can invest as much as your little heart and giant income desires. You can also take money out at any time for any reason without having to pay penalties, which can be very important if you want to retire before 59 and a half and you need an income strain. But remember, you will have to pay taxes if you receive dividends, earn interest, or make a profit when you sell investments. But personally, I wouldn't even mess with a taxable brokerage account until you've already maxed out those retirement options I mentioned earlier. So with this non-retirement brokerage account, you're using after-tax money, which then you pay taxes on again when you sell for a profit. But the good news is it's capital gains taxes,

which could be a lot lower than your ordinary income tax. But hey, the good news is, at least you're growing your money. And over the long haul, if you invest wisely, it's way better than earning mediocre interest in a savings account or stuffing your cash in a foliage tin and burying it behind your house. And speaking of houses, the next investment on our list is real estate. If you do this right, it can lead to some serious wealth building. But real estate is not hassle-free. It's one of the most hands-on time-consuming of all of these investment options. So don't rush into this unless you've already done your research and you have a passion for it. And before you go out and buy some rental property because you saw a video on TikTok, make sure you talk to people who have actually done this

whole real estate thing, because they can tell you what it's really like. And then you can decide if it's right for you. And here's the thing. Never ever borrow money to buy investment properties or vacation homes. Save up and pay cash to reduce your risk and increase your peace. And I know that's a controversial take. I know it's going to take some time to do it that way. But I don't care what some get rich quick roided up dingleberry set on TikTok. If you want to go this route, start small, buy what you can afford, and grow slow. And please make sure you do your homework before you buy land, a rental property, or any other investment for that matter. When it comes down to it, Wealth building is not that complicated.

It's just about doing the right things in the right order. So stick with this plan, and in 20 or 30 years, you're going to be in great shape. With no stress, no hard drive full of worthless NFTs, just real wealth and a pocket full of where there's originals if you're doing it right. If you want a deeper dive on all of this, be sure to check out our free investing guide. It is super comprehensive and again, completely free. I'll drop a link in the description below if you want to check it out. And while you're down there, you're going to see a link to an audience survey. This is really important.

this is the first time the George Campbell channel has done an audience survey. And we want to know what you want to see. What kind of content is going to help you build wealth? We want to know about it, so please take the survey. It would mean the world to me. And if you want to know more common investment traps to watch out for, keep watching this next video or click the link in the description below. Thanks for watching. We'll see you next time.