The Ramsey Show - App - To Make More on Investments, You Have to Risk More (Hour 3)

Episode Date: May 11, 2020

Debt, Savings, Home Buying Tools to get you started:  Debt Calculator: http://bit.ly/2QIoSPV Insurance Coverage Checkup: http://bit.ly/2BrqEuo Complete Guide to Budgeting: http://bit.ly/2QEyonc Interview Guide: http://bit.ly/2BuGnZE Check out other podcasts in the Ramsey Network: http://bit.ly/2JgzaQR 

Live from the headquarters of Ramsey Solutions, broadcasting from the Dollar Car Rental Studios, it's the Dave Ramsey Show, where debt is dumb, cash is king, and the paid-off home mortgage has taken the place of the BMW as the status symbol of choice. Chris Hogan, Ramsey personality, number one best-selling author, is my co-host this day on the dave ramsey show again our phone number is 888-825-5225 that's 888-825-5225 starting off

this hour in new hampshire will's calling hey will welcome to the Dave Ramsey Show. How you doing, Dave? Hi, Chris. Hey, what's up, guy? Not much, not much. Hey, I throw this question to you, Dave, and then I get the final punch with Chris. I really want him to punch me after this. Well, to make our long story short, I took a loan with a credit union, and I wasn't able to pay it, so I did a settlement with them, and a credit collector got it. And we came to a settlement to pay half of the amount.

So on the letter that I have in front of me, they told me to pay $1,000 upfront and within a few months, I think it's like 10 months or 12 months, I had to make payments on like $300 until the loan is satisfied. So my question is, can I pay more money or can I pay off the remaining balance since I already saved it?

Would I be breaking the agreement if I paid it? No, they won't be mad if you pay it early. They will not? No. I would put a note with it that says $300 for how many months? It was supposed to be somewhere around 12 months that I'm supposed to be, so I'm paying that. So what is the total that you would pay them over time, $1,000 plus what? Well, the original loan was like $25,000, and they said 50%.

Okay, so you need $12,500. Yeah, but I already have paid about probably $8,000 already, so I only got a remaining $4,000, which I'm supposed to pay by next year. Yeah, just send them a check. I already have the money. Yeah, just send them a check. You'll be fine. You need to keep records. You got to keep written records of everything that you have paid exactly in a file,

proof that you paid it, and keep a copy of the original agreement in writing that says they accept $12,500. So they're not going to come back to me for the other money that was left that is not in the agreement if I paid in a full? If you pay it early, you aren't going to piss them off, man. Okay, I see. And, Chris, give me an advice to release this money. I have this money, but because of COVID-19, I kind of slowed down,

and this is all I have in my account. So if I get rid of it, I will come down to zero. Yeah. Well, I mean, then you've got to sit still. I mean, you've got to let that sit, mean, you got to let that sit, but, but you also need to get out and hustle to get some money coming in. You know, you've got this earmark to be able to wipe this out. So as much as you don't have to touch, the more you can get this thing out of your life and you move forward. So now it's time to grind and hustle. Uh, that's

finding something that's bringing income in. And so you need to get after it. You need to let friends know you're looking. You need to let coworkers know, family members let everyone know you're looking to work. And it may not be something you end up putting on your resume, but it does bring money in. Yeah, that's a big thing is get yourself some margin again, because, no, we do not want to tell you to settle this down to zero or to pay it early down to zero when you've got income problem right in the middle of covet so no you just push pause right now just sit on that money and but chris

is right then let's go about the business of meeting our bills so we don't have to touch that money that's right and then we come the other side of this you get everything stabilized in employment then i would send the money early and that's the only way i would do it now dave i so glad to hear you say that, because for the people out there that if you've had hours cut, job loss, furloughed, you are pausing the baby steps while you save up money. However, once your income stabilizes, you're going to go right back to working the baby steps just like you were. Push play again. So that extra money that was over in savings, guess what? We start to apply that toward debt. It's like you push pause in the middle of a horror movie while you went to the bathroom. And then when you come back, the horror movie, you push play and fast forward to the end and get out of that thing.

That's right. That's what you've been going through. So, yeah, let's push fast forward when we come back. I like that. Game on, man. And gazelle intense and push through as fast and as hard as you can, all of you. We're here with you, man. We're going to help you.

We're going to walk with you. All right, Paul is with us in Massachusetts. Hey, Paul, welcome to the Dave Ramsey Show. Thank you, Dave. Nice talking to you. You too. I've listened to you for a long time. This is the first chance I've had to call in.

Your knowledge is amazing. Thank you. I really had to call in. Your knowledge is amazing. Thank you. I really enjoyed listening to you. Now I'm going to spring the question on you that I've been wanting to ask. I've got some U.S. savings bonds, Series I, face value $27,000, actual value $71,000. I've got them in a bank box. They're locked up, and I am thinking of exchanging them and buying some gold coins. Is that a good move or a bad move?

You have not been listening to us a bunch, I guess, just off and on periodically. Well, yeah. You told me. You've never heard me address gold before. Pardon me? You've never heard me address gold before. Not really, no. Oh, okay.

That's what I was trying to check on. Okay. So I don't buy gold as an investment ever. Okay. And the reason is very simple. It is a commodity and it is not tied, its value increase or decrease is not tied to anything except a shortage or an overabundance. In times like this when there's fear or in times when there's greed, gold prices go up, but nothing causes that to go up except just scarcity.

The only thing, and that's not true with a financial instrument that actually generates money like a stock does or like a piece of real estate does. They actually generate money. And the savings bonds are actually better than gold. They've had a better average rate of return over the last 40 years than gold has had. And gold has been all over the map. Yeah, no, I've got some real good bonds, too. Yeah, you do. And they were issued in 2001.

So what are they paying, five and a half? Something like that for the life of the policy. Yeah, I was thinking that. And the only thing I was thinking, the way this president is printing money, the money is going to be, the dollar is going to be worth nothing. That's what made me think of this. It's entirely possible. And so you can do whatever you want to do, but if I woke up in your shoes,

I would be buying an investment rather than either one of these things, and that would be something like some good mutual funds. That's where my money is. I don't own any savings bonds, and I don't own any gold. Now, Dave, the thing with the commodities, as we saw just a few weeks ago with oil, with the glut on the market and how it got driven down, it's beyond volatile. It is extremely, extremely volatile. So I'm with you. I don't see a reason to dilly-dally around when I can be intentional in growing money. See, the thing that happened, Paul, when we went off the gold standard and then they just print money, as you said, and the monetary is not based on gold standard, that made gold separated from the dollar. It's no longer tied to currency anymore. Its value is only based on supply and demand.

And in times like this, people run to gold out of the false assumption that it's going to be safe. But what it ends up being is what Chris said. Just very, very volatile. All up and down. Go back and look at the gold chart. Some prices over the past 20 years. And you'll see a bizarre ride and i can't recommend you take that ride business leaders now more than ever we need people with the right skills to

support our communities especially the frontline workers who provide resources and care for those most in need. To help, LinkedIn is offering free job posts for healthcare and essential service organizations that need to quickly fill critical roles with the people who help us all. If you are hiring for one of these organizations, free job posts on LinkedIn can help you quickly find the right people for your frontline. LinkedIn jobs can help by screening candidates the right people for your front line. LinkedIn jobs can help by screening candidates for skills and experience you're looking for and putting your job post in front of qualified people who have what you're looking for so you can find the right

person to quickly fill critical roles. To post a health care or essential service job for free or if you're in another industry and have hiring needs, visit linkedin.com slash ramsey. linkedin.com slash ramsey. Terms and conditions apply. Well, guess what? A whole bunch of people that weren't planning on being homeschoolers are now homeschoolers. They are there. You're there with your kids, and you're trying to figure out what to do. Some of you have a ways left to be at home depending on your state and what's going on and kids learning remotely um maybe your kids

um you know i think the vast majority of high school students in america today are not going back this this school year they may in the fall obviously but this year, very, very, very few are going back. And so our newest self-study course, Foundations in College Prep with Anthony O'Neill, teaching students that are going to college without loans is possible and gives advice on how to select your dream school. Now, in these uncertain times, we dropped the price on all of our foundation's self-study courses to $29.99 each that's more than $60 or even more off of these this is a deal we made this available to you guys at DaveRamsey.com slash hope to uh you know to get you these great deals while the kids are at home with you now they're're still at home with you, and now you need to finish up.

Also, we have a brand-new Foundations in Career Readiness self-study where Ken Coleman, Ramsey Personality, is teaching students how to get clear on their talents, their passion, their mission. Students learn how to network, how to draft a resume, how to ace interviews, the confidence to land a job. And all that stuff can also be used to help you pick a major, right? Develop a career idea, career track. So what major do I need?

So go to DaveRamsey.com slash self-study and find these fully digital self-paced courses. Of course, the foundations in personal personal finance the classes taught in 46 percent of the high schools in america today is available as a stay-at-home homeschool version two so daveramsey.com slash self-study for your kiddos john is with us in oklahoma hey john welcome to the dave ramsey show hey dave hey ch. How y'all doing? Great, man. How can we help? So my wife and I are 33. We have a four-year-old and one on the way, and we are wondering where to place our college

fund if we'll be able to cash flow it when we get there so that we don't have to pay a whole bunch of taxes if we just give them the money. Okay, Chris. So what baby step are you all on right now? 100% debt-free. So you're 100% – okay, fantastic. 100% debt-free, you're investing. Are you currently saving for college now, or are you just starting?

Just starting. Okay, all right. And what's your all's household income? About 90. Okay, 90. Okay. All right. And what's your household income? About 90. Okay. 90. Okay. Combined.

Looking at this, I would point you in the direction of a 529. And you don't want the state-guided one. You want one that allows you to be able to pick for yourself. And so that opportunity, you can connect with a SmartVestor Pro. They can sit down with you and your wife and really kind of map it out and show you the direction you guys are trying to go okay will there be a lot of taxes at the end of that none no no it's tax-free it's tax-free growth in the proper kind of 529 anyway and you select the mutual funds and they don't move unless you move them that's the type you want and a smart investor pro can help you do that you could also do it under the heading of an esa an educational savings

account but they're basically roth iras for college is what they are they grow tax-free and so with you starting with those babies if you put in a couple thousand dollars a year you probably have a hundred hundred and fifty thousand somewhere in range, and all of the growth is tax-free. If they don't use it, it can be transferred to a sibling. If they get scholarships, you can pull out the amount of the scholarships without paying taxes on it. So it's tax-free growth all the way around. It's a really good plan for your baby step five. Stephanie's in Illinois.

Hi, Stephanie. Welcome to the Dave Ramsey Show. Hey. I just first want to say thank you, Dave. Welcome to the Dave Ramsey Show. Hi. I just first want to say thank you, Dave and Chris, for all of your time. This has all been super helpful. Thank you. How can we help? So I'm kind of in a weird place in my life where I'm currently working on my PhD,

and I have some undergrad student loans, but I'm not going to finish my PhD in hopefully about two more years. I also have a fellowship where my tuition is paid for and I get a stipend, so I'm not accruing more debt. And I have my emergency fund as well as a three to six emergency fund, but I'm just, I'm in this weird place where my summer stipend has been taken away due to the university closing. And I don't know where I should put my money, if I should invest it, if I should just hold off, if I should pay debt.

I'm kind of all over the place in this kind of era. So how much money have you got in savings? I have $7,000. Okay. And so you're going to work this summer somewhere else? So that's part of my fellowship, is that the university has indicated that I'm not allowed to work because I do get a fellowship.

I'm sorry, but they're not allowing you to work there right but are you still getting the stipend uh not over the summer not for the three months then they should allow you to work so there's a legal battle that's going on i bet i don't know where that's going to fall and i'd much rather like stay ahead and figure out my own stuff and hopefully that they going to fall, and I'd much rather stay ahead and figure out my own stuff, and hopefully that they come to a decision of letting the class be done. They're not allowing you to come to the university and work as required under the fellowship, and they're not paying you the stipend. I don't think they could.

They changed the deal. Yes. Yeah. Yes, Stephanie. So I don't think they could. They changed the deal. Yes. Yeah. Yes, Stephanie. I don't know. You've got to be able to provide for yourself. What is your PhD in?

It's in applied psychology. Okay. All right. Cool. I love it. What are you planning to do, teach? Yes. Okay.

So mostly I want to deal with statistics and teaching statistics. And so I'm a planner and I like to plan ahead. Yep. And so I also don't like things up to chance. How much are your, I agree, how much is your stipend when you do get it it's 1 400 okay per month right okay and so you've been living on 1400 a month yes you're not working at all that's your only income when everything was going back like it was supposed to be going right yes okay and so 1400 a month for three months and then the university opens back in the fall am i missing something i just don't know if i should to keep from screwing this whole thing up you're willing to burn that 1400 times three out of your savings uh rather

than worry about going to work because because it might mess up your fellowship, right? Yes. Okay. I'm with you on that. I would be pushing really, really hard. I'd be making a lot of phone calls, and I'd be messing with some people going, guys, this is not fair that you won't allow me to go earn a living. And, Stephanie, I mean, you're advocating for yourself. That means you're writing down the name of the person you spoke with, the time, the date, and you're emailing them often.

So much so that they give you an answer to make you go away. Yeah. Okay. I'm serious. I mean, it's got to be that big of a deal. Squeaky wheel. Right. Yes.

Yeah. So be pushing on that because I don't want you to burn this $1,400. But if the two choices, no, you do not need to invest and no, you do not need to pay down student loans. $7,000 isn't a lot of cushion. Right. So your only options are burn $1,400 a month until you get back to work in the fall out of your $7,000 or

talk them into with squeaking loud enough that they say, listen, whatever you want to do, I'll give you an email. You can go work for three months. And then you just got to, after that, you can't because we're going to, the opportunity will be back and the stipend will be back in the fall, right? Right. Yeah.

And assuming this university stays afloat and so forth, which it probably will. So I'm with you. Those are your only two options. So either burn $1,400 out of your savings or get permission to go work and not burn the $1,400. But I wouldn't invest and I wouldn't pay down on debts. Not right now. You don't have enough margin. There's no wiggle room in these numbers.

So we have to main, like, you know, you're very logical, you're very calculating, and your degree field is legit even more so. So let's just narrow it down to just risk management right now until we get through the craziness. That's right. This is The Dave Ramsey Show. Folks, I love telling you about well-made, well-thought-out products. Today, I'm talking about Grip6 belts. I don't know about you, but I'm not a fan of traditional belts.

They never fit right, and they're uncomfortable. Grip6 belts are unique. Owner BJ designed a truly modern minimalist belt made of high quality materials with no holes, no flap, and no bulk. And the buckles come in really cool designs and are interchangeable. I personally own these belts in different styles and talk about affordability. Grip 6 belts come with a lifetime, and that means if you no longer like or fit the style of your belt, you can replace them for free. Plus, I like the way these guys do business. Grip6 is determined to help build and modernize American manufacturing.

To learn more and get this month's Dave Ramsey special, visit Grip6.com. That's GripIX.com. That's GRIPSIX.com. Ramsey personality Chris Hogan is my co-host on the Dave Ramsey Show today. Daniel is with us in Tennessee. Hi, Daniel. Welcome to the Dave Ramsey Show. Hey, Dave and Chris. Thank you so much for taking my call. Pleasure. How can we help, sir?

Well, I got a question on the best time for my wife and I to build a house. We have, we're in kind of a unique situation here. We have a family home, so we don't have any rent and we make pretty good money each year and neither one of us have student loans. So we're trying to figure out the best time to start building a house. Cool. How old are you? 27. How long have you been married? Three years. And what's your pretty good income? We make $80,000 a year. Good for you. And no debt at all? Well, we do have some debt, and I know what you're about to tell me. We have about $14,000 in a car and $3,000 in furniture.

Okay. What am I about to tell you? You're about to tell me to pay off those right now. Yeah. You got the money? Yes, sir. We do. Okay.

Good. Why wouldn't you do that? Well, that's what we need to do first. So we have about $40,000 saved up in our savings. So we need to go ahead and do that. And that will leave you how much? Well, let's see, $40,000, and then we have... $14,000? What did I tell you?

$14,000 and then $3,000, so... $17,000? $33,000? You got it. $23,000. $23,000. $23,000. $23,000.

That's good. Okay. And you make $80,000. You make $80,000, so your emergency fund should be how much? Three to six months of expenses. I'll be honest. Yeah, I'll be honest. I don't know right off the top of my head.

Okay, three to six months of expenses. Your household expenses are probably running around three grand. Yes. Maybe four. Maybe four. Oh four oh no you don't have a house payment they're three no no no we don't we yeah so probably about three is covering you uh maybe a little less even but uh so three months would be nine thousand six months would be eighteen thousand uh we could settle that on fifteen15,000. That leaves you $8,000 towards your down payment. Did I do something wrong? That sounds right.

So the only thing, and this is kind of where the question comes in, I guess. The only thing that's stopping us from starting now is my brother. I do have a brother that's going to be moving into this house when the time comes right. He's about to graduate from college next year. So we're trying to figure out, would starting now be a bad idea or should we go ahead and wait, you know, the next year or two, try to save up some more money? I mean, I know saving up money while you don't have rent is a great idea, but there's also the fact that, you know, interest rates are pretty good right now and so it wouldn't be a bad idea to start. Are you going to build on family land, or you've got to buy a piece of land?

Yes. So we have five acres that's going to be just gifted to us when the time comes right. Perfect. Okay. Wow. Well, I mean, you have $8,000 towards your building project. Yes. You're debt-free with an emergency fund.

You can start whenever you want. Correct. When would you want to start? Well, the house we live in is awesome. It was my great-grandmother's house. But you're not going to stay there. When do you want to start? You know, Dave, any time.

Any time would be awesome. Have you drawn a plan? We've looked online to find some plans and trying to find one that fits our budget or fits our, you know. You're not going to break ground until next spring. You don't have a plan and you don't have a builder. That's correct. So you need to start developing your plan and a builder. And in order to build a house properly, there's three documents you have to have.

A detailed schedule from the builder of exactly who's going to do what when, the blueprint, and the budget, the detailed line item of the budget. And those three documents are the communication between you and your builder to make sure that it's on budget, on schedule, and on plan. And if you do those three things, you'll have a good experience building a house. If you screw around and the builder goes, I'm not going to give you a schedule, then you're not going to be my builder. I don't work from budgets, and you're not going to be my builder.

We don't do blueprints. We just say we're going to build a house over there. You're not going to be my builder. You're going to have to do all three of these things. This is a freaking project, and this is the way this project is managed. Okay. Daniel, are you seeming nervous about this house project? Is it that your wife wants the house, or do you want a house?

Well, I'll be honest, Chris. I like the amount of money we're able to save right now, you know, given our situation. So I know when we go into a house project, it's going to take away, you know, anywhere from $1,000 to $1,500 a month, you know, that we're able to save. Right. Well, I think what Dave is telling you, getting on that budget, but I want you to emotionally process this, too. Like, you and your wife got to get on the same page and really look. When is it you were planning? Okay, what's the longest you could stay in Grandma's house?

Well, we're three years in now. I told my parents five years max would be what we would want. So two years? To stay here. Two years. Yeah, so we've got two extra years. Okay. So next spring is one year.

So you could either start, if you start building next year and it takes next spring and it takes a year that sounds suspiciously like two years it does yeah and you're by the way your payments don't your payments don't start until you until the house is completed and you convert your construction loan into a permanent mortgage okay awesome because the construction loan just runs interest while you're doing it sometimes they want you to pay the interest payments but sometimes they don't depends on how you structure your construction they've only been married three years is that long enough to build because building's a situation that's a process well uh yeah yeah it's uh it's not for the faint of heart

no it's not you need you need to treat it like project, and she's got to be willing to treat it like a project, too. Everyone in the picture, the decorator will screw up Christmas, okay, in terms of budgets, right? That's their job because they don't think about budgets. Everybody has to be held to the budget, the schedule, and the plan. And that's the spouse, the decorator, the builder, the subs, the suppliers. Everybody is held to the guidelines. This is our baseline. It's our plumb line.

It's how we know when we throw an out-of-bounds marker. And I built several houses, and I grew up around the building business, and I used to sell new homes when I was a kid, 22 years old. And this is where people get screwed up. They kind of go at this, and go well well well and then it takes three freaking years to build because the wife won't get the selections done it's it's five thousand million percent over budget because the decorator just goes and picks you know persian rugs to hang from the freaking walls or something instead of going this is what we said we were going to do

and you know the last house i built i built within% of budget, and it was a month early. 2%. Yeah. We hit within 2% because we managed to it every Friday morning. That's amazing. It's a project. Right. You know, and so if something came in over budget, like we picked it, you know, we decided

to pick that chandelier, then that means something else had to be cut by that amount. That's right. It's a budget. Yeah. That's why they call it that. You know, this is how you manage these projects. But, you know, most how you manage these projects but uh the you know most people who their builder is a nightmare is because they're a nightmare

it's because they didn't have this system of these three pieces of paper to manage to that and and or the builder wants to be loosey-goosey and just pull a wool over people's eyes and not tell people what the schedule is and what the dad dadgum budget is yeah dadgum budget man is that's just exactly what it means. I mean, we run a budget here. We're running a department. They don't hit budget. Dave, the CEO, wants to know why you aren't hitting budget.

That's what it's for. It's why we have a budget at home. We say this is how much we're spending on going out to eat. Well, guess what? We're not going over that. This is what we're going to spend on this clothing. We're not going over that. This is what we're going to spend on this clothing. We're not going over that. That's why we put the number in there.

We all agreed to it. We all had a vote. And so your spouse sits down with you. But the danger is if you're trying to make wounds in a marriage better by building, if you're trying to be immature in a marriage, and I'll just get you whatever you want, little lady. Yeah. You know, and that kind of crap.

You know, it's unbelievable. Yeah. No, you're right. I literally know a neighbor of ours went $4 million over budget. Dave. On this house. Now, it was in a very expensive home, but $4 million. Now, you know, but they changed their plans all throughout the whole building process.

They didn't stick to the plan. They didn't stick to the budget. The decorator was a dad-blame psychotic. And, you know, and it just, the whole thing, it was a nightmare. And then they blamed the builder. It wasn't the builder. No, no. It wasn't the builder's fault.

The poor builder. Poor builder. Bless his heart. I mean, gee. You got to own that. No, no. The poor builder. Poor builder, bless his heart. You've got to own that. This is the Dave Ramsey Show. Business leaders make your life easier with FreshBooks. Whether you're starting a business or

you've been at it a long time, FreshBooks is one of the smartest decisions you'll make this year. FreshBooks Thank you. time to work on your business. Try FreshBooks for 30 days free at freshbooks.com slash Dave Ramsey. Our scripture of the day, Matthew 621, For where your treasure is, there your heart will be also. Our friend Seth Godin says, Leadership is the art of giving people a platform for spreading ideas that work. I think Seth is smarter than me. He is definitely a different type thinker. He's an intellectual. Yeah, he really is.

He's brilliant. He's a lot of fun, too. He's brilliant. We've been friends a long time, and I just love reading his blog every morning. And he's world famous, probably one of the best marketing minds on the planet. Seth Godin, be sure you look him up. All right, let's go to Dave in Ohio. Hi, Dave. How are you?

Hi, sir. Great. Thank you for taking my call. And I just wanted to let you guys know, every time my wife and I go to a wedding, we give the total money makeover. It's by far the best advice we can give newlyweds for both their marriage and finance. Well, thank you, sir. We're honored by that. I appreciate it. Absolutely.

How can we help? My wife and I are completely debt-free, and we have a fully funded emergency fund, and we're saving for our first home. We want to put 100% down, and we're wondering what type of account or investment we should put that money into. How long is it going to take you? We think it'll take about two to two and a half years. Money market.

Okay. Yeah, just keep it simple. The market is, the stock market is just too volatile. And Chris, we always say five years. That's exactly right, Dave. And other Dave on the line, you keeping it liquid, it's going to allow you all to see it, know exactly where you stand without any kind of risk or any kind of penalties or anything at all. So that money market account is definitely the way to go.

See, if you were playing the stock market mutual fund on the short term and what's happened since February happened to your house fund, you wouldn't be happy, right? Right, yeah. That would be terrible. You would have lost 20% of your money or something, and you would be waiting on the market to come back up to build then rather than ready to break ground right now, if that was your timing.

And so that's what I would have been doing and so um money that's on the short term like that the statistics are 90 plus percent and it depends on which year we look it up but it's usually around 93 of the five-year periods pick out any five-year consecutive period in the stock market's history 93 or so have made money when you drop down to two year or to three years it's only 67 make money and so because there's a lot more three-year periods and you know because it's any consecutive three years all up and down the calendar there's almost two of those per five-year period so you you can see how riding that roller coaster would get you and uh you know that money is just too precious to you guys in this situation now in my situation where i'm uh i built a degree of wealth if i want

to put some money aside even if it's for a short term it's not i can i can afford for it to be off a little bit and i can take a little bit more risk with it. So I can put it in mutual funds if I've got a two-year window. Like right now I'm saving up for a real estate deal I'm looking at, but it's not my home. It's just an investment. There's no emotion attached to it. And if I don't get it, it's not a big deal. But I'm parking money over there that I'll probably pull it out inside of five years.

But I'm aware of the risk of that, and I can take that risk. In your case, every one of these dollars, every time you put $10,000 in there, it's a big deal. Yeah, it means something. And so if you're listening out there, if you're doing something three years or less, then you put it inside of a money market account. Five years or less. Five years or less.

That's exactly right. Five or more, then you could take a look at investing it, but you just need to be aware. Yeah, and you've got a one-in-three shot of losing money when you do a three-year play. That's what it amounts to. Yeah. And so that's not a play you want to make. Those are not good odds. And so the stock market is only good for long-term.

And based on the numbers we're just giving you, the statistics we're just giving you, long term is defined as five years. Five years, yeah. Really would be. I would just be safe. And you're not going to make any money on the money. It's going to sit there and make nothing. It's going to be sickening.

But you're not going to lose anything. That's right. It's going to be there. And you can count on it. Kathleen is in New York. Hi, Kathleen. How are you? Hi.

My question is similar, I think, to the person before. I am debt-free. I have about $30,000 that I currently have in a TIAA-CREF yield pledge money market account that expires in July paying a 2.15 percent i mean it's a good money market yeah but it expires and it goes down considerably sure um i use it for yeah i use it for my emergency fund um it's i like it connected to my savings and my checking account so I can put money, transfer money into it every couple of weeks that I don't need. I've been able to build up on it pretty successfully.

So I need it to be liquid, but I want it to make money. I don't know what to do with it. Yeah. Money market, I mean, even 2%, that's an outstanding money market, but even that's not making money because you've got an inflation rate of 4%. So you're losing purchasing power at 2%. In order to make money, you've got a long-term investment, but your emergency fund is not there to really make money. That's right. Kathleen, the reality of that is the emergency fund is supposed to be there.

That's that safety net for you. And so that's the goal of having that. Now, what you'd have to realize is, okay, that's going to sit there, and its job is just to be ready. Like you said, it being connected, you've been able to move it around when you needed it. That's the role. The goal of growing money, now that's with your investing. That's your 401ks, 403bs, and IRAs. And so just have a different mindset around that. You could look to see if you can find another money market account that's going to do that. But once you do the math on 2% of that $30,000, you'll realize

it's not really growing. Yeah. If you can get another money market that's similar to that, even if it's 1.5% or something, if you're using it for your emergency fund and it's attached to your checking account for that reason and those kinds of things and you want those features, you may be able to just get that at your local bank. You're probably not going to get 2% right now because the cost of funds have gone down. Interest rates are down. Prevailing rates are down over when you took that out. Even when you took that out, it was a great deal.

So I'd just be shopping among the different money markets that will work with you on tying to your checking. Check your local bank. See if they've got a money market that is competitive. I mean, you're sitting on a decent amount of money with $30K, and so you ought to be able to get somebody's attention on this. But, you know, you're just not going to make a lot. Not at all. And, Dave, you know what's crazy with these banks.

They'll do these introductory rates where you've got that for two to three months, and after that it drops down to, you know. So it's not going to be a long-term play. Let that money just sit and be liquid for you yeah there's kind of um the thing we teach uh all the time for all of you is there's a risk return ratio and if you want to make more you're going to risk more and you're going to be leaving and really the other the third variable that goes with that you got to be willing to leave a loan longer. And so you leave a loan five years plus, and you take some risk in that it goes up and down.

It's a bit of a roller coaster ride with it. Then you get good mutual fund rates of return of 10% to 14%, depending on what the year is and what's going on and that kind of stuff. I've been able to average on my personal funds for 30 years in excess of 12%. But I'm not a rocket scientist on that. It can be done. The S&P during that period of time has averaged about 11% of some change. So it's really not a big deal to beat that. But it's beatable.

And so what's your average rate of return? But I'm leaving it alone long term, and I'm willing to take some risk. Where I'm not taking any risk, that's back to the money market. That's right. And it's fully liquid. Like she said, I want this to be liquid. I want it to be accessible. When you have liquidity and you have principal protection, you're not going to make any money.

That's right. So you go down from that 10%, 12%, 14%, whatever it is, down to one. One. And there's really not a middle ground. No, there's really not. There's no 5 percent option that is valid. No. There's a bunch of crap out there that they try to sell you,

but there's not a good middle ground. So you just decide, is this a short-term play or a long-term play? That's good. And then that tells you which way to work it. Chris, thanks for hanging out. Thanks for having me, Dave. It's always fun. Co-hosting today, Chris Hogan, Ramsey Personality,

here on the Dave Ramsey Show. James Childs is our producer. Kelly Daniels, our associate producer. We'll be back with you before you know it. In the meantime, remember, there's ultimately only one way to financial peace, and that's to walk daily with the Prince of Peace, Christ Jesus. In the middle of these uncertain times, Ramsey Solutions wants to give you some hope. For the very first time ever, we're giving you Financial Peace University free for 14 days.

Go to DaveRamsey.com slash hope so you can watch from home.