A recent episode of "The Ramsey Show" featured 50-year-old Keisha from San Antonio, TX, seeking investment advice from finance guru Dave Ramsey. Keisha, a nurse and diligent saver, reached out about how to invest her $300,000, which she had accumulated but never invested.
"I am a great saver, but I haven’t invested at all," Keisha said. "I’m 50 years old, and my money’s just sitting in the bank, not earning any income." She also stated that she recently opened a Roth IRA with Fidelity, depositing $8,000 — the maximum allowed — but wasn't sure what to do next. Keisha also has $100,000 in a 5% CD for her daughter's college fund and a $25,000 emergency fund.
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"This is not a one-time, five-minute discussion, and you suddenly are an investor," Ramsey stated. "You begin learning about investing over the rest of your life. The more you learn, the more comfortable you’ll be."
Ramsey emphasizes the importance of continuous learning in investing. "We’ll get you started," he said. "But you’re going to start the process of learning, and the more you learn, the more comfortable you’ll be investing. And you’ll be as good an investor in a year or two as you are a saver."
To help Keisha start her investing journey, Ramsey provided resources for local investing professionals — SmartVestor Pros — and told her to interview a few to find someone she's comfortable with assisting and educating her in making her own investment decisions.
"I want you to have someone with the heart of a teacher," Ramsey says. "And that means when you meet with them, every time you meet with them, you should learn something. That way you’re making your investing decisions."
To help illustrate the importance of investing, Ramsey shared an example of what Keisha's $300,000 savings could become if she started investing immediately. "If it was invested at a 10% rate of return, over seven years it would have doubled. It would have become 600,000. So the fact that you’ve not learned about investing and not, therefore, done investing, has cost you $300,000. That’s how important this is. Because here’s the deal — you’re 50. When you’re 57, if you invest it well, this will be 600,000. And when you’re 64, that 600,000 will be 1.2 million. And when you’re 71, that 1.2 million will be 2.4 million."
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Ramsey recommended splitting the money to invest in four types of mutual funds: growth, growth and income, aggressive growth, and international. He said each investment opportunity should have at least a 10-year track record.
Regarding Ramsey’s example’s 10% interest rate, co-host George Kamel added, "And by the way, that number doesn’t come out of thin air. That’s the actual track record of the S&P 500 — the 500 largest companies on the stock market."
Ramsey amended, "11.3% is what it’s averaged since the stock market began. That’s the average annual. And so if you only make 10, if you only do as good as the market, every seven years your money’ll double."
Keisha's question about investing and how to get started is not uncommon. Consulting a financial advisor can provide tailored advice for those in similar positions and ensure investments align with long-term goals. Ramsey's advice is clear: investing is a lifelong learning process, and starting sooner rather than later can yield significant financial growth.
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