Dave Ramsey Explains How To Build Wealth In The Current Economy: 'This Is Not The First Time The Stock Market Has Gone Down'

Dave Ramsey has been hosting "The Ramsey Show" for decades. He has spoken with many callers and has gone through quite a transformation since he started selling books from the back of his truck.

However, the more things change, the more they stay the same. Ramsey found himself in a deja vu moment when a caller asked him about building wealth in the current economy. 

The caller has been listening to Ramsey since he was a child, and he is now 26 years old. He jumped on the show to ask Ramsey about building wealth in the current economy. It can seem bleak with tariffs capturing all of the headlines, but Ramsey encouraged the caller and other listeners to remain calm.

"This is not the first time the stock market has gone down," Ramsey said during the call. 

Ramsey proceeded to offer a lesson in crafting an investor's mindset and how he views the current economy.

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When In Doubt, Zoom Out

Ramsey has been a financial guru for decades, so he has heard from callers over the years during stock market panics. For instance, he explained that people thought the world was going to end during the pandemic and that the U.S. economy would never recover.

While headlines seemed to agree with that consensus, Ramsey held his equities and benefited from the sharp recovery. Right now, a similar story is unfolding, where large publications are posting negative headlines about the stock market.

"The news is full of drama queens," Ramsey said while encouraging the caller to tune out the noise. 

If you zoom out the S&P 500 over the past five years, you will see some solid returns. Those returns get even better when you look over the past 10-20 years. However, you don't even have to look that far. Ramsey mentioned that the S&P 500 gained more than 50% from the start of 2023 to the end of 2024.

Regularly Invest

Ramsey is an advocate of regularly buying reliable companies. He mentioned at the end of the call that he invests when the stock market is going up and also buys shares when the stock market is going down. He's not focused on the short-term noise and focuses on a stock's long-term potential instead.

He also said that he's looking for extra money to buy some extra shares during this period of economic uncertainty. Ramsey explained that Wall Street loathes uncertainty, and that's part of the reason why the market has delivered some big red days in recent weeks. 

Investors who can ride the uncertainty may have the potential to generate strong returns. It's similar to Trump's tariffs during his first term. Investors panicked in 2018, and many of them sold their shares. Then, the stock market came roaring back in 2019, much to the delight of patient investors.

Younger Investors Typically Take More Risk

The caller mentioned that he is 26 years old, and that's normally an age where investors can take more risks. While we don't know enough about the caller's financial situation, it may be feasible for him to buy and hold stocks for many years, if not decades.

A lengthier time horizon gives you more time for assets to recover before you consider selling them. While it's optimal to buy and hold stocks forever, the caller should consider if he may have to sell shares within a few years to buy a house. However, the caller may be a few years away from that point. 

You can also make low-risk investments, but the problem with these assets is that they produce low returns. CDs and high-yield savings accounts keep your money safe from stock market crashes, but these assets have woefully underperformed the S&P 500 in the long run. The caller should assess how much risk he is willing to take and not let short-term noise distract him from his long-term financial goals.

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