Dear Dave,
I’ve just started dipping my toes into investments and I want to know what you think of bonds. I would also like to appreciate any other advice on investing.
Joseph
Dear Joseph,
For beginners, I don’t buy bonds. Bonds are often advertised in the financial world that are safer than stock markets, but actual data suggest they are not safe. Overall, bond markets are almost as volatile as stock markets because of the way bond values respond to changing interest rates. Most importantly, the rewards are not that good.
I have millions of dollars in the market and I don’t have a single bond. Not one. I also don’t own any stocks because I don’t like the risks involved. Instead, I have shared funds. Mutual funds contain 90-200 different stocks. Even my HSA (Health Savings Account) invests in mutual funds. I immediately purchased the HSA once it was available and I have proposed contribution limits every year since then. Now, I am lucky to not have to touch my HSA for a large medical event. We always pay change for these things. As a result, my HSA has basically become another tax-free retirement account.
It can be said that I like shared funds. Love them! Suppose I invested in the $100,000 market. No bonds, nothing. All of this goes straight into a good growth stock mutual fund. Again, we are talking about the 90-200 best companies in the world. At this point, the only real risk you encounter is the overall risk of the stock market as a whole. You are not betting on the farm on a company based on your golf friend’s “intuition”, and that’s how too many people play single stocks.
I don’t trade stocks or mutual funds every day, either. In terms of investment, I have long-term buying thinking. Do you remember the old story “Turtle and Hare?” I was a good turtle for my investment method. Why? Because even if it’s not flashy or exciting, the turtle wins every time.
Joseph, please leave it in your mind. If all your bankrupt friends are impressed by your investment, you may have done something wrong. Or at least, you might do better!
– Dave
Dave Ramsey He is an eight-time national best-selling writer, personal finance expert, and the host of “Ramsie Show”. he Appears in “Good Morning America”, “CBS This Morning”, “Today”, Fox News, CNN, Fox Business, etc. Since 1992, Dave has helped people restore control of money, build wealth and improve their lives. He also serves as CEO of Ramsey Solutions and is the author of many books, including Baby Stepmaires: How the Ordinary People Build Extraordinary Wealth, and you can, too.
