As my regular readers know, we are playing catch-up. As the result of divorce, there are some Dave Ramsey rules that we bent. But there are more principles that we follow than don’t, because we still won’t put money in anything we don’t understand. Below is a YouTube video from The Chris Hogan Show. (He’s a Ramsey personality.) He is spot on. If you don’t want to watch all 14:08, check out my Noldy NotesTM below.
Savings Bonds
Savings bonds pay low rates. Chris Hogan says we are better off saving through a money market account. We use Vanguard’s Federal Money Market Fund (VMFXX), our Roth IRA settlement fund.
Prepaid College Tuition
This one may actually not be that bad. If we anticipate college tuition increases to outpace our investments, this may not be a bad idea. But use a Coverdell ESA. (We did not use a 529, because it limits what the investment can be spent on and still remain tax-favored.)
Prepaid Burial Plan
Here we’re betting that inflation will outpace our investments, not a good wager lately.
Certificates of Deposit
Chris Hogan calls these certificates of depreciation. They tie our money up for long periods of time at very low interest rates.
Precious Metals
Although many investors buy gold as an inflation hedge (especially in times of quantitative easing), is gold really what we want in the event of a zombie apocalypse? It’s not like we’re going to roll up to the grocery store with our gold bars to buy groceries. If things ever got bad enough, we’d go back to the barter system… a case of water, a can of gas, or a box of ammunition may have far more worth.
Cryptocurrencies
I think the Ramsey experts are against Bitcoin because it is harder to understand. And we don’t invest in what we don’t understand. Personally, I do not have any bitcoin, but I am learning more about it as a potential part of an overall investment plan. I’ll report on what I learn!
Single Stocks
Owning single stocks is risky. We don’t put all our eggs in one basket. Think of the Enron employees who had all their 401(k) investments in the single stock of the company. Stick to the index fund and ETFs.
Little Risk of Going Wrong with Tried and True
The 401(k) and Roth IRA are tried and true. We can easily wrap our brains around this. Investing in funds that hold companies we know and love is understandable. And most everyday millionaires have achieved millionaire status through these vehicles.
As Always…
Thanks for reading! I hope this information provides food for thought. Remember that I am not a certified financial planner, a certified public accountant, a licensed real estate agent, etc. My content is for educational purposes. I am a math educator who happens to have a finance degree. Like they say, never take financial advice from a math teacher! (Do they really say that?)
But you should spend less than you earn, invest the difference, and stay out of debt!
I would so appreciate your sharing my content with anyone you feel could benefit. And if you would like a free exploratory conversation or just want to shoot the breeze about personal finances, call me and leave a message or send a text to 570-731-0425.