Dave Ramsey: Stop playing with gold and silver, and pay off that debt (2024)

FAQs

What does Dave Ramsey say about gold and silver? ›

I'd stop investing in gold and silver completely. I don't put money in precious metals at all, because they have a lousy long-term track record. — Dave Ramsey is CEO of Ramsey Solutions. He has authored seven best-selling books, including The Total Money Makeover.

It may be a good time to sell gold when the market prices are favorable, and you have a pressing need, such as high-interest debt that's costing you more over time. Selling gold during high market prices can maximize the return on your investment, providing you with a larger sum of money to pay off debts.

Generally speaking, you want to try to avoid selling stocks to pay off debt. But in some cases, simple mathematics pushes the needle in that direction. For example, if you have a lot of debt but it's at a 0% interest rate, there's really no hurry to get it paid off.

Career. By 1986, Ramsey had amassed a portfolio worth over $4 million. However, when the Competitive Equality Banking Act of 1987 took effect, several banks changed ownership and called his $1.2 million in loans and lines of credit because he was over-leveraged. Ramsey was unable to pay and filed for bankruptcy in 1988 ...

However, in comparison to gold, silver is more abundant on Earth, which means it doesn't have as much upside potential as an investment. Silver remains an attractive investment option in 2024, mainly as a hedge against inflation and other economic uncertainties.

Both silver and gold can function as safe haven assets, but gold tends to have a better track record over long periods of time. That said, over shorter periods the specific dynamics of each market end up being more important to their respective returns.

There are several risks to investing in gold, including as follows: Price volatility: The price of gold can be volatile, and it may fluctuate significantly over short periods.

The effects of recession on gold

Past performance is not a reliable indicator of future results. Due to its reputation for being a safe-haven asset, gold tends to perform well during a recession.

Cons of Investing in Gold

There is no stream of income associated with the investment. Other investments provide income in addition to gains from price appreciation. For example, stocks can earn dividends, bonds can earn interest and investment real estate can earn rent.

Millionaires usually avoid the following: High-interest debt: Millionaires typically steer clear of high-interest consumer debt, like credit card debt, that offers no return or tax benefits. Neglect diversification: They don't put all their eggs in one basket but diversify investments to mitigate risks.

How aggressively should I pay off debt? ›

Pay the largest or highest interest rate debt as fast as possible. Pay minimums on all other debt. Then pay that extra toward the next smallest debt. Paying off a big debt can boost a feeling of control and gets rid of big interest, too.

If the interest rate on your debt is 6% or greater, you should generally pay down debt before investing additional dollars toward retirement. This guideline assumes that you've already put away some emergency savings, you've fully captured any employer match, and you've paid off any credit card debt.

Ramsey's general recommendation in his Baby Steps has long been to start with having $1,000 saved in a starter emergency fund. If you earn under $20,000 a year, the post on Ramsey Solutions said you may adjust this amount to $500.

As a result, many experts recommend a precious metal portfolio that ideally consists of 75% gold and 25% silver. This is because the silver price tends to be more volatile than that of gold and will therefore have a larger impact on the value of your precious metal portfolio as its price fluctuates.

Gold and silver during a recession

While gold does generally see its price rise during a recession as mentioned above, silver often performs differently. Silver sees a much greater use in industrial applications, such as electronics.

Depending on your financial situation, most experts recommend you invest no more than 5% to 10% of your retirement funds in precious metals. The experts cite this low figure for a number of reasons.

Adding a slice of precious metals to your portfolio may help you diversify your holdings and hedge against inflation. But because precious metals can be volatile at times and underperform over the long term compared to equities, many experts suggest limiting your precious metals allocation to no more than 10%.