Jan 29, 2024
Dave Ramsey’s life story reads like a feel-good Hollywood comeback film. The personal finance expert has gone from millionaire to bankrupt to personal finance celebrity with a syndicated radio show who now helps others with their money problems, according to his website.
He isn’t one to hide his secrets to success, either. In an episode of “The Ramsey Show,” the host shares two of his secrets to wealth.
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“Here’s a couple of rules I’ve discovered in 30 years of working with wealthy people,” he said.
What are they?
1. Hard work
Ramsey has shown time and again his belief in the power of hard work, often encouraging those who call into his show asking for advice to pull themselves up by their bootstraps.
“Almost no one statistically becomes a millionaire from an inheritance,” he said. “That’s all just mythology and bull crap.”
His company, Ramsey Solutions, conducted a survey of 10,000 U.S. millionaires between November 2017 and January 2018. Around 79% of respondents said they didn’t receive any inheritance from family or friends, while 93% attributed their wealth to hard work as opposed to a big salary.
But data on how billionaires acquired their wealth paints a different picture. Since 2015, nearly one quarter of new billionaires inherited their wealth, according to UBS’s 2023 Billionaire Ambitions Report. However, 2023 marked the first year heirs gained more wealth than entrepreneurs.
Though hard work may pay off in some cases, it seems that it may have to contend with inherited wealth, especially if we’re on the cusp of a great wealth transfer. The UBS report predicts over 1,000 billionaires may transfer more than $5.2 trillion to their heirs over the next 20 to 30 years.
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2. Be boring
You may think a millionaire has enough money to blow away on expensive cars and invest in meme stocks. But Ramsey warns that this is just another myth.
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“Millionaires do not do super fancy, weird, extremely risky things and keep their money,” he warned. “They usually lose everything if they do.”
Take MC Hammer, for example — the 90s rapper famous for parachute pants and his hit “U Can’t Touch This.” According to Thrillist, he spent his $30-million-plus fortune on extravagant expenses such as on thoroughbred horses, private helicopters, a 40,000-square-foot California mansion and more. Hammer ended up filing for bankruptcy in 1996. He did exactly what Ramsey says not to do if you want to get rich.
“The millionaires that we have studied are fairly boring,” Ramsey said. “They put money in things they understand and like.”
Ramsey says he puts his money in growth stocks and real estate, which he claims to purchase in cash.
Figuring out an investment strategy that works for you and is simple enough to explain to your buddies may be better than putting your money in risky or hot stocks. It may even be the key to making you a millionaire.
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Sabina Wex is a writer and podcast producer in Toronto. Her work has appeared in Business Insider, Fast Company, CBC and more.
