Should I Invest In Cryptocurrency?

Michael: Michael starts off this hour in Dayton, Ohio. — Hey, Michael, how are you?

Michael: Hey, Dave, how’s it going? It’s an honor to speak with you and Ken.

Dave: You too, sir. What’s up?

Michael: Hey, so I’ve been looking a lot at cryptocurrency. I know you guys are a little against it — it's pretty hostile in that environment. I have about $3,800 saved up from working my job, and I just want to know: what are the best investments to really look at, and where to go about it?

Dave: Um, “hostile” — what do you mean by hostile?

Michael: Well, hostile... where the validity of it — or, the volatility — yes.

Dave: Oh yeah, definitely. Okay, well, I mean, you have to set your investment goals with what you believe is your best path to becoming wealthy. Otherwise, you wouldn’t do the investment, right? And so... how old are you?

Michael: I’m 24.

Dave: Okay, all right. So, when I was 24, I made a lot of mistakes buying things that I thought would make me wealthy quickly and easily. I bought a lot of “nothing down” real estate. I went broke as a result. I bought gold futures once — a buddy of mine had a stockbroker, Ken, a friend of his who was a “gold guy.” And he had the ticket. He had it figured out. He had the formula.

He had hit — buying on the way a future works: you purchase it at a price, and if it goes under that when you get to that date, you get zero. If it's over that, then you get a multiple of what you put in.

So I bought a future. Put $5,000 in — that I didn’t really have, that’s about all I had. Put the whole $5,000 in because this guy had hit — he had hit 14 times in a row on his prediction.

Wow. I mean, he was amazing. He was like a gold savant. He had it all figured out. Fourteen times he had hit, and the future made. So, the rate we went in at, I put $5,000 in. It was a 10x. If it hit, I was gonna make $50,000. It was his 15th try.

And we all know where I’m going with this. Oh, yeah — you can see where the story is going. He missed on that try. And my little bitty $5,000 net worth was just evaporated — based on my attempt to make $50,000 in 90 days off of $5,000.

And, you know, Bitcoin’s hot. Crypto’s hot. A lot of people are making a lot of money on it right now. It is, as you said, Michael, very, very volatile.

So it falls — for me, an old guy — under the heading of “get rich quick.” And I have not found many people who get rich quick. And I don’t like losing money. I mean — just telling that story from 25, 35 years ago — yeah, I would think so.

I work too hard for the money that we get — and that we get to keep after the government takes their share. So I don’t like losing it.

Michael, you can certainly do what you want to do, but you called here. We do not tell people to invest in highly volatile, unpredictable investments. And currencies of any kind fall in that category.

Bitcoin would be the most volatile among those. Crypto would be the most volatile among those. And statistically, you’re probably going to get your— well, you might get it.

I mean, the GameStop thing — when the kids were running the GameStop thing off of Reddit — that was extraordinary. One guy called here: he put in $3,500, and he made $50,000. His hit. I mean, he was playing, he was running short on that thing, and you know — those guys took 'em to the woodshed. It was interesting to watch from the outside.

But I’ve also got a friend who’s invested in six restaurants. I go over there and eat. Yeah, I didn’t invest in any of them. That’s right. I like the people who run them, but you know what the failure rate on restaurants is? It’s like — almost all of them fail. They just don’t make it.

But he’s an investor, so he wants to do that — and that’s fine. He called me and said, “You wanna put money in this restaurant?” I said, “I’ll go over and eat. I will invest in your food.”

Ken:— Yes, because — well, it’s really true. The way you teach investing, and the way I live, and the way you live — that’s right. And that’s how you base it.

There is risk involved, of course. But when you’re talking about Bitcoin or really volatile stocks like this, it is — I think — no different than gambling. I’m not trying to be cute with the words, but there’s investing — which is “I’m going to invest,” if you think about what that word means — and then you talk about this kind of stuff, and it is a form of gambling.

It really is. You’re going, “All right, I’m going to put it in and hope that it keeps going up.” But this stuff could drop — just like this — out of nowhere. At a minimum, it’s speculating, not investing.

Dave:— That’s right. Gambling might be on one side. Speculating… yeah, that’s a bit of a strong statement. Investing implies the tortoise. Speculating implies the hare. Gambling is the possum in the middle of the road.

Ken:— Okay, but yeah, that’s what it feels like emotionally to me. It really does. If I were to invest in Bitcoin — I’d be a… You got a better shot at Bitcoin than you do the lotto — that’s all I’m saying.

Dave:— That is fair. But both of them are dumb ideas, in my mind. And I didn’t put any money in either one of them. I’ve never bought a scratch-off ticket in my entire life.

Ken:— Dave, you’re no fun.

Dave:— No, I just don’t like giving my money away. If I’m gonna have fun that way, I’ll roll down the window with $100 bills out and call it a traffic jam — you know, going down the interstate. That’s more fun.

Ken:— Yeah, well, you’re too competitive. You want to have a shot at making some money — not just, “I’m going to throw it in the air and see what happens.”

Dave:— And you know, of course, everybody that’s a Bitcoin genius right now thinks Dave Ramsey’s an out-of-touch boomer — which is probably true. But I’m also worth several hundred million dollars, so let’s go figure that out. Yeah, I’d say: look at the scoreboard. Take Dave on all you want to, but the scoreboard is the scoreboard.

And it does come down to: your risk tolerance. Well — not just risk tolerance. What is your goal? And what do the data points tell you?

I’ve had people call this show investing in Beanie Babies.

Ken:— Really?

Dave:— You remember when Beanie Babies were crazy?

Ken:— I was a kid. I remember my grandmother…

Dave:— People invested. They were like — such a hot commodity. People were investing in them, calling them a collectible. Calling in here saying, “I put my kid’s college fund in Beanie Babies.”

Ken:— I did that, actually. For me, that’s right up there with Bitcoin.

Dave:— Yeah, I mean — I got a lot. But I did buy Beanie Babies as a gift. No — Sharon got them. Not as an investment, but Sharon was collecting them as a hobby. And now? Okay, that’s good. Now the grandbabies and the shih tzu play with them. That’s all they’re good for.

But the thing is, Michael — you can invest in whatever you want. But the data points tell us that people who do get rich quick — don’t.

That’s the bottom line.

Out of studying 10,000 millionaires — the number of them that got rich quick is very, very, very small. The ones that were methodical and boring, and didn’t have a good story to tell their golf course buddy when they’re playing — it’s a fishing story with some stock they got into — they didn’t have any of that. They just were methodical. They were boring.

And that’s what I’ve done the second time. The second time, I kept it. First time, I lost it all.

You do what you want to do.