Financial Guru Dave Ramsey On Bitcoin and other Cryptocurrencies

Financial Guru Dave Ramsey On Bitcoin and other Cryptocurrencies

By Megha

Dave Ramsey is a self-proclaimed financial expert, an author, and a radio show host. He refers to himself as “America’s trusted voice on money.” He has written seven of the best-selling books around the stock prices and financial market. 

In a radio show, Dave Ramsey has offered advice on investing in cryptocurrencies, such as bitcoin. He acknowledges such investments as a way of growing money fastly. As he was receiving numerous queries regarding the investment in cryptos, he responded to them on this show. He stated- “You can certainly do what you want to do. But, we do not tell people to invest in highly volatile, unpredictable investments. And currencies of any kind fall in that category. Bitcoin will be the most volatile among those; crypto would be the most volatile among those.”

Ramsey called crypto an incredibly high-risk investment option and compared it to making money from cocaine. He recommended investors not get involved in the trading of cryptos because of the uncertainty. Regardless of the popularity of bitcoins and other cryptos, several things make such investments a terrible choice. He commented, “It was interesting to watch such investment options from the outside.” He further continued saying, “Buying gold, or buying commodities, or buying bitcoin, or buying currencies, I mean, there’re a lot of volatile [assets]. You can do options. You can be selling short on the market. You can do day trading. They're all kinds of things you can do and occasionally make money at, and most of the time end up losing it…bitcoin is in that category. It’s a high-risk play.” As per Ramsey, the bitcoins should be driven out and called cryptocurrency “fun money.”

Although he recommended an immediate selling of bitcoin and not to look at it as a worthwhile investment option, his recommendations are not correct for everybody. He made various points on cryptocurrency and the right time to consider investing in it. 


Why Is The Crypto Currency Advice Of Dave Ramsey Sensible?

In one of the radio shows, Dave Ramsey stated, “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.” 

To justify his opinion about the crypto investment, Ramsey has presented several points. These are the points that will make you understand why the advice given by Ramsey makes sense. Here are those key points:


- Cryptocurrencies are highly vulnerable. If investors are investing in this sector, they should be prepared to experience considerable fluctuations in the stock price and afford to lose all the money in worst-case scenarios.


- Cryptos are “Get-rich-quick” schemes, and such plans seldom pay off the investor. As per the records, most people who invest in becoming rich quickly end up with disappointment.  

- Bitcoin and other cryptocurrencies are not actual money or have any value. They are just virtual money with no reliable system backing its trading in the financial market. 

- There is no stability, no predictability, and no confidence in cryptos. According to the reports, this sector was full of fraudulent activities and bad transactions from the past few years.

These points explain what Ramsey was trying to say and why he is not in favor of investing in the crypto market.


In What Situations An Investor Can Think Of Buying Crypto According To Dave Ramsey?

As per Ramsey, “The Bitcoin and other cryptocurrencies are high-risk investments, but they aren’t stupid.” He is not against investing in high-risk bearing investment options like crypto, as long as the investor has significant knowledge of the sector and fulfills a few criteria. He has come up with a list of situations where he thinks that one can invest in crypto.


- Investors who are financially stable and have a habit of saving their hard-earned money can look up to the crypto market for investment. In such situations, cryptos will be an added value to the portfolio. However, such investment options are not for investors just starting on the road to financial freedom as they can’t risk losing their money.

- If an investor has an adequate emergency fund at its disposal may look for investment in the crypto market. However, the fund must be worth three to six months of livelihood costs of the investor.

- Investors who have no outstanding debts on their heads can consider cryptos. 

- People who contribute each month to a pension fund can add bitcoin and cryptocurrency to their portfolios. 


Smart Ways Of Buying CryptoCurrency

Ramsey believes that if an investor picks cryptocurrency to make bankable investments, they must be clever with their decision. With hundreds of platforms available all across the globe to provide them access to cryptocurrencies, investors should not choose any of them blindly. They must lookout for the top crypto exchanges and pick what caters to their investment needs. Only after thorough research should one start investing in cryptocurrencies. 


Another most prominent tip that Dave Ramsey has for crypto investors is that it should only be a small portion of the portfolio. A good rule of thumb is to invest a maximum of 5%-10% in risky investments, including crypto. If 90% or more of the portfolio is of stable investment, choosing crypto will be a good decision. This strategy will help keen investors make the most of their money without risking their financial existence on a volatile asset.

By now, it is clear that Dave Ramsey is not a crypto enthusiast. Once, he noted that “I have zero money invested in this type of thing. I worked too hard for it, and I really don’t have any desire to lose it. The government takes enough of it without me losing it.” But listening to both sides of the discussion helps the investors to weigh their judgment and conclude what is right for them.