Dave Ramsey Thinks ‘You’re Dumb’ If You Don’t See This Crypto as a Risk
Written by
Tiffany Lew
Edited by
Cory Dudak
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Personal finance expert Dave Ramsey believes a sole investment in bitcoin without understanding the high risk is a dumb idea. He might not be entirely off the mark, either. Yes, digital assets like crypto can strike gold, but more often than not, buying and selling them comes at a higher cost than you planned.
There is no getting around the fact that bitcoin is fundamentally volatile, but it’s less so than many large, popular megacap stocks subject to market manipulation. However, while investors this year have been moving from gold to bitcoin, gold remains the better performer year-to-date, outperforming bitcoin and hitting a new all-time high earlier this year.
With all of this in mind, here is why Ramsey doesn’t support you putting all of your money into this crypto asset.
Ramsey vs. Bitcoin
Ramsey considers bitcoin and other crypto exchanges to be speculation, not a legitimate long-term investment. While acknowledging that the crypto market and blockchain technology have matured, his fundamental distrust of the volatility and unproven track record remains. Here are some key takeaways:
- Ramsey classifies bitcoin as it is a short-term gamble on demand and price swings. He believes investing in stocks or mutual funds is better served for long-term wealth building.
- For perspective, when compared to the stock market, bitcoin is currently less volatile than just 33 S&P 500 stocks.
- However, while bitcoin is notorious for being volatile across trading platforms, its volatility has declined and is expected to continue doing so. It is also predicted to continue to compensate investors as it has historically, despite a lack of investor protections.
A Warning: Make Sure You Have Money To Burn
From 2020 to 2024, bitcoin has been three to nearly four times as volatile as various equity indices, which is especially notable as “equity indices are typically considered the riskiest part of modern traditional portfolios due to their historical volatility,” according to Fidelity.
Ramsey said he comes across young people who say they’ve invested everything they have in bitcoin and they don’t have anything else. He equates this to taking all your money and gambling in Vegas.
“If you chart bitcoin and you don’t see risk, you’re dumb,” he said on a podcast. “It’s all over the freakin’ world and that tells you it’s a highly volatile, short-term play and you’re trying to ride this thing out.”
Ramsey added it’s got the “cool factor” because it’s related to technology and people want in on it because it’s a fad.
He advised, however, that you just need to be comfortable with the amount of money you put into bitcoin and its potential loss. He said, “Just be able to burn the amount of money you put in there, in the middle of the kitchen table, and not miss it.”
Caitlyn Moorhead contributed to the reporting for this article.
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