‘Ramsey Show’ Host: Why There Are More Millionaires — And How You Can Join Them
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John Csiszar
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Gary Dudak
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George Kamel, co-host of “The Ramsey Show,” posted a recent YouTube video about the rise in millionaires. According to Kamel, this jump has been fueled by the big rebound in the stock market in 2023 vs. 2022, in which the S&P 500 posted its biggest annual drop since 2008.
As cited by Kamel, Fidelity Investments reported that the number of employees with balances above $1 million spiked 26% in the second quarter of 2023 alone. This shows the power of the stock market in creating long-term wealth. But how can you personally join the rising ranks of American millionaires? Here are the four pointers that Kamel offers his audience.
Stay Invested
When the market drops precipitously, it’s a perfectly normal reaction for investors to get nervous and want to sell to avoid additional losses. But as Kamel points out, that’s the worst possible action you could take if you want to build long-term wealth.
Selling when your value is down not only locks in a guaranteed loss, it removes the chance that you can earn compound returns on that money. Just as bad, the odds that you could pick the exact right time to get back into the market are slim to none.
According to Kamel, during the 2021-22 stock market volatility, 40% of investors pulled money from their 401(k), locking in those losses. Those same investors most likely missed out on the market’s huge rebound rally in 2023 as well.
Keep a Balanced Perspective
While short-term market movements can be nauseating, the long-term trend is consistently up. During times of market volatility, you’ll be doing wonders for your portfolio if you can simply keep a long-term, balanced perspective.
Kamel highlights the fact that the S&P 500 has been up 31 of the past 40 years, with 21 of those years posting gains of more than 12%. Even with the major market corrections and bear markets the market has endured over those past 40 years, the S&P 500 has still returned more than 12% annually on average.
That’s more than enough to get you to millionaire status if you start investing early enough and remain in the market through thick and thin.
Don’t Try To Time the Market
One of the most famous Wall Street axioms is that “it’s time in the market, not timing the market” that can create wealth. Trying to time the market will inevitably leave you whipsawed, as it’s human nature to sell out at market lows and fail to buy in until new highs are reached. Of course, not being in the market when it’s roaring could dramatically reduce your long-term return.
According to data from Fidelity cited by Kamel, if you invested $10,000 and missed the best five trading days from Jan. 1, 1980 to Mar. 31, 2020, you would have missed out on $285,000 in profits. Missing just the best 30 of those 9,000 or so trading days would have cost you a whopping $582,000.
When the deck is so obviously stacked against trying to time the market, Kamel urges investors to simply stay the course and always remain invested.
Think About Buying the Dip
According to Kamel, over the past 100 years, the market made an amazing recovery the year after a big selloff all but one time. That’s a pretty impressive data point supporting the notion that buying the dip is generally a profitable idea for long-term investors.
When markets drop by 10% or more, Kamel recommends investors view that as a fire sale, a chance to get into the market when it’s cheap. While volatility will always exist, and will often be uncomfortable, having a long-term view can help you get through even the most gut-wrenching of market declines.
Bonus Tip: Meet With a Financial Advisor
Kamel is a big proponent of financial advisors, noting that both he and his boss, Dave Ramsey, utilize them. A good financial advisor can help you stick to your investment plan when markets get volatile, suggest any tweaks that might be necessary during changing market conditions, and, as Kamel puts it, “talk you off the ledge” when you can’t handle the ups and downs in your portfolio.
As Kamel notes, it can be hard to take a deep breath and remain calm during emotional times in the market, but that’s an essential contributor to long-term investment success. For this reason alone, Kamel feels that a good financial advisor can help nearly all investors.
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