Dave Ramsey’s investment strategy: lessons to learn

1 min readLast updated December 5, 2023by Rachel Carey

From losing it all to building a $200 million fortune, this article looks at Dave Ramsey’s investment strategy, its principles, and how it helps to build long-term wealth.

Summary 

  • Dave Ramsey is an American personal finance guru who rebuilt his fortune after losing it. 

  • Today, Ramsey is an author and media personality with a net worth of $200 million. 

  • Dave Ramsey’s investment strategy is built on five simple principles.  

  • The strategy is ideal for beginners but may not suit more experienced investors. 

Who is Dave Ramsey? 

David Lawrence Ramsey III is a well-known media personality and personal finance guru from America. He is the author of eight best-selling books, the host of the financial podcast series The Ramsey Show, and the founder of Ramsey Solutions. This company helps people take control of their finances in practical, accessible ways.  

By the age of 26, Dave Ramsey had a $4 million real estate investment portfolio and an annual income of over half a million. At 28, he lost everything – and spent the next few decades rebuilding it and developing a set of principles for transformative money management and wealth generation. Ramsey's net worth today is $200 million, and he is widely regarded as one of America’s most trusted sources of financial advice.  

Dave Ramsey's investment strategy focuses on debt liberation, emergency funds, and wealth building.  

What is Dave Ramsey’s investment philosophy? 

Dave Ramsey’s investment philosophy is built on common sense, aggressive investment growth, and debt financing, often in connection to real estate investment.  

Some of the core tenets of Dave Ramsey's investment strategy include:  

  • Kill debt  

  • Save up for an emergency fund  

  • Think long-term  

  • Invest consistently  

  • Work alongside a financial advisor  

Having built, lost, and rebuilt an even bigger fortune than he started with as a young man, Ramsey’s philosophy is founded on the idea that the right strategy is key to successful wealth generation. He uses a set of five principles to help others reach this goal.  

What are Dave Ramsey’s investment principles? 

As part of his financial growth strategy, Ramsey has developed a set of five simple principles that everyday people can follow if they want to take better control of their finances.  

From dealing with debt to creating the right environment for financial prosperity, these five principles can be used as a template for pursuing and achieving your financial goals.  

1. Avoid creating debt 

Debt is the enemy of financial growth. A significant part of Dave Ramsey’s investment strategy is to A) eliminate existing debt and B) avoid creating more.  

First things first, develop a plan for paying off your debt as soon as possible so that you can be in a stronger position for investing and budgeting in the future. Without dealing with debt, the remaining four principles will be hard to follow.  

2. Create a budget 

When it comes to fruitful yet safe investments, setting a budget is absolutely essential. Budgets help you add structure, balance, and stability to your investments and teach important financial self-discipline.  

Before you jump into any new investments, set yourself strategic limitations in order to avoid overspending or finding yourself in debt later on. Know what you have to work with and stick to it.  

3. Ensure positive influential surroundings 

The people you surround yourself with, and the environment you immerse yourself in can play a significant role in how successful you are on both personal and professional levels.  

By surrounding yourself with people who influence you in a positive, healthy way, you can share ideas, form partnerships, and create successful interpersonal dynamics that are conducive to financial success. Spend time in places with people who inspire you to reach your goals.  

4. Saving and investing 

Creating a consistently growing emergency fund is one of Ramsey’s best-known principles. He recommends that everyone start an emergency fund as soon as they can, with a starting deposit of $1,000 or more.  

Once you have an emergency fund, you should have the security and confidence to make bolder investment moves. Emergency funds are crucial for long-term financial success.  

5. Generosity 

Giving back to your community and investing well is one of the core principles of Dave Ramsey’s investment strategy. This doesn’t mean mindlessly giving away your earnings but making the conscious choice to distribute your wealth in a fair and morally upright way.  

While generosity isn’t one of the better-known (or even better-liked) traits of a successful investor, Ramsey believes that it can keep you grounded while operating in the throes of the investment sector.  

How does Dave Ramsey approach market volatility and market downturns in his strategy? 

Ramsey understands that investing is about playing the long game and keeping a cool head. He encourages investors to stay the course during market downturns and avoid panic selling, thus emphasizing a long-term investment horizon. 

Does Dave Ramsey provide guidance on retirement planning as part of his investment strategy? 

Yes, Dave Ramsey’s retirement investment strategy includes advice on retirement planning, as this is a crucial component of financial planning and freedom.  

Investing in your future is always advisable, and a financial advisor can guide you toward making the right choices.  

Dave Ramsey’s 401k investment strategy advocates for systematic retirement contributions through employer-sponsored plans. 401(k)s are an excellent option for saving for retirement. 

What are common mistakes to avoid when following Dave Ramsey's investment strategy? 

Common errors include neglecting to save an emergency fund and not having any savings, not diversifying your investments across different asset classes, and not seeking professional advice when needed. 

Is Dave Ramsey's investment strategy suitable for all types of investors? 

While Dave Ramsey’s investment strategy is beginner-friendly and straightforward, it may not align with advanced investors who seek more complex or aggressive strategies. 

Need more information? 

Dave Ramsey’s story is one of consistency, common sense, and clever investments. While it's true that every person’s story is unique, the principles and philosophy that Ramsey has developed can be used to inspire and add structure to any person’s financial strategy for investment success.  

One of Ramsey’s biggest tips for building wealth is to hire a financial advisor. Let Unbiased match you with an advisor who can help you to reach your investment portfolio goals.  

Senior Content Writer

Rachel Carey

Rachel is a Senior Content Writer at Unbiased. She has nearly a decade of experience writing and producing content across a range of different sectors.