As investment strategies vary across generations, co-host of The Ramsey Show and author of Breaking Free From Broke George Kamel joins Yahoo Finance Live to discuss investing strategies to steer clear of.
Kamel cautions that “if you follow the trends, you’ll fall for the traps.” He notes that young people often overlook the investing strategies of older generations, leading them into risky ventures like NFTs, cryptocurrencies, and permanent life insurance. He advises investors to adopt a long-term mindset and be “a crockpot in a world full of microwaves,” avoiding impulsive entries and exits from the markets.
Kamel acknowledges that cryptocurrencies are currently the most attractive asset class. However, he expresses concern that young people are ignoring traditional investment vehicles like 401(k)s and IRAs, instead placing “all of their bets on crypto.” He likens this approach to “virtual roulette” stressing the importance of taking preliminary steps such as getting out of debt, establishing an emergency fund, and investing in mutual funds, which have “proven to be successful over time.”
Kamel explains that there are “three stooges” to wealth building: greed, fear, and pride. Greed, he notes, is the “get-rich-quick” mindset that drives people to seek rapid wealth accumulation. Fear manifests as FOMO (fear of missing out) and mistiming the market. Pride arises when investors believe they know it all, leading them to invest in certain stocks at specific times with unwavering confidence.
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Editor’s note: This article was written by Angel Smith
Video Transcript
BRAD SMITH: Making the right investment decision, it is not easy. And while there is no one-size-fits-all playbook for investing, making smart investment decisions can help you get one step closer to achieving your financial goals. Now, every once in a while, investors will make poor decisions, and fall into some investment traps that could cost you thousands of dollars.
To break down what investment traps you need to avoid, I’m joined by George Kamel, who is the host of the George Kamel YouTube channel, co-host of “The Ramsey Show,” and the author of “Breaking Free From Broke– The Ultimate Guide to More Money and Less Stress.” There you see the cover of his book. George, Thanks for taking the time here today. What is the number one trick that people can start to implore right now in order to avoid some of the investing pitfalls or traps that are out there?
GEORGE KAMEL: Well, I always say if you follow the trends, you’ll fall for the traps. And unfortunately, a lot of young people out there, they’re kind of spooked by the stock market and what their parents did. And so they’re turning to things like NFT and crypto, and even worse, permanent life insurance has made a wild comeback. If you look on Instagram, you see the words “tax-free wealth strategist,” that’s a sign you’re about to get scammed.
So if you can just instead be the crock pot in a world full of microwaves and have that long-term mindset, and stop timing the market. Don’t jump in and jump out. Just enjoy the ride. And if you see this show, you’ll see a lot of green, you’ll see a lot of red, it can stress you out. So you got to just be calm and look for the long term.
BRAD SMITH: OK. So let’s walk through some of them because, sure, if I was interested in, you know, fuzzy penguins, then maybe I would have bought into a lot of NFTs or tokens out there. But at the same time, I would have been needing to be ready to incur risk, more outsized risk, than some other asset classes or areas of the market.
I bring up NFTs, of course, because it’s tied into some of the riskier or trendy, as you mentioned, at the time, parts of the financial and investment conversation. So crypto, NFTs, permanent life insurance, which one is really taking the cake from your own purview?
GEORGE KAMEL: Well the one that’s sort of the sexiest right now, of course, is crypto. With Bitcoin shooting up in value, everyone’s going, see, we were right. We should all be in crypto. And the problem is young people are avoiding tax advantaged retirement accounts like IRAs and 401(k)s, and instead hedging all of their bets on crypto and that worries me.
Because we also get calls on “The Ramsey Show,” where people go, I put all my money into this coin because my buddy told me it was going to be the next one to take off, and now I lost all my money. You have to remember this is some virtual roulette you’re playing.
This is still gambling. And I’m not anti-crypto, but you’ve got to be doing the right things first. You’ve got to get out of debt, you’ve got to have the emergency fund, you must be investing into those tried and true investment assets like your 401(k), the IRAs, index funds, mutual funds, that’s what’s proven to be successful over time.
BRAD SMITH: George, it’s interesting and we showed your book earlier here. You talk about the three stooges of wealth building. How did you come up and come down to this, and what are they?
GEORGE KAMEL: Well, as I’ve taken calls on “The Ramsey Show” and talked to so many people, I found that it really boils down to three things. It’s greed, fear, and pride. Those are the three stooges of wealth building. And greed is that intense selfish desire to build wealth really quickly. That’s the get-rich-quick that can throw people off because you don’t make good decisions when greed is at the forefront.
Next is the fear, a lot of people have FOMO. What if I miss out on this investment and the timing and the market and this crypto? And instead, you should have JOMO, the Joy of Missing Out knowing that you’re doing the right things. You’re building wealth with confidence and peace. And lastly, you’ve got pride, and this is the thing that says I’m better, I’m smarter. I know exactly what stock to invest in. And that’s when people lose their butts.
So instead, you’ve got to have humility. And so if you can have that generosity thing to fight against that greed, you can have the JOMO to fight against that FOMO, and then you have the humility to fight against the pride, I found that is the most peaceful way to build wealth.
NEW YORK (AP) — Shares of Tesla soared Wednesday as investors bet that the electric vehicle maker and its CEO Elon Musk will benefit from Donald Trump’s return to the White House.
Tesla stands to make significant gains under a Trump administration with the threat of diminished subsidies for alternative energy and electric vehicles doing the most harm to smaller competitors. Trump’s plans for extensive tariffs on Chinese imports make it less likely that Chinese EVs will be sold in bulk in the U.S. anytime soon.
“Tesla has the scale and scope that is unmatched,” said Wedbush analyst Dan Ives, in a note to investors. “This dynamic could give Musk and Tesla a clear competitive advantage in a non-EV subsidy environment, coupled by likely higher China tariffs that would continue to push away cheaper Chinese EV players.”
Tesla shares jumped 14.8% Wednesday while shares of rival electric vehicle makers tumbled. Nio, based in Shanghai, fell 5.3%. Shares of electric truck maker Rivian dropped 8.3% and Lucid Group fell 5.3%.
Tesla dominates sales of electric vehicles in the U.S, with 48.9% in market share through the middle of 2024, according to the U.S. Energy Information Administration.
Subsidies for clean energy are part of the Inflation Reduction Act, signed into law by President Joe Biden in 2022. It included tax credits for manufacturing, along with tax credits for consumers of electric vehicles.
Musk was one of Trump’s biggest donors, spending at least $119 million mobilizing Trump’s supporters to back the Republican nominee. He also pledged to give away $1 million a day to voters signing a petition for his political action committee.
In some ways, it has been a rocky year for Tesla, with sales and profit declining through the first half of the year. Profit did rise 17.3% in the third quarter.
The U.S. opened an investigation into the company’s “Full Self-Driving” system after reports of crashes in low-visibility conditions, including one that killed a pedestrian. The investigation covers roughly 2.4 million Teslas from the 2016 through 2024 model years.
And investors sent company shares tumbling last month after Tesla unveiled its long-awaited robotaxi at a Hollywood studio Thursday night, seeing not much progress at Tesla on autonomous vehicles while other companies have been making notable progress.
TORONTO – Canada’s main stock index was up more than 100 points in late-morning trading, helped by strength in base metal and utility stocks, while U.S. stock markets were mixed.
The S&P/TSX composite index was up 103.40 points at 24,542.48.
In New York, the Dow Jones industrial average was up 192.31 points at 42,932.73. The S&P 500 index was up 7.14 points at 5,822.40, while the Nasdaq composite was down 9.03 points at 18,306.56.
The Canadian dollar traded for 72.61 cents US compared with 72.44 cents US on Tuesday.
The November crude oil contract was down 71 cents at US$69.87 per barrel and the November natural gas contract was down eight cents at US$2.42 per mmBTU.
The December gold contract was up US$7.20 at US$2,686.10 an ounce and the December copper contract was up a penny at US$4.35 a pound.
This report by The Canadian Press was first published Oct. 16, 2024.
TORONTO – Canada’s main stock index was up more than 200 points in late-morning trading, while U.S. stock markets were also headed higher.
The S&P/TSX composite index was up 205.86 points at 24,508.12.
In New York, the Dow Jones industrial average was up 336.62 points at 42,790.74. The S&P 500 index was up 34.19 points at 5,814.24, while the Nasdaq composite was up 60.27 points at 18.342.32.
The Canadian dollar traded for 72.61 cents US compared with 72.71 cents US on Thursday.
The November crude oil contract was down 15 cents at US$75.70 per barrel and the November natural gas contract was down two cents at US$2.65 per mmBTU.
The December gold contract was down US$29.60 at US$2,668.90 an ounce and the December copper contract was up four cents at US$4.47 a pound.
This report by The Canadian Press was first published Oct. 11, 2024.
