Dave Says Know Your Investments

Advice & Stories, Dave Ramsey, Expert Q&A, Investing Basics, Retirement & Investing
on October 31, 2011

Dave Ramsey is a money-management expert, national radio personality and best-selling author.

Dear Dave,

I started putting money into growth stock mutual funds inside a Roth IRA last year. Recently, one of my statements said it had grown. How did it grow?

—Meg via Twitter

Dave Says: I love the fact that you’re investing and thinking about the future. But please don’t put any more money into that investment until you understand exactly how it works. That’s how people lose their money. You should never invest in something because someone else told you to get into that investment. Now, how did your money grow? You’ll have anywhere from 90 to 200 different companies’ stock in a growth stock mutual fund. Some of them will go down and some will go up over a period of time. But if the overall effect is that the group is worth more now than it was before, then you made money. In other words, the value of that overall group of stocks went up.

But I can’t say this enough, Meg: Get educated on your investments and know what they are and how they work. Never, ever put money into something you don’t understand!

Related: What Is A Roth IRA?

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