During a recent episode of The Ramsey Show (1), Diane, 57, told host Dave Ramsey that after selling a business with her husband for $1.2 million, she\u2019s sitting on a cushy $600,000 nest egg.<\/p>\n
On paper, Diane looks like she\u2019s in a decent financial position. With no personal debt and an additional $250,000 in retirement savings, she holds roughly $850,000 in assets under her name. For someone nearing retirement, it\u2019s a solid cushion.<\/p>\n
But despite her sizable savings, Diane admitted it\u2019s not all roses. Following the sale of the business her husband ran, the couple were \u201cgiven a large lump sum\u201d \u2014 half of which they used to pay off \u201csome unexpected unknown debts<\/a>.\u201d<\/p>\n \u201cYou\u2019re being cryptic,\u201d responded cohost Jade Warshaw.<\/p>\n With some prodding by the hosts, it became clear that her husband has a gambling problem that drains roughly $3,600 a month in additional income from a rental and his social security. As a result, the $850,000 Diane mentioned is now in her name for safekeeping.<\/p>\n So with this in mind, Diane is looking for the best way to invest her money for a comfortable retirement. As a start, she was hoping to invest $125,000 of the money into a new franchise, despite having no business experience.<\/p>\n \u201cI\u2019m very confident and very passionate about this and I\u2019m expecting for it to be very successful and I have a family that is willing to stand behind me and support me,\u201d she shared.<\/p>\n But Ramsey and Warshaw had some sobering words on how to make the most of her remaining funds.<\/p>\n While it\u2019s not clear why Diane\u2019s husband is gambling, sometimes the source of the income can impact how a person spends it.<\/p>\n According to Complete View Financial (2), when people experience a financial windfall \u2014 whether from selling a business, an inheritance, or another big payout \u2014 it can spur the receivers of the funds to treat it differently than earned income. \u201cThe way the money is framed also influences behavior: We save more when something feels \u2018earned\u2019 and spend more when it feels like a bonus,\u201d says the financial planning and investment management firm. And sometimes this brings with it a higher risk of impulse spending.<\/p>\n According to the FINRA Investor Education Foundation (3), people between the ages of 58 and 101 can also be especially overconfident when it comes to making big financial decisions, like investing. \u201cFinancial literacy levels among all Americans are alarmingly low, but among older investors, our research suggests that the challenges are even greater,\u201d said Gerri Walsh, president of the FINRA Foundation, in the report<\/p>\n And Dave Ramsey didn\u2019t sugarcoat that the real threat to her future is her husband\u2019s gambling habit and the temptation to pour money into a brand-new business she has no experience running.<\/p>\n \u201cIt\u2019s hard to fill up a hole while somebody\u2019s digging out the bottom,\u201d he said, warning her that even strong savings can disappear quickly under pressures like a new venture and an addiction.<\/p>\n Ramsey urged Diane to protect her money and suggested putting the bulk of her savings into diversified mutual funds, aiming for long-term average returns of around 10%.<\/p>\n Ramsey recommended that Diane let time and consistency do the heavy lifting. And thanks to compound growth, her money could double roughly every seven years and that would turn Diane\u2019s $850,000 cash pile into substantially more, with Ramsey saying, \u201cIn seven years, at 64 years old, you\u2019ve got $2 million dollars. At seven more, at 71, you\u2019d have $4 million dollars.\u201d<\/p>\n As for Diane\u2019s business idea, Ramsey advised that optimism wasn\u2019t enough to keep a business afloat, especially since she doesn\u2019t have prior experience.<\/p>\n The Commerce Institute (4) backs up how risky such a venture can be with 2024 data from the U.S. Bureau of Labor Statistics (5), showing that 49% of new businesses don\u2019t survive their first five years. That failure rate rises to 65% when looking at the first 10 years, highlighting just how high the stakes can be.<\/p>\n And for Diane, the risks are even higher. With no track record, Ramsey warned that overconfidence could turn a $125,000 experiment into a much bigger financial drain.<\/p>\n Read More: 5 essential money moves to make once you\u2019ve saved $50,000<\/a><\/p>\n Ramsey laid out a framework to protect Diane from the two biggest risks in her life: overconfidence and instability at home. Here\u2019s what he recommended:<\/p>\n The bulk of Diane\u2019s savings should stay in long-term, diversified investments and be completely separate from both the business and her husband\u2019s spending.<\/p>\n That advice lines up with guidance from the U.S. Securities and Exchange Commission (6), which stresses that money set aside for retirement should be put into carefully researched investments<\/a>. Once that capital is lost, there\u2019s less time to rebuild it especially for older investors. In other words, this is not the time for risky bets<\/a> \u2014 in business or elsewhere.<\/p>\n If the franchise costs $125,000, Ramsey told Diane, that should be her limit.<\/p>\n Ramsey\u2019s warning echoes a broader guideline highlighted by the Commodity Futures Trading Commission (7) that says you should not expose yourself to losing more money than you can afford to lose.<\/p>\n One of the most important factors in Diane\u2019s situation is to keep everything separated because when gambling is in the picture, money needs guardrails.<\/p>\n Experts, including the Responsible Gambling Council (8), say to protect your assets by setting up separate bank accounts and consider changing access to mortgages and other assets so that the person who gambles doesn\u2019t have access to them.<\/p>\n Diane\u2019s situation may sound extreme, but it\u2019s not uncommon for people who come into money suddenly to struggle with what to do. The smarter move is slowing down, protecting the funds and limiting risk to help maintain and build wealth<\/a>.<\/p>\n Join 250,000+ readers and get Moneywise\u2019s best stories and exclusive interviews first \u2014 clear insights curated and delivered weekly. Subscribe now.<\/a><\/p>\n We rely only on vetted sources and credible third-party reporting. For details, see our editorial ethics and guidelines<\/a>.<\/p>\n The Ramsey Show (1)<\/a>; Complete View Financial (2)<\/a>; FINRA Investor Education Foundation (3)<\/a>; Commerce Institute (4)<\/a>; U.S. Bureau of Labor Statistics (5)<\/a>; U.S. Securities and Exchange Commission (6)<\/a>; Commodity Futures Trading Commission (7)<\/a>; Responsible Gambling Council (8)<\/a><\/p>\n This article provides information only and should not be construed as advice. It is provided without warranty of any kind.<\/p>\n","protected":false},"excerpt":{"rendered":"During a recent episode of The Ramsey Show (1), Diane, 57, told host Dave Ramsey that after selling…\n","protected":false},"author":2,"featured_media":503380,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[44],"tags":[176636,8374,176637,87345,102,1906,6623,13593,176635,56,54,55],"class_list":{"0":"post-503379","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-mental-health","8":"tag-business-experience","9":"tag-dave-ramsey","10":"tag-diane","11":"tag-gambling-problem","12":"tag-health","13":"tag-mental-health","14":"tag-mentalhealth","15":"tag-retirement-savings","16":"tag-selling-a-business","17":"tag-uk","18":"tag-united-kingdom","19":"tag-unitedkingdom"},"_links":{"self":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts\/503379","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/comments?post=503379"}],"version-history":[{"count":0,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/posts\/503379\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/media\/503380"}],"wp:attachment":[{"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/media?parent=503379"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/categories?post=503379"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.newsbeep.com\/uk\/wp-json\/wp\/v2\/tags?post=503379"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}