I Made $1.1M Trading Stocks

[Music] brought to you by the Every Dollar app. Start budgeting for free today. >> I'm 45 years old. I am single widowed mom of two. My kids are 12 and 15. Um I do well financially. I get social security. I put all my um money away that I can for HSA and retirement and everything. So doing well. My only debt is my mortgage and I should pay that off in the next 10 months. I have 15,000 left on it. I have a 3% interest rate on it. So, um it's doing well. So, my question is back at the start of COVID, um some friends told me I should invest money in the stock market um because it had dropped and I they kind of helped me through it. I opened an account. Um I had some of my husband's life insurance money I put into it. Um it was about $270,000. And over the last 5 years, I've done a little investing, not a ton, but um some. And now I am at 1.1 million. So I've done really well. >> Yeah. Way to go. >> Yeah. So I don't I don't know. This year when I hit the million mark, I kind of got nervous about it. And I don't know if I should just keep going, if I should start to sell because I have over 500,000 in unrealized gains that, you know, could go. So I just I don't know kind of what I should do with it. Okay. So, um well, what we teach and what I have done personally is I invest in good growth stock mutual funds. I don't buy and sell single stocks. >> And the reason I don't is the data tells us that over time what you've what you've pulled off, congratulations, is not sustainable. Mhm. >> The research tells us that that's, you know, for instance, people, you're not doing this, but people who are day trading, they're buying and selling all during the day. 97% of them lose money within a year. >> Okay. >> So, that's an example. Okay. That's people that think they can beat the system. Now, you have not been day trading, but you have been trading, >> correct? >> A little bit. And I So, >> so where did where did these gains come from? Explain it to me. >> Hey, sorry for the interruption. This is important. No one likes to think about dying, but one day your family will have to deal with everything you leave behind. So, the question is, will it be easy or a total nightmare? That's where Knockbox comes in. Knockbox is a kit with 15 categories and clear instructions that give your family an organized plan so they're not sifting through old paperwork and guessing passwords and dealing with lawyers. So, leave your family memories instead of a mess. Grab your Knockbox kit today at knockbox.com/ramsey for the best discount available. That's knockbox.com/ramsey. >> So where did where did these gains come from? Explain it to me. >> Um, so I have 20 stocks and >> probably most of that is within like four stocks that I've done really well on like and one of them is Palanteer that I bought more recently >> and that's a good portion of it. >> So it's kind of in four stocks. The rest are, you know, between three and 10,000 gains, which I'm not >> too worried about. I'm sure they'll continue to go up. >> The majority of the money you made was from the four stocks, not the 20. >> Yeah. Well, she invested in 20 and four of them hit. >> Yeah. And the other the other uh 16 have done okay, but not they're not the >> I mean, they they've done good. >> Yeah. They're not the hockey stick, though. Up into the right. The rest of this is Yeah. >> Okay, that makes sense. Um so, um here's the thing. Um 20 stocks is not a well- diversified portfolio and four sure is the devil isn't. >> And diversification equals lowered risk. Diversification means to spread around and your your risk is you're you're the karate kid. You're standing on one foot hoping you can kick. >> Mhm. >> You follow me? Instead of firmly planted on two with a solid base. And so, um, you know, you've done well. I don't I'm not bismerching that, but I I'm not going to recommend that you keep doing that or that anybody do that. Uh, I'm glad for you. I'm happy that you've made it, but again, the data the data tells me that that most likely you're not going to continue this trend. Um, and so, uh, it would scare me if I woke up and half of my fortune was in four stocks. >> Mhm. >> Because as those four companies go, so goes my fortune. And I want to be spread out more than that. So, a typical growth stock mutual fund has 90 to 200 stocks in it. And if you're in four different categories of growth stock mutual funds, growth, growth in income, aggressive growth in international, that puts you in somewhere between 400 and a thousand different companies. And so it's all it's spread out. And so one or two companies going up or down does not change your life. It's the movement of the whole market that changes your life when you're invested with a well- diversified portfolio. instead, you know, you wake up every morning thinking about these companies more than they do. >> Mhm. >> You have to. I mean, it would stress me. And so, you know, you called to ask. So, what would I do? I would say, "Thank you, God, that this happened. I've got this money and I'm going to make it safe now so it doesn't slip away from me." And so, it's akin it's akin to I hit on the uh roulette wheel and I'm up 200 bucks. So, I'm walking away from the table and I'm leaving the casino. while while I'm up. >> And you'll likely have maybe I don't know 70 or 80 grand in taxes you'll pay, which out of 1.1 big whoop. >> Yeah. So, I I would sit down with a Smart Investor Pro, go to Ramseyolutions.com, pick some good mutual funds, and move this to a well- diversified portfolio. And if it's making uh 10% average, it'll double every seven years. So, 7 years from now, you'll have 2 million. 14 years from now, you'll have 4 million. 21 years from now, you'll have 8 million just as steady as a rock. Just as so predictable, it's sickening. And what instead of um you're at the fair and you're on the roller coaster and then you got off and ran straight onto the tilt world and you're going to throw up. >> I would not recommend that. >> This is I mean this I I'm again I I I'm happy that you made some money. I'm a wee bit surprised that you made some money, but I'm happy you did. And uh just like if somebody says, "I I went to Vegas and I made a million dollars. I put 275 on the roulette wheel and I made a million dollars." I'm happy for you, but I don't recommend that as a methodology to uh to become wealthy uh because you'll end up with nothing. And um yeah, I I was counseling a in the early days I was coaching a lady that had um $900,000 in her company for in her 401k and she was 60 or she was 69 years old and it was a big time name brand company that anybody would know if I mentioned it. Household name, okay? And a big big company, major stock. And um they made some mistakes in some of their product launches and their stock went down 38% in two quarters. >> Wa. >> So she 100% of her 401k is in company stock. >> Oh man. >> She had one stock. So as that company goes, so goes her future. So her almost million dollars went down by almost 400,000 in two months or in two quarters. And she came to me, "What do I do?" But I'm like, uh, I don't know what you do. We're not going to write it down and then write it down, then write it down, hoping it comes up. I'm going to cut my losses and get out of dodge. And so instead of a million dollars to work with, you know, we had 600,000 to work with. And because she wasn't diversified, >> but it was a name brand, predictable, experienced, boring company. Shouldn't have done that. But it, you know, and it hadn't done that. It had gone up all these years. But then about the time she needs it, she hits retirement age. Boom. This thing goes down the dad gum hole. And so that's the kind of thing you're facing. And um diversification is a basic financial principle. The first thing they teach you in financial planning. Spread the Bible says it. Spread your portions to seven. Yes to eight. For disaster may come upon the land. Spread it out. Money is like manure. Spread out. It grows grows things left in one pile. It stinks. >> I like that. And the slower you grow it, the more likely you are to actually keep it and replicate that. You know, the proverb says wealth gained hastily will dwindle. Whoever gathers little by little will increase it. So unless you got a crystal ball or you're Nancy Pelosi, I would not be betting on any single stocks. >> Whoa. >> Sorry, Nance. She's been doing very well for herself. >> Dropped it in there. Well, you just >> I wonder if she's if Sarah's maybe for Michelle was friends with Nancy. Maybe that's who told her to get on these stocks years ago. >> Somebody Somebody helped her pick. >> Somebody knew something. >> Yeah, that's interesting. Yeah. No, I wouldn't accuse Michelle of that. Michelle seems like she's sweet lady. >> Just leave her alone, George. Don't Don't be abusing the customer. >> Leave Michelle alone. >> Don't be abusing the customer. >> Well, see, now everyone else goes, "Well, if I just pick the right stocks, I can be like Michelle. That's the scary." >> That's true. >> If you pick the right stocks, you be like Michelle. >> You go back in time. >> That means four times out of 20 you hit. That's a pretty heavy failure rate. Four times out of 20 you hit. Think about it. The statistic. I mean, if you got four out of 20 answers on a test, right, you would get an F. Create your free every dollar budget today. The simplest way to budget for your