Dave Says

Dear Dave,

I'm retired, and currently I have about five percent of my retirement savings in gold and silver I've been acquiring over the last few years. I've seen gold prices decline significantly, and I'm wondering if I should hang on to it as a safety factor in the event the economy goes bad in a hurry. I want to make sure I'll still have a safety factor, and something of value, if that happens.

Steve


Dear Steve,

What's the safety factor here? And if everything goes downhill, why does it have value? Gold has this weird allure and mythology around it that says, "I've still got something that people will take when the economy crashes." But the truth is there hasn't been an instance when people used gold as a medium of exchange in a crashed or failed economy since the Roman Empire.

People still use gold because they believe in it. We also believe in green paper with presidents' faces on it. So, gold really has no more intrinsic value than that green paper. The only reason we place value on it is because we, the society, place value on it. A failed society might not place value on it anymore.

In a completely failed economy, the first step is usually a takeover by a Fascist government. After that, you get a new color of money – of paper – with a new leader's face on it. Then, the old stuff isn't worth anything. It's very seldom you ever see gold come to the rescue.

I don't believe in investing in gold for that reason. Plus, the track record on gold, as far as a rate of return, is horrible over the long haul. There was a time a few years ago when everyone went crazy on it, but other than that? Ugh!

--Dave


Dear Dave,

We've got our emergency fund in place, and we're debt-free except for our home. We'd like to have a child soon, but my job requires frequent travel. I don't want to be away most of the time when there's a baby in the house, so I'm thinking about opening my own business. That way, I can set my own hours. What do you think of this idea?

Ray


Dear Ray,

Ask yourself this question: If time and money weren't considerations, which one would you rather do? You'd be on straight commission as an entrepreneur, so there would be no regular checks to count on as income. You'd have to wake up every single morning, go out and kill something and drag it home. If you don't, your family won't eat.

An entrepreneur is the only person I know who can go from sheer terror to sheer exhilaration and back every single day. You've got to have a strong mind and heart to make things happen, and it will be a rough ride if you don't have both. Plus, it won't last long if you don't absolutely love what you're doing.

Everybody wants to be successful in their job and make lots of money, but personal happiness is just as important. If you wake up jazzed about what you're going to do every day, chances are you'll be successful and happy. But if you wake up dreading the day and your job, then I can almost guarantee you won't be successful financially or happy.

Do lots of research and planning before you make any big changes, Ray. There are great small business ideas still waiting to be had, but to make something good happen you've got to find the one that's right for you!

-- Dave


* Dave Ramsey is America's trusted voice on money and business. He has authored five New York Times best-selling books, including The Total Money Makeover. The Dave Ramsey Show is heard by more than 8.5 million listeners each week on more than 550 radio stations. Follow Dave on Twitter at @DaveRamsey and on the web at daveramsey.com.