On the Ramsey Show – Highlights YouTube channel, the finance expert suggested how a 61-year-old can still retire on time despite his savings going down. Jesse emailed into the show explaining his hopes to retire soon however after checking his accounts, he’s not so optimistic this can happen.
He said: “I’m hoping to retire soon but I’m watching my retirement savings go down day after day after day.
“The only money not going down is the $180,000 (around £145,000) sitting in the bank earning almost zero interest.
“But it’s not completely eroding away with the stock market. What should I do?”
The personal finance expert explained that cash sitting in the bank is losing value as inflation will erode it.
READ MORE: Dragons’ Den’s youngest pitcher secures £50k at 15 – business now worth 2.5million
In the stock market, one’s savings are less likely to “completely erode away,” as the returns historically go up and down.
The stock market is down but it will come back up due to the cyclical nature and track record, Mr Ramsey said.
Mr Ramsey said: “It’s not completely eroding away.
“If you had $1million (around £800,000) and it went down 10 percent to $900,000 (around £700,000), it should go up to $1.1million (around £890,000) by the next year.”
For those who may be retired and worried about their retirement income invested in the stock market, Mr Ramsey urged people to “not panic”.
He said: “You weren’t going to cash out all your money this year anyway.
“If you have $500,000 (around £400,00) in your pension you’re not cashing that out straight away unless you panic.
“You should be living off the income it creates and not touching the principal so let the principal ride the rollercoaster and let the reasonable income come off it and retired people will be just fine that way.”
READ MORE: Pensioner ‘gutted’ after handing over £3,000 to fraudsters
As Jesse is still working, the personal finance expert encouraged him to keep investing despite seeing his money go down.
Mr Ramsey suggested he should invest the $180,000 (around £145,000) sitting in his bank account as that is losing value more than what is in the stock market.
He continued: “I don’t time the market but I’m telling you every down market is followed by a two-year upturn except for one year.
“Just hang on. When the leaves get green next spring you’ll be okay.
“All these companies are not losing money, they are making money, and guess where stock price comes from? Profit and potential profit. That’s all still there.”
Mr Ramsey reassured Jesse that his money is fine and he should not make any rash decisions just because his money is down.
Mr Ramsey explains when it comes to investing, there’s a voice in people’s heads that may exaggerate things, however, it is not always as bad as people think.
It should be noted that with investing comes risk. Before making any choices about money, Britons can speak with a financial advisor.
For all the latest Business News Click Here
For the latest news and updates, follow us on Google News.