‘It’s Never an Investment’: Dave Ramsey’s Rule for Pokémon Cards, Boats and Other Things People Call Assets

Dave Ramsey has a clear definition of what constitutes an investment: it should either generate income or appreciate in value for future resale. By this standard, items like collectibles and boats do not qualify as investments.

For instance, if a dealer offers 60% of the market value for a Pokémon card collection, that would result in a loss of $13,200 from an estimated value of $33,000. In contrast, an equivalent sum invested in an index fund could potentially grow to around $65,000 over a decade.

Ramsey argues that referring to hobbies as investments often leads individuals to justify spending more money on them. He advises people to categorize these purchases as expenses in their budgets and to exclude them from their net worth calculations.

During a recent episode of The Ramsey Show on September 11, a caller shared that her 36-year-old husband allocates 80% of his income to buying Pokémon cards. She mentioned that he considers this collection to be a form of portfolio worth $33,000. In response, Ramsey remarked that such behavior "sounds like a 14-year-old," further asserting on October 18 that "it's not an investment, and it's not a portfolio. It's a habit." This call was initially reported on September 13.

Ramsey applies his investment principles to more adult-oriented purchases as well. In an episode aired on August 27, he discussed the notion of buying a boat, stating, "It's not an investment. So we bought a boat, and it's an investment in our family. No, it's consumption for your family." He succinctly summarized his stance by stating, "It's never an investment. It's wise consumption... Or it's unwise consumption."

When individuals label something as an asset, they tend to include it in their net worth calculations and often stop budgeting for it as an expense. This miscalculation can become evident when they attempt to sell the item.

In a related context, many Americans face numerous questions about their 401(k) plans. They often wonder about the best time to roll over their 401(k) into an IRA, the tax implications of any errors in the rollover process, and when they must start making required withdrawals. To address these concerns, Fisher Investments has compiled a resource titled "401k & IRA Tips and Answers," which is available for free and covers various topics, including rollovers, contribution limits, and withdrawal requirements.

Ramsey's viewpoint is reinforced by the reality of resale values. He defines an investment as something that either provides financial returns or appreciates in value for resale. However, collectibles like Pokémon cards do not generate income while owned, placing the emphasis on their resale value, which often does not meet expectations.