After leaving college with a finance degree, Zack, from Nashville, Tennessee, started day trading professionally.

He’s excellent at his chosen profession, netting between $30,000 and $90,000 every month. But day trading doesn’t take up all of his time and he wants to branch out into the world of real estate investing.

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“I am trying to figure out when to make the jump into real estate because, that’s kind of where I want to take my end goal,” Zack told Ramsey Show hosts, George Kamel and Rachel Cruze.

But both Kamel and Cruze think there’s a step in between that Zack should take before diving straight in.

Day trading to real estate — when to make the move

Although Zack wants to jump into real estate, the Ramsey hosts needed to gather more information about his current income.

Zach explained that he had practiced for over three years before deciding to make an initial investment of $3,000 of his own money to start day trading. After doing well, he shared his results with several proprietary (prop) trading firms, which offered him a chance to work for them.

Essentially, a prop trading firm allows him to trade using “other people’s money.” When he makes a profit, he can keep between 70% to 90% of the profits. But if he makes too many bad trades, the prop firm will boot him out of their system.

“I was able to pay my student loans off by doing it,” said Zack.

“If you’re so good at this, why not use your own money?” asked Kamel.

Although Zack is good at trading, he doesn’t always have the large lump sums required to make it worthwhile. With that, he prefers to lean on the funds provided by prop trading firms and split part of the profits.

“I was raised a Ramsey kid, so the less risk and the more success, then that’s kind of where I was going with it,” Zack told the hosts.

As he’s earned this money, he’s put the Ramsey principles to work. He started by paying off his student loans, building up a substantial emergency fund and setting aside a large portion to cover his income taxes. Currently, he is debt-free and has around $50,000 in liquid cash.

His end goal is to use the funds to invest in real estate.

“I’ve always wanted to get into real estate. And so, I’m trying to figure out when the best time would be to make that move and start investing in real estate as well,” said Zack.

The Ramsey hosts urge caution, especially against taking out loans to purchase rental properties or flipping projects. Instead, they suggested he first get into real estate by purchasing his own home to live in. After that, he could consider purchasing rentals as he has the cash available.

“With real estate, we say, if you’re going to go beyond your primary residence, you want to do it with cash,” Cruze told him.

Since he just signed a year-long lease, the Ramsey hosts suggest he save up for a home during this upcoming year. From there, the time to branch into rental real estate is whenever he has the cash available, according to the Ramsey principles.

Read more: You don’t have to be a millionaire to gain access to this $1B private real estate fund. In fact, you can get started with as little as $10 — here’s how

Pros and cons of day trading

So far, day trading is working out well for Zack. But he’s only been doing this for a couple of months. The appeal of the type of day trading he’s doing is undeniable. After all, who wouldn’t like the possibility of quick profits without any major overnight market risks.

“A bad day would be me breaking even or only losing about a thousand or two,” Zack said.

Plus, day traders enjoy a more flexible schedule with increased independence to do other things throughout the day. For example, Zack mentioned he only spends about three to four hours a day trading, leaving plenty of space in the day for other activities.

Although enticing, day trading comes with some serious risks.

For starters, there is a steep learning curve. It can take years of practice to become proficient in trading. Zack mentioned that he practiced for several years before trading with real dollars. Even with experience, traders can face a high risk of financial loss and must account for the high fees tied to every trade.

Many think they can beat the odds. But the vast majority of day traders lose money. According to recent research by Tradeciety, only 1% of traders earn a profit after the fees are taken into account.

If you’re serious about day trading, consider learning with play money. You can find online simulators to practice day trading without running the risk of losing real money.

Depending on how that goes, you may or may not want to jump into the market with your hard-earned savings.

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