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Dave Ramsey warns against leaving $450K inheritance in a CD
Ramsey said investing at long term market rates could have roughly doubled the money in about seven years, versus low CD yields.
Yahoo Finance carried an exchange on The Ramsey Show with Dave Ramsey and Ken Coleman after a 23-year-old from New York asked what not to do with an inheritance.
According to the interview, the caller and his brothers sold their parents home and received about $450,000, had no debt, earned about $75,000 a year, and said the funds were currently sitting in a CD.
Ramsey argued that freezing money in a low yielding account can be costly because inflation erodes purchasing power and young investors benefit from time in the market. He said that if the inheritance were invested at long term market rates, it could double in about seven years, and he contrasted that with what he described as the CD’s weaker returns.
The article also cited Federal Reserve data showing the median net worth of Americans under 35 is about $39,000, compared with more than $364,000 for those aged 55 to 64, underscoring the stakes of getting capital to work early.