:max_bytes(150000):strip_icc()/GettyImages-2211409841-86e511aab574425d8cddc2985c0f1bc9.jpg "Young Earners, Dave Ramsey Warns Against This Savings Pitfall That Could Cost You")
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Key Takeaways
- Parking a large inheritance in a low-yield CD can quietly cost young earners hundreds of thousands in missed growth over time.
- Ramsey told a 23-year-old with an inheritance to learn how investing works, use growth stock mutual funds, and leave the money alone.
- Research from DALBAR and the CFA Institute shows that investor behavior is why many people fall short over the long run.
A 23-year-old caller named Jackson recently told Dave Ramsey he has $450,000 sitting in a certificate of deposit (CD), and he has no idea what to do next. The call, aired on The Ramsey Show Highlights in January 2026, is relevant for anyone who has some savings but feels scared to make a move.
Jackson lives on Long Island, earns about $75,000 a year in financial technology, and inherited the money after he and his two brothers sold their late mother’s home. He has no debt, rents with his brother, and parked the inheritance in a CD earning roughly 3% while the S&P 500 returned about 67% in total over 2023, 2024, and 2025. Ramsey’s response was: “While you had this sitting in a CD making 3%, it should have made five times as much.”
The Risk of Playing It Too Safe
Ramsey praised Jackson for not blowing the money and called his caution “very wise, beyond your years wise,” but he also warned that doing nothing is its own kind of risk. He told Jackson $450,000 invested at market rates could reach roughly $900,000 in about seven years if left alone. (This assumes an average growth of a little over 10% per year.)
That’s a very different trajectory from keeping the money in cash-like products, especially when you compare it with where most young adults are starting.
The Federal Reserve’s latest Survey of Consumer Finances shows a median net worth of about $39,000 for Americans under 35, versus a net worth of roughly $364,500 for those between the ages of 55 and 64.
What Ramsey Told Him to Do
Ramsey’s game plan for Jackson is a simple one. First, he told him to sit down with a vetted financial professional through Ramsey’s SmartVestor network and learn how investing in mutual funds really works before committing the money. Then, he urged him to move the inheritance into diversified growth stock mutual funds and “keep your dad gum hands off of it.”
“Don’t put money in something because I said to or someone else said to, but because you start to understand it,” Ramsey told him on air. He also shut down the idea of using the inheritance to buy an apartment in New York City, noting that $450,000 would not buy a place outright and that Jackson’s income would likely not support a huge mortgage there. Ramsey’s advice was to live on his salary, pretend the inheritance doesn’t exist, and let compounding do the heavy lifting.
That approach lines up with guidance from the Certified Financial Planner Board of Standards, which warns that sudden wealth—especially from an inheritance—can disappear quickly without a plan, guardrails on spending, and help from a qualified planner. The CFP Board’s consumer resources on sudden wealth stress the importance of taking time, building a structure, and getting tax and investing advice before making major moves.
Why Behavior Matters
Jackson’s first instinct—to pause and avoid a big mistake—was understandable. But the bigger long-term danger isn’t starting cautiously—it’s staying frozen or reacting emotionally every time the market moves.
According to Dalbar’s 2025 Quantitative Analysis of Investor Behavior report, in 2024, the average equity fund investor earned 16.54%. The S&P 500, meanwhile, returned 25.02%, leaving an 8.48 percentage point gap in a single year. Dalbar, which has tracked investor behavior since the 1980s, reported that investors have trailed the index for 15 straight years and concluded that investment results depend more on investor behavior than on fund performance.
The CFA Institute’s Enterprising Investor blog has flagged the same pattern. A 2025 piece on investing through uncertainty noted that “emotions can become a hidden liability for investors” and that reacting quickly to swings often chips away at long-run results. That’s exactly the trap Ramsey wants Jackson to avoid by picking a plan he understands and then leaving the money alone.
Important
Under Internal Revenue Code Section 1014, most inherited non-retirement assets receive a stepped-up cost basis, meaning their tax basis resets to fair market value at the original owner’s death. That step-up wipes out capital gains that built up during the parent’s lifetime, but any growth after the inheritance is taxable when the assets are sold, which is why the IRS and major custodians urge heirs to understand basis rules before restructuring investments.
If you’re in your 20s or 30s and sitting on a chunk of cash, you should probably follow Ramsey’s advice to Jackson: get help from a credentialed planner, learn enough about investing to be confident in your choices, move long-term money into growth-focused investments instead of CDs, and then stay out of your own way so time and compounding can do their job.
