In 2021, on an episode of "The Ramsey Show," a young caller stunned personal finance expert Dave Ramsey with a $43,000 stock portfolio, but the financial expert had a surprising response.
Young Investor With $43,000 In Single Stocks Seeks Retirement Advice At 22
Nick, a 22-year-old caller, phoned into the show seeking retirement advice. His employer didn't offer a 401K, so he asked Ramsey whether he should open a traditional or Roth IRA.
Nick revealed he had around $3,000 in savings and had invested $43,000, money received from a childhood accident settlement, mostly in single stocks through E-Trade.
Ramsey Warns Against Early Roth IRA Contributions Without Income Stability
Ramsey applauded Nick's initiative but expressed concern over his investment strategy and priorities.
"You're way ahead of the curve to be working on this at your age," he said, adding, "But you're taking too much risk, in my opinion." No more than 10% of your net worth should be in a single stock, Ramsey added.
The expert advised Nick to redirect his focus toward financial independence. "You do not need to start your Roth IRA yet," he said.
"You need to pile up money to make the transition out of your household and complete your studies," Ramsey added.
Nick currently lives with his parents and earns about $15,000 a year through a work-study program. He said he doesn't plan to move out until age 26 to 28, prompting Ramsey to push back. "I don't want you 28 years old in your mother's basement, dude. Get out and get going."
Ramsey Says Lack Of Hope, Not Knowledge, Is Why People Fail Financially
In a 2023 interview on The Iced Coffee Hour podcast, Ramsey said the biggest barrier to wealth-building isn't knowledge, but a lack of hope.
Many people avoid saving or budgeting because they don't believe their efforts will lead to financial success. "I don't believe if I save money, I can really be a millionaire," Ramsey explained.
Using a farming analogy, he emphasized that just like planting corn requires faith in a harvest, financial progress depends on believing change is possible. Ramsey said restoring that hope is central to his show's mission.
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