Suze Orman praises CDs as ‘the smartest money move’, but Dave Ramsey says they’re just ‘glorified savings accounts’ – who wins the debate?

When it comes to certificates of deposit (CDs), Suze Orman and Dave Ramsey, two of the most prominent voices in personal finance, offer contrasting views that reflect their broader financial philosophies. Understanding their perspectives can help individuals decide which approach best aligns with their financial goals and risk tolerance.

Don’t miss:

Suze Orman’s perspective

Suze Orman advocates CDs as a safe investment option, especially in uncertain economic times. She appreciates their safety and predictability, thanks to FDIC insurance and fixed interest rates. Orman suggests that CDs can be a smart choice for those who want to protect their capital while earning a modest return, especially when interest rates are favorable.

Earlier this year, she wrote on her blog: “So I need you to listen, because the smartest money move you can make right now is to lock in today’s great rates by putting some of your savings cash in certificates that have a duration of one year. at a maturity of two years”.

See also: Founder of Personal Capital and former CEO of PayPal reinvent traditional banking with this new high-yield account – start saving better today.

She points out that CDs are not a substitute for long-term investments in the stock market, but they can serve as a stable component of a diversified portfolio. This approach is particularly suitable for retirees or those approaching retirement who need to protect their savings against market volatility.

Orman also cautions against using CDs for emergency funds because of the lack of liquidity and potential early withdrawal penalties. Instead, she recommends them for funds that can be set aside for a specific period, allowing investors to lock in current interest rates before they drop.

Trends: Number of “401(k)” millionaires up 43% over last year – Here are three ways to join the club.

Dave Ramsey’s perspective

Dave Ramsey, on the other hand, considers CDs too conservative. He often describes them as “glorified savings accounts” with returns that struggle to keep up with inflation. He argues that CDs might offer slightly higher interest rates than savings accounts, but they are not long-term investment vehicles.

Ramsey encourages people to consider higher-yielding investments, such as stocks or mutual funds, which, despite their risks, offer the potential for long-term growth. His advice is rooted in the belief that building wealth requires taking calculated risks that CDs simply don’t offer.

The story continues

Ramsey’s approach is particularly geared toward those who want to maximize their investment returns and are comfortable with the volatility of the stock market. He suggests that CDs may be suitable for short-term savings goals, but cautions against relying on them for long-term financial growth.

Trends: A Billion Dollar Investment Strategy With Lows as Low as $10 — you can become part of the next big real estate boom today.

debate

The debate between Orman and Ramsey on CDs highlights a fundamental difference in investment philosophy. Orman’s advice appeals to those who prioritize security and predictability, especially during economic downturns. Her approach is about protecting wealth and ensuring stability.

Ramsey, by contrast, focuses on growth and wealth accumulation, advocating for investments that can beat inflation and provide substantial returns over time.

Ultimately, these perspectives depend on individual financial goals, risk tolerance and investment horizons. For those who value security and have a lower appetite for risk, Orman’s advocacy for CDs may resonate more. Meanwhile, people looking for higher returns and willing to accept market fluctuations may find Ramsey’s approach more suitable.

Read on:

“THE SECRET WEAPON OF ACTIVE INVESTORS” Up Your Stock Game With The #1 “news & Everything” Trading Tool: Benzinga Pro – Click Here To Start Your 14 Day Trial Now!

Get the latest stock analysis from Benzinga?

This article Suze Orman praises CDs as the ‘smartest money move’, but Dave Ramsey says they’re just ‘glorified savings accounts’ – who wins the debate? originally appeared on Benzinga.com

© 2024 Benzinga.com. Benzinga does not provide investment advice. All rights reserved.