I'm 23 And Just Received a $450,000 Inheritance (I Don't Know What To Do With It)

Summary

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Episode Overview

Main Theme
This episode of The Ramsey Show Highlights features a 23-year-old listener who has recently inherited $450,000 and seeks advice on how to manage and invest it wisely. The discussion revolves around responsible wealth management, the importance of financial discipline, investment strategy, and the unique opportunities and responsibilities that come with inheriting a significant sum at a young age.

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Key Discussion Points & Insights

1. Listener Background and Situation

• The caller (B), 23 years old, recently received a $450,000 inheritance after the sale of his late parents' home.
• Currently debt-free, recently graduated college, earning $75,000/year, renting with his brother in Long Island, and planning a future move to NYC.
• The inheritance is temporarily parked in a certificate of deposit (CD).

Notable Quotes:

• “So I recently, maybe not recently, a few months ago, came into a large inheritance from my parents. And I'm just wondering what to do with it.” — Caller (B) [00:08]
• “You're so wise. I mean, you didn't call me up and say I need to buy a Lamborghini... for your own sake… you're just a sharp 23 year old.” — Host (A) [05:47]

2. Assessing Immediate Financial Moves

• The host applauds the caller for not rushing into big purchases, highlighting the wisdom in initially placing the funds in a safe, liquid account.
• Both the host and co-host (C) emphasize the value of maintaining discipline and resisting the urge to spend the inheritance on lifestyle upgrades or depreciating assets.

Notable Quotes:

• “Not a bad move for the first move anyway. That way you didn't go do something stupid with it.” — Host (A) [02:30]
• “This is a massive head start for you...when Dave's preaching discipline, it's because we realize how much of a massive head start this is for a 23-year-old.” — Co-host (C) [05:30]

3. Strategic Investment Advice

• The Ramsey team recommends the Baby Steps as a prudent framework, tailored to the caller’s situation since he has no debt.
• Rather than using the inheritance to purchase a home outright (which isn’t feasible in NYC), the host suggests focusing on long-term growth by investing in growth stock mutual funds.
• Advises connecting with a vetted financial advisor (SmartVestor Pro) to learn about investment vehicles and make informed decisions.

Notable Quotes:

• “If it was invested at market rates, it would double in about seven years and be about 900. 450 will not buy anything in the city. Would you agree with that?” — Host (A) [02:55]
• “Go to ramseysolutions.com, click on SmartVestor Pro, sit down with one of the people that we recommend, and start learning about investing.” — Host (A) [03:39]
• “Just let this money grow because if you don't touch it, it will double every seven years.” — Host (A) [03:57]

4. Stock Market Context and Opportunity Cost

• The host points out the opportunity cost of keeping money in a CD versus investing in the S&P 500, referencing recent strong annual returns.
• The caller is encouraged to learn about historical averages and understand the power of compounding in suitable investments.

Notable Quotes:

• “While you had this sitting in a CD making 3%, it should have made five times as much... So I don't want you doing that next year. I want it to be in a good investment instead of in a CD.” — Host (A) [04:32]

5. Building Financial Literacy and Autonomy

• Emphasis on education before investing: the host stresses that the caller should only invest in options he understands, not simply take advice at face value.
• The hosts affirm B’s capacity to learn and make sound choices, given his background in financial technology.

Notable Quotes:

• “Don't put money in something because I said to or someone else said to, but because you start to understand it. And I've got a feeling after talking to you, you'll be able to understand it.” — Host (A) [05:15]

6. The Power of Generosity

• The co-host introduces the idea of using a portion of the inheritance to bless others, emphasizing the intangible rewards of generosity and its role in appreciating wealth.
• This act, according to the hosts, enhances personal fulfillment and is central to Ramsey's philosophy of living and giving well.

Notable Quotes:

• “Give it to somebody. I think it's really rewarding...to think about how to bless somebody that you would not have been able to bless before... Live like no one else so that later you can live and give. And that is such a key thing.” — Co-host (C) [06:31]

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Memorable Moments & Quotes with Timestamps

• 00:08 — Caller introduces his situation: “I recently...came into a large inheritance from my parents. And I'm just wondering what to do with it.”
• 02:30 — Host recognizes wisdom in using a CD as a temporary parking place.
• 03:39 — Strong advice to find a trusted advisor and focus on learning about investing: “Go to ramseysolutions.com, click on SmartVestor Pro...”
• 04:32 — Host illustrates the missed opportunity of leaving money in a low-yield CD.
• 05:30 — Co-host emphasizes the enormous head start and importance of long-term thinking and discipline.
• 06:31 — Encouraging generosity: “Give it to somebody...really rewarding.”

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Timestamps for Important Segments

• 00:08 — Caller describes inheritance and initial steps
• 01:06 — Financial status: no debt, renting, future plans
• 02:30 — Safe initial moves: CD for liquidity and safety
• 03:39 — The case for long-term investing over real estate in NYC
• 04:32 — Comparative returns: CDs vs S&P 500
• 05:30 — Discipline and upward mobility
• 06:31 — The power of giving

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Conclusion

The episode offers a concise yet impactful roadmap for young recipients of significant inheritance: secure your financial footing, invest for long-term growth, enhance your financial knowledge, and don't overlook the joy and responsibility of generosity. The hosts highlight the caller’s prudent instincts, encourage financial discipline, and stress the life-changing potential of handling newfound wealth wisely—reminding all listeners of the importance of living and giving thoughtfully.

Transcript

[A]

Xander shops, all the top term insurance companies to save you money. Get [e-mail].

[B]

So I recently, maybe not recently, a few months ago, came into a large inheritance from my parents.

[A]

Wow.

[B]

And I'm just wondering what to do with it.

[A]

Wow, sorry. You lost them. How much did you get?

[B]

Around450,000.

[A]

Cool, cool. So how long have you been listening to this? Listening to us?

[B]

Probably maybe about a little less than a year.

[A]

Okay.

[B]

My brother's a big fan of you.

[A]

Okay, well, thank you. I was asking because I didn't know how far to go back to give you the answer, but. So we would walk you through the framework called the baby steps with that money because we believe and we know that if you follow through and handle money properly after that, enduring that, that it will be the. The way that this money gives you the most lift. Okay. And so that means do you have any debt except your home?

[B]

So we actually just sold our home. That's what most of the money was tied up. And so right now I'm renting and I have no debt. I just graduated college.

[A]

Okay, cool, cool. And how old are you?

[B]

I'm 23.

[A]

Wow. Okay. So we sold our home. That was your parents home, you mean?

[B]

Yeah, it was. My parents were separated, but it was my mother's home and it had a lot of my father's money tied up in it. And so me and my two brothers sold that house six months ago.

[A]

And your part is 450,000?

[B]

Yes. Okay.

[A]

All right. And you're 23. Are you married?

[B]

I'm not.

[A]

Okay. And what do you make a year?

[B]

Right now I make 75,000 a year.

[A]

Good for you.

[B]

Okay, thank you.

[A]

What is your plan over the next few years? Where do you plan to be?

[B]

So right now I'm just renting with my brother in our hometown and I plan. So I'm working in the city and I live in Long island, and I'm planning to move to the city sometime in the future, maybe about a year. So I have all of that money that I got from the house that I didn't have previously, just sitting in a CD right now, which pays my rent every month.

[A]

Yeah. Okay. All right. Not a bad move for the first move anyway. That way you didn't go do something stupid with it. Right. And so.

[B]

Yeah. Mark dying too?

[A]

Yeah. What do you. What do you do for a living?

[B]

I work in financial technology.

[A]

Okay, good, good. Well, you're very early in your career, so I predict your income will go up pretty dramatically in the next seven years. Would that be a fair prediction?

[B]

I'd say so, yes.

[A]

And I also predict that the 450,000 could grow a lot in the next seven years. Like if it was invested at market rates, it would double in about seven years and be about 900. 450 will not buy anything in the city. Would you agree with that?

[B]

Yes.

[A]

Not paid for. I mean, you could put it as a down payment, but you couldn't pay for it. And you don't really make enough to pay a payment and put 450 down in the city. Hardly. So you're probably renting if you're living New York, Manhattan lifestyle. Right.

[B]

So right now I'm on Long Island.

[A]

I know, but you said you're moving to the city.

[B]

Yes, but I will be renting. Yes.

[A]

Yeah, that's what you told me. Yeah. So I'm projecting what to do. In other words, we're not going to use this to buy a house because we can't pay cash for it with.

[B]

Your current plan, Absolutely.

[A]

Okay. So given that, I'm going to tell you to go to ramseysolutions.com, click on SmartVestor Pro, sit down with one of the people that we recommend, and start learning about investing. Okay. And put it in some good growth stock mutual funds and continue to keep your dadgum hands off of it. That's been very wise on your part. Very wise beyond your years wise. And, and so leave it alone. Leave it alone. Pretend like you don't have it and just use your income and live off your income, barely, which you barely can, living in the city. Okay. And just let this money grow because if you don't touch it, it will double every seven years.

[B]

Sounds good to me.

[A]

That's about the averages. Okay, now, so the s and P500. Have you ever heard of that?

[B]

Absolutely.

[A]

Okay. That's basically the bellwether, the mark of what the stock market has done. Closed the year for 2025, up 16%. It closed the year the year before, up 26%. It closed the year before, up 25%. It averages throughout its lifetime a little over 11, up close to 12%. That's the average. But in the last three years, it's done 67% total. So while you had this sitting in a CD making 3%, it should have made five times as much. Okay, so I don't want you doing that next year. I want it to be in a good investment instead of in a cd.

[B]

Understood.

[A]

So go over there and learn about it with a good Smartvestor Pro and Don't put money in something because I said to or someone else said to, but because you start to understand it. And I've got a feeling after talking to you, you'll be able to understand it.

[B]

Yeah, I think so, yeah.

[C]

This is a mass, don't forget something. This is a massive head start for you. And so when Dave's preaching discipline, it's because we realize how much of a massive head start this is for a 23 year old who's very upwardly mobile in his profession. So. And you just, just leave it alone.

[A]

You're so wise. I mean, you didn't call me up and say I need to buy a Lamborghini, you know, I mean, because I would have smacked you sideways. I mean, you know, for your own sake, you know, you're just, you're just a sharp 23 year old. And you know, I. Talking to these guys like, this is why I've become such a huge fan and I've got them on our team here. Of these Gen Z's, there's so many of these Jacksons in the Gen Z.

[C]

That's right. You know, I'm not saying he should do this, Dave. I'll throw this out, see what you think about this. But my head, when you were talking, I saw, I tried to put myself in his position at 23, no debt, and now he's going to be in really good shape. I would say a small amount of money, I would consider a small. But enough to make an impact. Give it to somebody.

[A]

Oh, yeah, yeah, sure.

[C]

I think it's so really rewarding when we come into money, whether we earn it or it's a gift and to think about how to bless somebody that you would not have been able to bless before. I'm going to tell you, it's a really great way to begin to appreciate the power of money. Not just from compound interest that we teach, but as you teach and you've been making it so clear for so long. Live like no one else so that later you can live and give. And that is such a key thing. And in this case, I think he could bless somebody with some amount.

[A]

I think that'd be a brilliant idea. Xander is the best place to find term life insurance to protect your family. Visit Zander.com for quotes today.