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Dave Says

Dave Says
Dave Ramsey is America's trusted voice on money and business, and CEO of Ramsey Solutions. He has authored seven best-selling books, including The Total Money Makeover. The Dave Ramsey Show is heard by more than 12 million listeners each week on 575 radio stations and multiple digital platforms. Follow Dave on Twitter at @DaveRamsey and on the web at daveramsey.com.

Here's a Better Idea

Here's a Better Idea

Dear Dave,

I'm 27 years old, and I have no debt. In addition, I have a five-month emergency fund of $14,000. Recently, I started a new job making $60,000. I've been offered a 401(k) with no match, but I was wondering if instead I should open a high-yield CD.

Kris

Dear Kris,

You’re doing very well at a young age. Congratulations! I’m glad you’re thinking about your financial future, too. But I’ve got a better idea.

How about opening a Roth IRA with good growth stock mutual funds inside? That would be my choice. Fund it up to $5,500 a year, and make sure the mutual funds have strong track records of at least 10 years. This investment — growing tax-free — will be superior to a non-matching 401(k) or certificate of deposit. If you want to invest even more, you could then put additional cash into the 401(k) offered by your company.

With your income and maturity, plus the proper investment strategy, you’re likely to retire a very wealthy lady. Keep up the great work, Kris!

- Dave


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