Suze Orman Praises CDs As 'Smartest Money Move' But Dave Ramsey Says They're Just 'Glorified Savings Accounts' – Who Wins the Debate?

Regarding 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 aligns best with their financial goals and risk tolerance.

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Suze Orman’s Perspective

Suze Orman advocates for CDs as a secure investment option, particularly in uncertain economic times. She appreciates their safety and predictability, thanks to FDIC insurance and fixed interest rates. Orman suggests CDs can be a smart choice for those looking 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 up because the smartest money move you can make right now is to lock up today's great rates by putting some of your cash savings in certificates that have a one-year to two-year maturity."

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She emphasizes that CDs are not a replacement for long-term investments in the stock market but can serve as a stable component of a diversified portfolio. This approach particularly appeals to retirees or those nearing retirement who must safeguard their savings against market volatility.

Orman also warns against using CDs for emergency funds due to their lack of liquidity and potential penalties for early withdrawal. 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 potentially decline.

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Dave Ramsey’s Perspective

Dave Ramsey, on the other hand, views CDs as too conservative. He often describes them as “glorified savings accounts” with returns that struggle to keep pace with inflation. He argues that CDs might offer slightly higher interest rates than savings accounts, but they fall short as long-term investment vehicles. 

Ramsey encourages individuals to consider higher-yield investments like stocks or mutual funds, which, despite their risks, offer the potential for greater long-term growth. His advice is rooted in the belief that building wealth requires taking calculated risks that CDs simply do not provide.

Ramsey’s approach is particularly geared towards those seeking to maximize their investment returns and are comfortable with the stock market’s volatility. He suggests that CDs might be suitable for short-term savings goals but warns against relying on them for long-term financial growth.

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The Debate

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

Ramsey, conversely, focuses on growth and wealth accumulation, advocating for investments that can outpace 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 risk appetite, Orman’s endorsement of CDs may resonate more. Meanwhile, individuals seeking higher returns and willing to embrace market fluctuations might find Ramsey’s approach more suitable.

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