Should She Cash Out? Woman Who Turned $1,000 Into $380,000 In Tesla Stock Asks The Ramsey Show For Guidance

Tesla TSLA is one stock that has skyrocketed from its beginning stages, leaving many wishing they got in on it from the start. One woman recently called "The Ramsey Show" for financial advice regarding her Tesla stock, which grew to an astonishing amount from her initial investment.

Her dilemma? Whether to cash out and pay off her mortgage or hold onto the stock because, in her words, "Nobody knows what Tesla’s capable of."

From $1,000 to $380,000 in Tesla Stock

The caller explained that she invested $1,000 in Tesla stock in 2011, in the company's early stages. Over the years, without adding any additional money to her investment, the stock surged, reaching upwards of $380,000. She and her family now owe $288,000 on their home and are weighing the benefits of selling the stock to become mortgage-free.

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Financial expert George Kamel, a host on "The Ramsey Show," was impressed by the caller's success. "What?" he reacted in shock, before confirming that she had truly turned just $1,000 into hundreds of thousands of dollars without adding more funds to the investment.

The Risks of Holding a Single Stock

While acknowledging the incredible return, Kamel advised the caller to be cautious. He emphasized the risks associated with keeping such a large portion of wealth in a single stock, even one as well-known as Tesla. "As soon as you can get that house paid off and get out of a single stock, the better," he said.

His advice aligns with common financial principles: diversifying investments can help protect against market downturns. Tesla's stock, like any other, is subject to volatility. Holding onto the stock means exposure to potential price swings that could reduce the value of her gains.

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The Role of Taxes in the Decision

One of the biggest factors to consider in selling such a large stock position is the tax implication. Kamel advised the caller to consult a tax professional before making any moves. Since the stock's value has increased significantly since she bought it, selling would trigger capital gains taxes. Depending on her income and how long she has held the stock, the tax bill could be substantial.

Instead of selling all at once, Kamel suggested an alternative approach: selling off portions of the stock gradually over a few years. This strategy could help reduce the overall tax burden by spreading the gains across multiple tax years, potentially keeping her in a lower tax bracket.

Can Her Income Cover the Mortgage Instead?

Another consideration is the caller's household income. She shared that her family is earning $275,000 annually, which is a strong financial position. Kamel's advice implies that, with such a high income, they may be able to aggressively pay down the mortgage without relying entirely on the Tesla stock sale.

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What Should She Do?

Ultimately, the decision rests on her financial goals and risk tolerance. Paying off the mortgage would provide security and eliminate monthly payments, but holding onto the stock could yield further gains—though with added risk. Consulting a financial and tax professional could help her determine the best course of action based on her specific situation.

For investors who find themselves in a similar position, the key takeaway is clear: while big gains in the stock market can be life-changing, careful planning is essential to ensure those gains translate into lasting financial stability.

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