Suze Orman Tells 35-Year-Old: ‘You’re Too Young to Have Money in Deposits’ and Should Focus on ETFs

On a recent episode of the Women & Money podcast, personal finance expert Suze Orman gave Brett, 35, critical advice. Brett, who makes $93,000 a year debt-free, was worried about his retirement savings and looking for tips on how to improve his financial strategy.

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He explained that he maxes out his Roth IRA each year, currently having $14,000 in a CD, and contributes 5% of his income to a Roth TSP matched by his employer and invested in Lifecycle funds, for a total of $54,000. Brett asked Orman if he should contribute more or diversify his investments, especially since he sees his peers with large retirement savings and feels inferior by comparison.

Orman’s first piece of advice was to stop comparing yourself to others. “The first thing you need to do, Brett, is stop comparing yourself to others. What other people have or say they have doesn’t matter,” she said. “You just need enough money to make you feel secure, to support yourself in retirement, your family, or whatever.”

She emphasized the mistake of investing in CDs at a young age, especially in a Roth account. “You’re too young to have any money in CDs, especially in a Roth account at age 35. You need to go for growth with ETFs and individual stocks,” Orman advised.

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To illustrate the missed opportunity, Orman pointed out that if Brett had continued investing $8,000 per year in CDs at 5%, he would have had $600,000 after 30 years. However, if he had invested the same amount in the market in ETFs at 10%, he could have accumulated $1.7 million, which is $1.1 million more. She added, “If you work until you’re 70, you could have $2.8 million. That’s just your Roth IRA. At 5%, all you would have is essentially $850,000. So how much is that, Brett? Do you want $850,000 at age 70 or $2.8 million?”

Orman also advised Brett to get rid of life-cycle funds, which she believes limit growth potential. “I don’t like life-cycle funds. I don’t like target-date mutual funds. Look for index funds and manage your money, investing it to grow at that age,” she recommended. That strategy, she suggested, could easily add $7 million or $8 million to retirement.

Orman encouraged Brett to contribute more, but criticized his current investment choices, not the amount he had saved. “How are you doing now? I would give you maybe a C-, and not because of the amount you’re saving, but because of the way you’re investing it.”

Orman’s advice emphasizes the importance of growth-oriented investing for young professionals. Orman strongly believes Brett can significantly increase his retirement savings by avoiding conservative options like CDs and life-cycle funds and focusing on ETFs and individual stocks.

Whatever you choose, it’s important to prioritize your personal financial goals over comparisons, and adopt strategies that maximize growth potential. For personalized advice tailored to your specific situation, consulting with a financial advisor can be invaluable in ensuring your investments align with your long-term goals.

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This article Suze Orman Tells 35-Year-Old: ‘You’re Too Young to Have Money in CFDs’ and Should Focus on ETFs Originally appeared on Benzinga.com