Dave Ramsey's Blunt Advice To Aunt Who Won't Sell $650K In Tesla Stock Over Tax Fears: 'You're Going To Have Taxes. Welcome To Making Money.'

Many people talk about what their $10,000 investment would have turned into if they bought a stock five years before it became popular. However, some people actually buy early and end up with substantial gains.

Someone called into "The Ramsey Show" saying that his 37-year-old aunt has $650,000 worth of Tesla stock. She worked at Tesla for six years and didn't touch the stock. The caller expressed caution, saying that it's not good to put all of your eggs in one basket.

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Financial guru Dave Ramsey was on board with the assessment and liked that the aunt could turn to her nephew and that he told her to minimize her risk. The video conversation ended up on Ramsey's channel. He also shares what he would do with the money and how the aunt can continue to build wealth.

More Context on the Aunt

The aunt works as a project engineer and earns $70,000 per year. She's only paying $1,000 per month in rent and has $20,000 in debt that will be paid off this year. The aunt has retirement investments but no cash savings. She wants to wait until it reaches $1 million to sell, and she also doesn't want to take a big tax hit. Ramsey offered pretty blunt advice on the capital gains taxes.

"You're going to have taxes. Welcome to making money."

Ramsey went on to explain how this is a good problem to have. He also didn't bash Tesla stock. He said he would have the same opinion regardless of whether the $650,000 was in Tesla, Apple, or any other solid stock. Ramsey believes in portfolio diversification over allocating most or all of your capital into a single holding.

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How Ramsey Would Use the $650,000

We don't know how much the aunt would have to pay in capital gains tax. She would have to pay a 15% capital gains tax rate on her gains, but Ramsey views it as an expense worth paying.

Ramsey encourages the aunt to view it as $650,000 on the kitchen table instead of seeing it as money tied to Tesla stock. The financial guru proceeds to ask what you would do if you saw that money on your kitchen table.

While each person has different ideas of what they would do with the money, Ramsey offered suggestions based on the aunt's financial situation. He said he would use the money to pay off the debt and then buy a house.

The caller mentioned they were a low-income household earlier, so it may be feasible for the aunt to buy a house with cash in her area. Then, she doesn't have to worry about any rent or mortgage payments.

See Also: ‘Which Bucket Do I Draw From First?’ Suze Orman Explains To 67-Year-Old The Best Order For Tapping Into Her Retirement Accounts

Load Up On Your Retirement Accounts

Ramsey wraps things up by saying she can make another million if she puts more money into her retirement accounts. If she follows Ramsey's approach, she won't have any mortgage payments and will be in a better position to max out her 401(k) plan and Roth IRA.

Ramsey believes she can invest close to $5,000 per month, which would be a big game changer. Tesla stock has served her well, but selling some or all of the shares can open up more possibilities. She can enhance her quality of life in a sustainable manner if she uses the extra funds wisely.

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