He had $300K in cash at home and $400K in a savings account. Here’s how The Ramsey Show says he can turn it all into $2M

The Bank of Canada’s inflation calculator shows just how significant that erosion can be over time (2). Using Statistics Canada Consumer Price Index (CPI) data, $300,000 in 2016 when Stewie started saving, would need to be roughly $369,000 today to have the same purchasing power (3). That represents a gap of nearly $70,000, simply from doing nothing.

“We need to harness the power of compounding interest, and when it’s at home, there’s zero compounding interest,” said Warshaw. “As a matter of fact, it’s almost negative. It’s depleting the value of your money because [of] inflation.”

There’s also a safety risk. Cash kept at home isn’t protected by the Canada Deposit Insurance Corporation (CDIC). The CDIC automatically insures eligible deposits up to $100,000 per category at each member institution — but only when that money is deposited at a CIDC-member bank (4). It offers zero protection for bills at home sitting inside a drawer.

Why he hasn’t invested yet

When the hosts asked why the money hadn’t been put to work inside some sort of investment, Stewie admitted he was afraid of the stock market. Stories from his grandfather about the Great Depression had left a lasting impression.

It’s a common feeling. But Warshaw gently pushed back: yes, markets can go down. But over long stretches of time, they’ve also consistently recovered and moved higher.

“Yes, there’s been downturns, but usually it [the stock market] recovers very quickly within the next year or two,” said Warshaw. “And so the point of the stock market is it’s a long-term ride. It’s not something you hop in and hop out of.”

For Canadian investors, the long-term numbers back her claim. The S&P Composite Index has delivered average annualized returns in the range of between 7% and 9% over multi-decade periods, while globally diversified index funds — including those tracking the S&P 500 — have historically averaged around 10% annually. Past performance doesn’t guarantee future results, but the long-term trend for broad, diversified index investing has consistently had an upward trajectory.

How his savings could potentially grow to $2M

Using an investment calculator, the hosts guided Stewie through a hypothetical scenario based on his situation:

• Invest the $300,000 lump sum into a broad index fund
• Add $500 every month in ongoing contributions
• Leave it invested for 17 years, from age 50 to 67
• Assume an average annual return of 10%

Under those assumptions, the total could hypothetically grow to around $1.89 million by the time he retires.

Canadian investors have a notable advantage here: both Registered Retirement Savings Plans (RRSPs) and Tax-Free Savings Accounts (TFSAs) allow investments to grow sheltered from tax — either tax-deferred with RRSPs, or completely tax-free in a TFSA.

For someone starting with a large lump sum at age 50, maxing out both accounts and holding low-cost index exchange-traded funds (ETFs) inside them could significantly improve the after-tax outcome compared to investing in a non-registered account like a high-interest savings account.

Of course, returns aren’t guaranteed. Markets fluctuate and no one can predict what the next 17 years will look like. But the core principle — getting a large sum invested early and letting compound growth do the work — is well-supported by historical data.

What about the $400K in savings?

Later in the conversation, Stewie revealed he also had around $400,000 in a high-yield savings account, bringing his total savings to roughly $700,000.