Wednesday, May 16, 2012

Make a Guaranteed 15% On Your Money

The point is that paying off credit card debt is the best investment that you can make. It is a GUARANTEED return, and you don't have to take taxes out of it as you are just paying back a debt. The above example showed a 15% profit in the stock market/mutual fund. What would have happened if the investment only went up 5% instead of 15% or what if it went down 15%? You would be in an even a bigger hole. In the example above you would have needed a 20% return in order to pay off the credit card in full after commissions and taxes. That is double the average return for the stock market. Historically, that is asking a LOT when you could just have paid it off from the beginning and not have to deal with the stress of the debt.

I always suggest paying off personal debt (which includes credit cards, automobile loans, furniture loans, personal loans, and student loans) prior to investing money in the stock market/mutual fund.

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