Target: Debt - MoneySense

Target: Debt

Are you investing and trying to pay down debt at the same time? Focusing on your debt will get you further.

  34

by

  34

pig_target_120

Financial publications and web sites are filled with advice on how to profit from the latest hot stock or fund. However, if you’ve got credit card or mortgage debt, you need to focus on eliminating it.

Chances are you’ll earn a higher rate of return from servicing debt than from playing the stock market. Paying down your credit card, for example, guarantees you a risk-free after-tax return of 18%. To achieve a similar return through investing, you would have to earn more than 25% before tax and take on considerable risk.

So it’s time to prioritize. Kill that debt before you apply your money elsewhere. Not only will it instill good financial habits, just think of how easily you’ll sleep when you’re officially debt-free.

Comments are closed.