/ Savings And Investments

Should you pay off your debts or invest?


Hey Guys/ladies๐Ÿ–๐Ÿฝ,

So you have a bit of debt๐Ÿ๐Ÿ‚ and you also have some savings which you want to invest. Where should your money go๐Ÿ˜‘๐Ÿ˜? The key thing here is opportunity cost๐ŸŒง๐ŸŒž and whilst we can look at it from an economic point of view๐ŸŒ, you must also consider it from your own personal preference.

Opportunity cost๐Ÿ’ก means the option you lose by making a particular decision. In the case of pay off debt or investing, the bottom line comes down to how much the debt๐Ÿ’ฐ๐Ÿ’ฐ will cost you in interest or how much your savings can make in interest๐Ÿ’ธ๐Ÿ’ท. If paying off your debt will save you ยฃ100 but investing your money will bring you ยฃ150 over the same time period then it seems better to invest your savings and then pay off your debt after which you will be left with ยฃ50.

For the above example to be optimal, the expected interest on your savings and debt have to be guaranteed rather than assumptions.

The question you should always ask yourself: Can your money do better elsewhere๐Ÿ“ค๐Ÿ“ฉ? Warren Buffet famously carried on his mortgage on his Nebraska home๐Ÿ ๐Ÿก although he could have easily paid it off. He did this because his money was better served elsewhere.๐Ÿ›๐Ÿฆ โ €โ €โ €โ €โ €โ €โ €โ €โ €โ €โ €โ €โ €โ €โ €โ €โ €โ € โ €โ €โ €โ €โ €โ €โ €โ €โ €โ €โ €โ €โ €โ €โ €โ €โ €โ €
To come to the same conclusions as we have, you have to be confident that you are not putting yourself into more unnecessary debt and that you can stick to your plan. If your behaviour can match your financial plan then great! if not, take the safer option and clear your debt first.๐Ÿ’Ž๐Ÿ’ฅ
โ €โ €โ €โ €โ €โ €โ €โ €โ €โ €โ €โ €โ €โ €โ €โ €โ €โ €โ €โ €โ €โ €โ €โ €โ €โ €โ €โ €โ €โ €โ €โ €โ €
As long as you keep going, you should eventually get to the end-game objective, which is to have no debt and an abundance of great, lucrative investments providing a comfortable standard of living for your family. With enough patience and hard work, this is a goal that you can achieve.๐Ÿ™Œ๐Ÿ‘Œ

Get the latest posts delivered right to your inbox

Should you pay off your debts or invest?
Share this

Subscribe to Huuti