is my logic wrong here, like shouldnt any sane person then invest virtually all their money?

i suppose the main counterargument is that its safer in a bank, anyway im not too knowledgeable so i wanna hear what people have to say here

  • Slatlun@lemmy.ml
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    3 years ago

    Good in general, but one thing - it isn’t always a good financial decision to pay debt down. It depends on interest rates. If the bank/credit card/whatever is charging you less interest than you can make on investing, you should choose to invest instead.

    Example 1 Credit card charging 20% and expected return on investment 5%. In this situation you should pay the debt.

    Example 2 Mortgage at 3% and expected return on investment of 5%. Investing will net you 2% (5%-3%) a year more than paying off your loan.

    Note that paying a loan is a guaranteed return while investing is a gamble, so you have to weigh that in personally.