Should I pay my debt or Should i Invest?
I was in a gathering and there was a question which struck my heart that was asked and I will be willing to ask this question here “Since there is an economic recession, should I pay my debt or invest with the income I get?”
This question has caused a lot of confusion and has left so many people in the middle not knowing what to do in terms of decision. I realize that 3 out of 4 persons is in one debt or the other, from student loan, mortgage, and business loans and many more. If you are living in a low income country or a country with high inflation, what will be your advice, invest with the income you get or pay your loan.
A lot of people can manage their debt (depending on the type of debt they are into) but not all debt are cool. High Interest rate debt can be very disturbing and should be paid out. I got into a debt at one point in time with a Fintech company. I never understood what I was getting into until I got myself fully soaked into it. It was an alarming 15 percent return in 2 weeks (Who does this!!) This was a rip off for me and I didn’t know how much mess I was getting into until I could pay the loan after 2 weeks and had to pay an additional 7% for an extension of another 2 weeks. This became more disturbing when I requested for a final extension because I couldn’t afford to pay all within one month and the financial institution decided to do me a favor by allowing me to have another one month grace but for a 10% interest. Do you see what I am saying? I was forced to pay of this debt never to get a loan again because I knew I was in a debt that wasn’t pleasant.
Some people have low interest rate and feel they could invest with the money they have instead of paying their loans. One thing to consider when doing this is can you take risk, are you sure the investment will bring in good returns and will the revenue from investing cover the loan and its interest rate as well a leave you with a few cash?
This is another thought, if you feel investing instead of paying debt is a good plan, what then happens if you put in your money into an investment instead of paying your debt only to check your investment and see that it has lost a large percentage of its capital?
Tell me what you believe is best, to pay off your debt first with the revenue made or to invest with the money first before paying off debt.
Just like you mentioned, it is greatly dependent on the interest rate of the loan and the type of investment.
If the interest rate of the loan is conveniently low and affordable,one could quickly re-invest the money get some extra profit and pay back the loan fast but if the profit rate is disturbing, then the best thing will be to pay the loan back very fast.
I just feel that is the appropriate thing to do.
I would particularly prefer to invest in a good business and then use the profits to pay off my debt and also continue to receive income. Because when I pay off the debt, that's it, I paid it off but I ran out of money, I think it's smarter to invest and keep making money.
That is also a smart decision but I also feel the loan should not be a high profit like the one I described above.
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I wonder how long it will take for crypto to eliminate high interest debt. I'm guessing over a decade, but could be done inside of a few years if it were not for the scheming and outright villains.
Some loan options are completely a rip off and it is best to pay them off as fast as possible it is dangerous to dwell long with them.
This is a fantastic topic. I particularly enjoy reading your contents. Hey I have to say that I'm always in a kind of debt. And I always choose to invest every time I have money. I think this is because my loans are from family.
Loans gotten from relations and family are usually more lenient than loans from fintech companies. I think where the loan has big interest and short time frame, best thing to do is pay the depth.