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A good piece of advice from my father that I've always followed (and it has helped make both of us wealthy) is to avoid debt when possible, and if you do have debt, pay it off as quickly as possible. Some people may be able to take out debt and use the cash to make money faster than the interest on the debt, but most people can't. Banks work on the fundamental basis that they charge more in interest on debt than they provide interest on savings / investments. Stocks can sometimes outpace interest on debt, but over the long term they generally will not. Pay off your debt, and save whatever you can. Also, money invested today is worth more than money invested tomorrow. It's basic advice, but it really makes a difference in the long run. Consider two scenarios: Scenario 1 you invest $1000/year for 5 years, and then nothing for the next 5 years at an interest of 5% - you end up with $7,400 at the end of 10 years Scenario 2 you invest nothing for 5 years, and then invest $1000 per year for 5 years at an interest rate of 5% - you end up with $5,800 at the end of 10 years. $1,600 difference on $5,000 total investment is quite a large differential, and shows the time value of money very clearly.
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Dec 9, 2016 06:15
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| # ¿ May 2, 2024 12:17 |
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