Treat Paying Off Debt Like An Investment To Guarantee Returns

If you're just getting started with investing, you may be overwhelmed with your choices. What's the best investment you can make to maximise your future returns? If you still have debt (especially credit cards), then one of the best investments you can make is paying that off.

Australian money photo by Shutterstock

As personal finance blog Rags to Reasonable points out, your debt is a big negative hanging on to your net worth. Investing and paying off debt have the same effect on your net worth: they make it go up. Some debt might not cost you as much in interest as some investments would make for you, but paying off credit cards is always the best return for your money.

Paying off your debt is a lot less sexy of an investment than buying property, or building a stock portfolio, but it's really simple, is hugely beneficial, and (in case I haven't made it 1000% clear) it's totally guaranteed.

When you break it down, investing is all about making your money worth more over the long-term. Your hope is that putting $1000 into an investment now will make it worth more than $1000 in a couple years. However, if you put that $1000 towards your credit card debt, it will be: the faster you pay down your principal, the less you pay in interest.

Looking for a Great Investment? Start with your debt. [Rags to Reasonable via Rockstar Finance]


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