Читать книгу Mutual Funds For Dummies - Eric Tyson - Страница 54

Consumer debts include balances on credit cards and auto loans. If you carry these types of debts, please do not invest in funds until these consumer debts are paid off. I realize that investing money may make you feel like you’re making progress; paying off debt, on the other hand, just feels like you’re treading water. Shatter this illusion. Paying credit card interest at 14 or 18 percent while making an investment that generates only an 8 percent return isn’t even treading water; it’s sinking! In the world of investing, a 14 to 18 percent guaranteed return is absolutely fantastic so you should not only do that first but feel great about it!

You won’t be able to earn a consistently high enough rate of return in funds to exceed the interest rate you’re typically paying on consumer debt. Although some financial gurus claim that they can make you 15 to 20 percent per year, they can’t — not year after year. Besides, to try to earn these high returns, you have to take great risk. If you have consumer debt and little savings, you’re not in a position to take that much risk.

I go a step further on this issue: Not only should you delay any investing until your consumer debts are paid off, but you should also seriously consider tapping in to any existing savings (presuming you’d still have adequate emergency funds at your disposal) to pay off your debts.