Debt can either be your best friend, or worst enemy on your wealth accumulation journey.
Proper management of your ‘good’ and ‘bad’ debt obligations is crucial to help make your debt work for you.
As a general rule, ‘bad debts’ should be a primary focus in a financial plan. A debt is considered ‘bad’ if it is costing you interest that is not deductible, and if the collateral on the loan is not a growth investment. The higher the interest rate, the worse bad debt gets. Any personal debt as Credit Cards or personal loans should be a primary goal to repay, otherwise you might be compounding financial losses.
If you have a mortgage, we can help you review your goals and provide advice around the opportunity costs of repaying debt, or building wealth.
However, debt can be used as a tool to accumulate further wealth. If done so correctly, this is considered to be ‘good debt’.
Through the proper structure of investment debt, and using strategies to enhance your wealth, you can help to maximise your long term returns.