52 Tips

Only invest if the projected returns will outweigh the interest of your debt and if you can absorb any potential losses.

This is a good rule of thumb if you are mulling the prospect of investing money instead of paying off your debt. On one hand, you’ve got the opportunity to make a little extra money that you can use around the house or to pay off the existing debt. On the other hand, you won’t end up losing your house and car should your investments fall through.

The “risk” part is something you have to be especially mindful of. Most safe investments don’t see returns greater than interest rates, while investments have a higher tendency of going sour when there are more rewards promised at the end of it all.

This means that you must ensure that you have enough money flowing into your account to handle your existing debt when you push through with your investment portfolio. Banking too heavily on the success of your investments and leaving your other assets wide open can get you in serious trouble when something goes wrong.

Oh, and one last thing: don’t forget inflation. Your money will be worth less now than ten years in the future, so make sure you factor that into your calculations when checking whether to invest more or pay off more debt.