What’s the best investment to make?
Don’t we all want a silver bullet answer for that? I know I do. It’s like a cheat code for financial prosperity. If only I could go back in time, I’d buy Priceline when it was a penny stock, and get friggin rich!
But, shit, man, if that’s what you’d do if you could go back in time, then you need some bigger dreams. And that’s me I’m talking to.
So, what do I do? How do I take a little bit of money, and turn it into a bunch more? The math on it isn’t difficult. Find the best return on investment while considering risk. The trick is looking at your whole life. You need to think about possible investments, maybe a house, maybe equities, but you also need to think about what you owe.
If you have debt, you need to consider what that debt costs, and if paying that down makes more sense than putting money into your 401k.
For instance, if you have credit card debt at 20%, then you better be doing all you can to pay that debt down. Because you’re certainly not going to get a predictable ROI of more than that, not long-term anyway. If you can get that kind of ORI all the time, drop me a line, we’ll publish your strategy on this blog and all retire to Key West.
I know that sometimes credit card debt is what you have to do. I knew a dude who finished his undergrad degree because he took a bunch of it on. It worked out for the best for him to do that, so that might be you. Or you did it for an illness or another crisis. The key for those situations is to suck it up, and get to paying. You’ll get out of it.
The other group, though, is the one who gets into credit card back because they buy too much stuff. In order to even get your life to a place where you could consider the best possible investment, you must not be one of these people.
Some people can make conspicuous consumerism work for them. Mostly, we call those people trust-funders. Or super motivated and talented folks who don’t need to listen to idiots like me. Sucks to be you, I guess.
Not really, I’m sure it’s very nice to be you.