One Step to an 18% Return on Your Money
Posted on April 2, 2008
Filed Under Credit Cards, Personal Finances, Saving Money |
Most people know the historical performance of the stock market has resulted in stocks returning just over 10%. That number also includes dividends and assumes they’ve been reinvested along the way.
If you look across very many years, you also see that fund managers and stock pickers generally fail to beat the market. That means even the pros have trouble staying ahead of a plain old index fund.
So wouldn’t it be incredible to find a way to get a guaranteed 18% or better return on your money?
Well, if you’re one of the millions who carry a balance on their credit cards, and have an interest rate of 18% or more, you can achieve an 18% or better return by simply paying off your credit card balance and keeping it paid off.
Sounds too simple right? But it’s a fact. Most people will do better than 18% because most are paying higher rates, but even if the interest rate on your card is below 18%, you’ll still make a better return even if the rate is as low as 11%.
But few folks bother with the easy money. They continue to buy stocks either directly, or through various plans like 401k, 403b, IRA, etc. and get an average of 10%, while they pay 18% plus. Just to be clear, you’re losing 8% month in, and month out.
In fact with the market down as it’s been recently, they’re losing a lot more.
So, it’s a simple solution – don’t carry a balance on any credit card. Besides making a superior return, you don’t end up paying 20 times as much for purchases – but that’s another story.
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