Invest in paying off some of the debt load that you are carrying and you will make a return that equates from about 5% to a 19% rate of annual return on your money and without worrying about which direction the stock market is heading.
Let's look at you biggest expense in your life,your home loan or loans.Let's say you bought a home in january of 2008 for 200,000.00 at a 30 year term,7% interest rate.If you pay on this loan for the full 30 years,you will pay back 279017.00 in interest.
Now,if you were able to pay just 100.00 more each month toward's your principal only,you would pay off your note in 291 installments instead of 361 and will have saved 63,549.00 dollars in interest.By doing this,you money will have given you a 9% rate of return,without any worry about the stock market.
Now we'll look at probably the second biggest debt in your life.This would be your credit card debt load.And possibly it may even be bigger than your home loan amount.
On a 15,000.00 credit card bill,if you make the minimum monthly payments of 600.00 per month,it will take you 16 years and 7 months and you will have paid back 9650.00 in interest on the original 15,000.00 bill.
Now,if you would just take 25.00 more each month added to your payment,you would save 5659.00 in interest payments and you would be finished 2 years and 7 months sooner,equating to about an 11% return on your money.
And finally, we'll look at our third item,your car loan.Let's say that you borrow 25,000.00 for five years at a 10% interest rate.On your monthly payments of 531.18,your interest paid back will be 6870.00
If we were to add 50.00 a month to the payment,we would save 783.26 dollars in interest and 6 months of payments.And this would equate to an annual rate of return at 6.45% on your money.
We all live super busy lifestyles,often with both people working in the family and these things can slip by and before long,a couple of years have slid by.So,I urge you to set up these extra payments automatically with your bank or charge card company.Now,when your putting your nose to the grindstone everyday,at least you know that you're making a solid return on your money.
So,as you can see,by paying more towards the items in your life,you can achieve a great rate of return on your money without the fear and worry as if you were invested in stocks or mutual funds.I also would like to point out that the rate of return in mutual funds is not what you think,if you take out the expense fees of the fund,which happens if the fund goes up or down. and if the fund does go up in value,than you are taxed on it,decreasing the amount earned.
I also want to point out that when you are paying down your debt load in today's time,your money is worth more now than in a later time as inflation eats away at your actual dollar value.
