Many Americans fall into faulty means of debt control because they fail to consult financial advisors when it comes to portfolio diversification, optimization, and streamlining. For example, some people use one credit card to pay off another credit card.
This works for a while until interest catches up or credit card options run out. Suddenly, debt has compounded, and continues to compound, while the creditors pull on their collection boots and prepare to lighten your household.
There are situations other than credit cards where poor investment choices are apt to lead into voids of debt whose depth cannot be gauged.
Bad Debt vs. Good Debt
- Real Estate Loans
- Business Loans
- School Loans
Examples of “bad” debt include:
- Auto Loans
- Store Credit Cards
- Credit Cards in General
Do you see the difference? When it comes to things which produce a yield over time, debt isn’t always bad. Getting into debt to earn a degree can be a great way to secure your future. Should you select an occupation that pays well and employs students right out of the gate, then collegiate debt is a very good thing.
But, financial tips today often avoid what was once considered “good” debt. Today, collegiate investment isn’t what it was. Over the last several decades, obtaining a college degree is so common employers expect it like they used to expect prospective employees to have a GED.
Additionally, as the housing market has collapsed, and the Fed is raising rates, not all mortgages are “good” debt anymore. Some of them have become shackles. Increases in business taxation has compounded debt as well. For many mortgage holders, it may be time to consider a mortgage note buyer to secure the capital you need.
Now, when it comes to auto loans, store credit cards, and credit cards in general, those are still bad financial decisions. Sorry. if you got your hopes up for a reversal. So, while experts agree that there is “good” debt, it’s hard to come by, and requires exceptional credit.
So, if you’ve found yourself loaded with bad debt, there are ways out. You can help yourself by budgeting better and paying down your outstanding credit cards. You can also seek credit consolidation, contact the creditors for an alternative paydown, or seek credit counseling. If worse comes to worse, you might find help in bankruptcy.
Options for the Adroit Investor
Hopefully, bad debt has not crippled your finances. But, money never earns value sitting still. If you want your money to make money, you have to invest.
Even with interest rates increasing, it is difficult to find bank savings accounts or Certificates of Deposit that amount to anything.
Stocks, bonds, and commodities challenge average investors with their complexity and unpredictability. Mutual funds might be better investments, but they are not readily liquid.
Adroit investors perform due diligence on investment vehicles before they invest. They consider the pros and cons. They study the investment’s performance history, and they look for information about the investment’s future.
But, for the average investor, due diligence takes time, training, and education. It also uses tools that analyze the data and makes predictions. These tools also take specialists to operate, read, and interpret the results.
One of the more popular investment tools today is the use of asset allocation software. The software helps investors to divide investments among cash, bonds, and equities to spread the risk in your portfolio and improve your investment opportunities through diversification. The software allows you to reap the benefit of automated results that have been tried and tested.
To be sure, not all automated asset allocation software options fit every situation. That’s a reason it makes sense to talk with investment professionals when trying to diversify and upgrade your financial portfolio. They’ll know the ins and outs which exist beyond the software.
Avoid Debt At All Costs
Because the market is continuously in flux, no single portfolio option will meet all of your needs and those of your family on a regular basis. You’re going to have to drop certain things and add other things to make it work in the long haul.
This means meeting with investment professionals on a regular basis and pursuing possible investments cautiously. So, get protection from the financial elements by using advisors who understand the economic weather and can help you invest.
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