Paying Off Debt Vs Investment

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                                                    Paying Off Debt Vs Investment
                                                              By Walter Coyote



   The majority of us come to this late placein life, which with the surplus money, is it is advisable to
get outa debtor to invest. Joshua Kennon, an advisor on debt management is of the following opinion.
Debt can be placed into two catagories one with great rate of interest and second with lesser rate of
interest. Credit Cards belong to the primary category, they demand superior rate of interest and
therefore when an individual has more debt in the form of credit card reimbursement, it is only
advisable for him to get one withand pay off the interest occurring from the credit card and not
contimplate about the investment. In case of the subsequent categories of debt, which is lower rate
then it, is advisable that he invests in those funds, which gives greater returns. According to Mr.
Kennon two things must be taken into consideration, a. What is the rate of return of the funds? B.
What is the rate of interest of the many sum unpaid? Just if an person can encourage himself that
paying off a debt would help him to reduce a little of his burden and in so doing increase the monthly
amount saved.

Steve Bucci says thatThere are two methods, which an human being can adopt, one is to shell out
similar kind of amount outstanding i.E. Debts having similar interest tax, which are less significant in
amount and easier to pay. The second one is to pay the one, which has greater interest rates like
credit cards. Accordingly after an individual pays off a quantity of debts then he feels good about
himself and can start focusing on the next amount of debt to be paid or the investment he would like to
venture into. In case of debts, which pulls greater rate of interest, an person can pay that first such
that he is left with supplementary money later on so that he can focus on the other amount overdue.
But whatever be the choice the individual must chose one, which suits him; the best and can give him
extra convenience. Steve Bucci also tells us that paying off amount overdue ought to manifest on
one�s credit score. When an person begins to pay off amount overdue to lender then he is left with
smaller debts and his credit score would go up. This in turn would help him in the long run whenhe
wants a greater responisibality or other investment monies

Walter coyote is a member of streamline and would like to share this information with you




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                            Interest only a must have feature of your investment loan
                                                          By Bailey Hopes



Many investors are so caught up with researching the investment market to find a property they believe
will show a good return that they forget about the benefits derived when they also check out the
investment loan market with equal diligence.

By far the majority of investors simply approach their bank when looking for an investment loan and
accept the suggestions of the bank manager or mobile consultant without giving it a second thought.
Rather than taking this route, which may be easy and convenient, the astute investor will check out the
investment loan options available in the market before committing to the first investment loan
suggested to him or her.
By researching the investment loan properly an investor will soon discover that it is not just the interest
rate on a mortgage that can deliver cost savings and consequently a better overall return on the
investment property. While most Australians have a mindset of paying down principal on a home loan
so that over a 25 or 30 year term the debt is repaid in full – this approach is not appropriate for an
investment loan situation.
The difference between your home loan and an investment loan is that the interest that is paid on the
latter facility is tax deductible. The interest on the investment loan (as well as other maintenance and
real estate agency costs) is generally deductible against the rental income you receive on the
investment property. If the investment loan interest plus these other costs exceed the rental income
then you have a shortfall or loss on that investment. That shortfall or loss is deductible against you
personal income so that if for example you earn $60,000 p.a. from paid employment and you have a
loss of $5000 on your property investment (having paid investment loan interest etc) then your taxable
income will reduce to $55,000 p.a. and the tax payable will be re-calculated against that reduced
income. This is what is commonly known as negative gearing on an investment.
Because, unlike home loan debt, the interest on an investment loan is tax deductible it is preferable to
leave the principal debt as it is as opposed to paying it down by way of principal and interest
instalments over the life of the loan (as you would normally do for a home loan facility). By not making
any principal repayments on the investment loan you achieve a two-fold benefit:
1.you maximise the amount of deductible interest on your investment loan (the interest on your
investment loan does not reduce because you are not reducing the principal amount).
2.you conserve the money you would otherwise be applying to the investment loan to use to either
repay your home loan non-deductible debt or save for the purchase or other personal items e.g. a car,
refrigerator etc) rather than taking a lease or purchasing on your credit card – in both instances you will
be paying a relatively high interest rate and the interest repayments will not be deductible against your
income.
As a general rule any investment loan should be taken on an interest only basis and any surplus cash
that results from this interest only investment loan structure should be applied to repay non-deductible
personal loans or put aside as savings for future personal use.

Interest only a must have feature of your investment"
target="_blank">http://www.australmortgage.com.au>investment loan. Check out about the benefits of
investment" target="_blank">http://www.australmortgage.com.au>investment loan.




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                                               Presented by Daniel Toriola




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Patricia Johnson Patricia Johnson Management Consultant
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