Using Debt Intelligently - Is There Such a Thing?

Should you be concerned about last week’s CPI numbers, which implied an uptick for inflation? Brian explains that it was expected and that the market yields responded favorably after the reading. 90% of the increase was caused from a shelter number. It is expected that the shelter is going to come down in the next few months as the lag data comes in.

Brian, Chris, and Jeff, also discuss if it Is wise to leverage your debt? This is the subject of Brian Regan’s article “Using Debt Intelligently”, which was recently published on The Street|Retirement Daily. Brian’s argument is that in some cases the math makes sense to leverage the debt. If you can borrow at a low interest rate and invest at a higher rate, you earn the spread. This is the case when someone takes a mortgage out on their house and invests their money at a higher rate, rather than paying the mortgage off.

One big caveat in leveraging debt is to make sure that you have the discipline to keep accessible cashflow to pay the debt down/off. Also, even if the math works it can give some people greater comfort knowing they are debt free.

If you need help with your financial plan, contact us at (866) 771-8901. To learn more about Asset Management Resources, visit AMRfinancial.com.

Recorded August 10, 2023.