mb, i'd also like to approach my "credit card" idea in a different way. we see lots of knowledgeable investors saying margin debt is bad. yet the average person has debt, margin or otherwise. i have always believed that one should consider all one's debt in the portfolio along with stocks, etc. as an example, if someone pulls a cash advance to buy stock, to me, that is margin debt. similarly if a person gets a marginal dollar and chooses to send it to the brokerage rather than pay down a credit card, the person, in effect, has perpetuated the margin debt situation.
almost everyone has debt of some sort, even if it's only a mortgage or a car loan, etc.
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with that as a backdrop, what standard would you use to make the decision not to reduce debt and instead add the marginal dollar to your max income strategy.
again, as an example, if you bought a new vehicle and got promotional 0.9% financing, you might opt not to pay off that debt and instead put the money in t-bills at least to achieve a higher rate of return than paying off the 0.9%.
whether people are conscious of it or not they are often making a similar decision when they don't pay on the mortgage, etc.
in business, it is a very normal decision making process to carry a certain amount of debt if the debt has favorable characteristics and adding to investments rather than paying down debt.
how do you advise non-beginner investors to approach this issue? |
