GARBAGE NEWS. In the current phase with low interest arises for many people, the question of whether they should invest their money somewhere or use to pay off existing debt. Looking at the interest rate on savings accounts or fixed deposits when the question is quickly answered: Repayment should here take precedence over the system. But what if you buy stocks instead Tilgen want?
Redeem shares or debt? Investing money in shares or pay off debt?
Many people have both loans and deposits to savings or fixed deposit accounts. The latter hardly had interest in principle; the system no longer worthwhile in the core. The lending rates, however, are frequently higher than the returns that can be achieved with fixed-term deposits or secure bond even with new accounts with low percentages. Especially if you have the due taxes into account. Therefore, one should always give priority to the repayment of loans take precedence over a traditional investment.
A full or partial early redemption is usually possible with dispatchers or installment loans, and credit card limits. For mortgage loans, it depends on the contract concluded. Often, at least there is the possibility of being able to afford unscheduled annually to a certain extent, eg., 5% from the loan amount. Of this should be done especially with older contracts with relatively high interest use.
It is also possible to negotiate with the bank about a replacement of the old contract to get a new mortgage loan with low interest rates. Currently the interest rates here start at about 1.5%. The problem is that the bank this compensation required to compensate for their loss of earnings. Worthwhile detachment is often when the old contract expires not be long and you already still requires a follow-up financing. Here you should be for an individual offer and examine this critical, possibly by using third parties, such. As the Consumer.
However, you should never use any savings to early repayment, but always make sure that one has an "emergency reserve", with which one has the possibility of unforeseen expenses such. B. Repair or replacement of defective appliances, pay no new loans to. Rule of thumb: 2-3 net monthly income you should hold back as a reserve despite poor interest, possibly together with the sum which is due for already planned purchases in the coming 12 months well.
And what about if you want to invest your money in stocks?
There is often more dividend yields, up more than 3%, in some cases even higher, in the range of 2, however, pre-tax. Judging purely by the percentages, you might say: If the after-tax return is higher than the interest you have to pay for a loan, the investment is worth in shares. But be careful, this one-sided view can be dangerous.
Firstly, the payment of a dividend on the financial success of a company depends. Dividends may be increased in the good times but also in bad times shortened or even canceled. The risk is present with companies that have long pay dividends and they also increase continuously, the so-called dividend aristocrats, relatively low, but can not be completely ruled out. In addition, the courses can also fall from very good stock, even over a longer period. If you then need money, you have to sell with losses and all interest and dividend benefits are lost.
Therefore, one should always invest only a part of the freely available for at least 5-10 years money in only high-quality stocks, and also pay attention to a wide spread in different companies from several industries. The criteria for selecting good stocks have already been mentioned several times. The rest of the capital you can then use to repay debt and the structure of the iron reserve.