Believe it or not, your credit report can affect your investment portfolio in either a positive or negative way, which makes it an important factor for building wealth and reaching future financial goals. Here’s why your credit profile is so important and what services you can use to monitor it.
Debt and Loans
In today's economy, having debt is socially acceptable, but using our resources you can determine how to properly manage debt, as well as find ways to eliminate it, so you can build wealth for the future.
The cost of a college education has exploded to the point where using student loan debt to pay at least part of the cost has practically become a given. But even if student loan debt is a default choice, it’s still one that is best avoided or at least minimized.
Paying off debt successfully requires a lot of determination and hard work, oftentimes at the expense of other financial goals. This can push back your goal of saving for retirement and investing to build wealth. As someone that’s dealing with the plight of student loans, I have neglected many other financial priorities in hopes of being debt free sooner.
Leveraging debt for investments is a strategy that gets popular during multiyear bull markets. And there’s no question — on the way up, borrowing to expand an investment portfolio can work wonders, but we should never forget that what goes up, must come down. When it comes to investing, leverage is a double-edged sword — it magnifies movements both up and down.
You’ve put in the time at your business or on your job. You’ve amassed a large investment portfolio that should see you through your retirement years. And you even got your will and final arrangements set up on paper. But there’s one more thing to do before retiring…
A strong credit profile isn’t a form of wealth, but it is definitely a tool that will help you get there. Though we mostly think of a strong credit profile as an advantage when it comes to borrowing money – lower interest rates, better terms, etc – it actually goes way beyond credit.
Many financial people – perhaps even most – recommend that you get out of debt as soon as possible, and stay out of it for ever and ever. But is this always the best advice?
Reuters has a story about the poor getting bamboozled with yet another scam. No it’s not three card monte or state run lotto tickets. It’s via credit cards, and the rich are getting well.. rich off of them. According to the Boston Federal Reserve report, with its pretzel logic, only poor people pay by cash, and the rich elite pay via credit cards. Who better to perform the study than the Federal Reserve. With their multi-generation devaluation of the dollar, the Federal Reserve is an expert about wealth transfer. The report though, is class warfare at its finest.
The Huffington Post recently had an article about Payday lenders leaving Arizona. In their usual left leaning slant the article was cheering about these companies leaving the state and arguing how awful they were preying on people to take out loans.