Debt Investment Return Calculator
FANG, Bitcoin & Bull Markets
Top performing stocks in a bull market are frequently touted as a great investment. During different cycles different classes outperform. The Nifty 50 becomes the four horsemen then FANG. By the time an investment thesis has been named & widely marketed (like BRICS) the easy gains have already been made. Those who invest near the top risk buying into the momentum right before the market tanks. Worse yet, many investors are emotionally driven and liquidate their positions, selling out at the bottom in a panic which locks in their losses.
A Lower Risk Approach
An easier way to achieve guaranteed risk-free & often above market returns is to invest in paying down your debts.
For example, consider a credit card which has an annual interest expense of 23.8%. If you pay that debt down quickly you are not only guaranteed a 23.8% return, but the returns on debt payment are tax-free. To obtain a similar 23.8% return in the stock market you would need a far higher rate of return, because stock market returns are taxed. If your marginal tax rate is 25% then you would need to achieve a 31.73% return in the markets to have a similar after-tax impact as paying off your credit card.