Assignment Essay Example | Topics and Well Written Essays - 500 words - 65

Assignment - Essay Example To gauge this conclusion as an investment opening, the use of the extra and or available money to make more money later will be discussed. Some of the considerations to keep in mind are risk tolerance, investment options available, and the cash flow situation. Below are some vital points to consider in regard to the question ‘is paying down debt usually a good investment?’- Before considering whether or not to invest, you have to make sure that you really have additional money. Have enough backup income to keep all debts current; being behind on your debt expenses can destroy your credit and lead you to suffer fees that will overcome the return on any investment (ROI). At least ensure that you settle your minimum payments on all your debts. This will reduce the incidences where one pays debts and he/she is with time has no money for personal and emergency situations (Warren & Amelia 75). Things may be looking up now; this is where one takes into consideration the long term effect. For instance, what will happen if one loses his/her job next month or in the case of a medical emergency? Before one thinks of investing or making larger than necessary payments on your loans, some amount of money should be saved for emergency purpose. Many financial consultants recommend that one saves enough to cater for at least three months of emergency scenarios; the money should be in a safe, accessible account (Warren & Amelia 105). This is when one looks at reduction or full settlement of any given liability as an investment as it provides the first step to accumulation of assets, wealth. Accumulated interest rate increases the duration one take to source wealth; this makes one to avoid payment of unnecessary extra amount of cash annually in the future (Warren & Amelia 33). For instance, when one makes $5000 payment on a loan with a 10% interest rate, your annual return is 10%, or $500. This is based on the