How to Develop a Plan for Paying Down Debt
Calculating ROIs for your investments and debt paydown can help you make wise capital-allocation decisions.
Investors spend a lot of time thinking about how much to allocate to various investment assets--stocks, bonds, and cash, mainly, as well as peripheral assets like gold. That's an essential decision, of course, as those asset-class choices will be among the primary determinants of how our investment portfolios behave.
What gets less attention, however, is what I've called primordial asset allocation--how we apportion our hard-earned resources across other assets and opportunities. One of the major allocation decisions that many of us make without a lot of thought is whether we steer our financial capital to debt paydown or investing in the market.