All of us people want the best in everything, perfection in everything that we have is the only thing we can think about because of course we would like to enjoy the things that come with it, namely high satisfaction and of course we also would draw fame and attention that would make us even more noticeable and be known by many.

For example let’s take a look at our business today, are we doing good than we were when we were just starting out, if so then how would you rate the success that you’ve attained so far, would you call it as something that you can call a true success and time would still make your company great and be known all over the globe, of course what …

If you are looking for a space to set up an office or taking a lease for commercial purposes, think and learn more about the commercial lease in order to obtain the best deal. There exist, in abundance, various properties out for commercial lease or outright sale, but equally found in plenty, are the many buyers for the same.

It is when a buyer gets serious about choosing a commercial piece of real estate for the business deal that the commercial lease for the space needs to be researched. It becomes imperative to spend some time on it by understanding not only the legal nuances involved but also the nitty-gritty’s of a lease agreement.

The lease agreement forms are the very important documents for the purpose of taking …

Whether it’s a mortgage, car loan, student loan, credit card, or medical bills, you probably have some amount of debt in your life. It is only natural that you want to pay it off as soon as possible, but what do you payoff first and how do you plan for investing?

Since the amount you can pay towards these items is predicated by your income level, a decision normally has to be made between investing and paying off your debt.

What should you do? The answer depends on two variables:

1. The rate of after-tax interest you are paying on your debt 2. The after-tax rate of return you expect to earn on your investments

Before you answer the first question, you must understand that there are two different kinds of debt. On one end of the spectrum is high-interest credit card debt that originates from things such as credit cards and department store charge accounts. This type is the deadliest and generally should be avoided unless absolutely necessary.

The second type of debt is the lower interest variety; your mortgage, student loans, etc. Often, the interest on these types is partially or wholly tax-deductible, making it even more attractive.

With that in mind, the answer to the debt reduction vs. investing problem can be solved with this one statement: If you can earn a higher after-tax return on your investments than the after-tax interest rate expense on your debt, you should invest. Otherwise, you should pay off your balance.

Example of Debt Reduction vs. Investing - Calculation

Scenario 1 Assume you have a thirty year, $150,000 mortgage with a six percent rate. Also assume you are in the 25% tax bracket. Due to the itemized deduction of mortgage interest, your after tax annual percentage rate is really 4.02% (not the 6.00% you are paying).

Hence, if you expect to earn an after-tax return higher than 4.02% on your investments (odds are substantial you will if you have a long-term horizon), then you should invest.

Scenario 2 You have a $10,000 balance on a credit card with a 22% annual percentage rate. Credit card interest expense is not tax deductible, meaning you should only invest if you think you can earn a 22% after tax return on your investments.

Given that the historical long-term return on equities has been somewhere around 11-12%, this seems highly unlikely. In this case, it would be foolish to invest.

The Bottom Line