 Where would you invest money for your children UK only? |
Hi
My children have been given some money and we are unsure what to do with it. Obviously in the current economic climate it makes the Decision more difficult. But does any one have any ... |
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THE GENERAL MANAGER
CITI BANK LONDONADDRESS: PROMENADE LEVEL, CABOT
PLACE EAST , CANARY WHARF , LONDON E144QS.CONTACT PRIVATE
EMAIL: citibank_kennethdolton@yahoo.co.uk,
CONTACT... |
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is 24,000,000$ a lot of money?
Additional Details
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Donna C | Credit card interest - pay it or accrue it??? |
Please excuse my ignorance, but my husband tells me I just don't understand finance...my question is...we accrue about 200K in business travel charges on my husbands credit card. The credit card charges any where from 11.75% interest but it's gone done to about 9.98% lately.
My husband is telling me to put the reimbursements back into savings and or give it to our investment guy. Savings earns around 2%...the investment guy 10%.
This is the part I truly don't understand...I can't write off the interest accrued on credit cards on my taxes. I have to pay taxes on the money earned from my savings and the investments. I'm only earning 2% on savings, but paying up any where from $500.00 a month to 1,000 a month on the credit cards in interest....I'm truly confused I don't understand why I wouldn't just pay off the credit cards???? We have the money....there must be a good financial reason that I just don't understand...can someone explain it to me???? |
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CupCake
 |
If you have the money to pay down your credit cards then you should absolutely do so. It makes no sense for you to save/invest the money wehn the rate of return is less than what you pay in credit card interest.
Good Luck! |
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Jeff
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Pay off your credit cards....it isn't good business to play around with money that isn't yours....or that doesn't exist! |
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Rikounet
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You are right. And also, this 10% is not realistic right now. If you leave it a couple of decades, then yes, perhaps. Otherwise, forget it. |
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Spock (rhp)
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you have it correctly -- pay off the credit cards in FULL, every month.
***
when you have a continuing balance on your credit cards, the bank charges you daily interest on the average balance -- which includes your husband's travel expenses.
if you paid off the credit cards, you'd save about 45 days interest on all of his reimbursed expenses ... even at 10%, that is 200K * 10% * 45 / 365 or about 2,465.75 a year.
this would be undeductible cash lost to the bank. investing it with your husband's "investment guy" would only make the same return -- BUT it is taxable income, so the net to you is necessarily less by the amount of the marginal tax rate paid.
Besides, the credit card interest is certain and the investment guy's ability to produce income is not certain but varies. My rule of thumb for certain interest expense versus uncertain investment income is two to one -- I invest only when my estimated return [pre-tax] is TWICE my certain interest cost. This makes up for the times I lose on the deal due to uncertainty on the investing end.
***
not to worry about the bank -- they get paid by the merchants [including the airlines] for those 45 days' interest. |
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robert w
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so sorry your husband has his head up a hole of some form.
200K in biz travels??? is insane.
he is not working to keep u but to keep the slave cards happy.
YOU seriously need a visit to library read
any good book on finances.
cause u may be homeless and divorced if he keeps this up.
you want to visit dave ramsey.com to learn what ur husbands bigger mistakes are.
PAy OFF credit slave cards and u (he ) get a gaurenteed 9.98% return on investment (money) after taxes.
not what the 'investment guy' promises.
hope this isn't too harsh but you have some hard times coming to ur house/family. |
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Wayne Z
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IMHO....Your husband is wrong. You should pay off the credit cards imediately.
You apparently understand it better than he does.
Credit Cards
9.98%
0.00% Tax Benefit
9.98% After Tax Rate
Savings
2.00%
.70% Taxes (I assumed a 35% rate)
1.30% Net Rate After Taxes
Investments
10.00% (Are you positive about this one????)
3.50% (Taxes)
6.50% Net Rate After Taxes
When you compare the net rates after taxes, you should definitely pay the credit cars off first. The big issue is that your "investment guy" has a vested interest in your decision so he may have convinced your husband to invest with him. |
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Cherry Joe
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You have to clear credit card outstanding as long a as you are able to do so. Once you start doing the min. payment , then it will begin to accumulate with interest onwards and onwards.
I just have some articles on credit card debt : Consolidate Credit Card Debt To Solve Financial Problems? , Reducing Credit Card Debt - It's Never Too Late To Start , Credit Card Balance Transfer, if you are interest, you can take a look at http://avoid-bankruptcy-get-debt-consoli... |
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src50
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If you're saying that you're putting the employer's cost reimbursement payments into investments while carrying a balance (and paying interest) on the credit card, I'd agree that is dumb. |
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alexfont0801
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By yu paying off your credit card every month it won't help your credit. You are suppose to use up to 30% of the total value of your credit card. On the first bill pay double the amount of the minimum payment and on the next bill pay it off. This will boost your credit. |
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GetOutofDebt.org
 |
I understand the logic but your husband is gambling on the market. This is the same philosophy that some financial planners suggest with maximizing your mortgage to take that money and invest it.
The problem here is that a credit card is anything but a fixed investment. And depending on the amount of risk you are comfortable with, it can be very stressful to play this game.
Letting the card balance run up can also hurt your credit rating. As the card balance climbs above 30% of the credit limit it will start to bring down your credit score.
The best approach is for you to site your hubby down and explain that you are just not comfortable with this approach. He has a higher tolerance for risk than you do and you'd like to come to a compromise you both can live with. After all, you are a team.
If he dismisses your feeling on this or says that he's not going to change his approach, you've got bigger problems other than a credit card bill. |
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