Debt – is a scary word for many, however, it is one of the most crucial elements when it comes to building wealth.
There are two key types of debts, good and bad. Understanding the difference between these will allow you to make sound financial decisions and secure your financial future.
BAD DEBT VS GOOD DEBT
Bad Debt
Debt is considered ‘bad’ when it is used to secure depreciating assets or non-income-producing assets that are non-tax deductible.
Examples of bad debt can be – personal loans, car loans, and credit cards (if not paid in full each month).
Good Debt
Debt is generally considered ‘good’ when it is taken to secure growth assets, which are likely to be income-producing and potentially have associated tax advantages.
Examples of good debt can be – investment property loans, and home loans (in certain cases).
It is fundamentally important to understand, structure and manage the debt well, if not, the good debt can turn into a bad debt.
At SONI, we assist our clients in using debt strategically which allows them to Build Wealth through the property over the long term.
If you are keen to understand, how we can help you, reach out to Team SONI for a no-obligation consultation. Link in the comments section below.