Invest or Pay Off Debt? In a Pandemic, I’m a Stock Buyer

investor or pay off debt

If you were to tell someone that you were putting any extra cash you had into the market instead of paying off debt, they might think you have lost your mind.

Especially if they follow the personal finance guru Dave Ramsey.

However, I am a strong believer that not all debt is bad debt. For me, there are two kinds of debt: debt that earns interest and debt that is interest-free.

I currently have both kinds of debt, which I am sure many others do as well. So when I suggest using any extra cash to put into the market instead of paying off debt, I am referring to the interest-free kind.

Also, it is important to note that you should continue monthly payments for all debt regardless of which kind.

However, personally I prefer to use my extra cash to play the market or build up my cash on hand — instead of making paying down debt by making extra payments.

The reason this works for me right now is that the stock market is in a very unique situation, the COVID-19 pandemic.

In part because of the pandemic, not only have I managed to get several wonderful companies at great on sale prices but I am also building up cash on hand with extra cash I have and doing options trading.

That way, when another downturn happens I can jump on some more companies at discounted prices and make my portfolio even stronger.

The long game

When I look at investors and what their main goals are, they fall into one of two categories.

Category one is the investor that tries to take advantage of quick gains so they can increase their profits drastically over a short period of time.

To me, this is very risky and can get you burned quicker than you can recover. I believe that is what has got a lot of Robinhood investors, the younger investors who are using apps to buy slices of stock, in trouble this year.

Category two, where I fall, is the long-term investor.

This is the type of investor who is playing the long game and basing their trades and positions on long-term gains. This means getting great companies with strong balance sheets at great prices and holding them long-term.

Then, once you think the company has reached or is near the top in terms of share price, you sell high and take in your huge profit, thus giving you more money to invest.

Source: Google Finance

My main goal is to make sure that I am setting myself up for financial freedom much sooner than retirement, as well as making sure my retirement isn’t spent penny-pinching my way to the grave.

And right now, I believe that the market has been and will be one of the greatest investing opportunities of this generation for the months and years to come.

So, by building up your cash in order to buy the companies you want at discounted prices, you will be playing a much less risky game while also being able to make sure your future is much better financially.

You can even get yourself to the point that you can pay off all your debt at once or in a much shorter period of time because you are taking this amazing opportunity that the market is presenting to all of us.

Recommended Articles

Options: Why Buy Puts? To Make Money When You Think a Stock Will Fall in Price

Beginning options investors often struggle with the concept of put options. They have no trouble with call options. With calls, beginners usually grasp that you will buy a predetermined number

Bitcoin Zooming Higher Again. Speculation or the Future of Money?

As Bitcoin threatens to break through its record highs set a few years ago, at least some people are likely to get involved in speculating in them again. Many seem

5 Proven Ways to Earn Powerful Side Income

If you want to earn extra money with relative ease, whether it is to save up for retirement or prepare for a well-deserved vacation, one of the best things you


Day Trading Now: Stock Too Expensive? Buy a Slice

The cost to build a diversified stock portfolio is often the highest barrier for new investors. The outlay required to buy a basket stocks is more than the dollars available.

Looking for Better Returns? 5 Ways to Invest in Brazil

Brazil is known for tourist attractions, its natural beauty and soccer. The former Portuguese colony is also a thriving multicultural country — a melting pot not unlike the United States.

Add Some Spice to Your Portfolio with This Consumer Staple Stock

When the vaccine results from Pfizer (PFE) were announced on November 9, it sent the stock market on a wild ride. Sectors that had been underperforming the overall market screamed

Iaccino: Market Volatility Here to Stay

Bob Iaccino, editor of the Stock Think Tank, talks about Amazon's move into prescription drugs and market volatility on Bloomberg News.

Beat the system by understanding both sides of the trade, reward and risk. Get Bob Iaccino's Stock Think Tank newsletter through this special offer.

Are Cannabis Stocks a Good Investment for 2021?

Cannabis and CBD oils are booming industries.  Economies see a massive boost of billions of dollars when these two hit the scene. From recreational to medicinal, these plants offer a

The Benefits and Pitfalls of Trading Options on ETFs

An exchange-traded fund (ETF) is a collection of assets that track specific investment categories. For instance, SPY tracks the S&P 500. ETFs can also track sectors and industries, such as

Options Strategy: Sell Covered Calls on Technology Stocks

Stock prices of publicly traded technology companies have been resilient this year. Many remained unaffected or benefited from the onset of the current crisis. Other sectors seem more exposed to

Looking for Foreign Stocks with Powerful Dividends? Look No More! (VYMI)

Declining yields on investment income products has let investors to hunt for high dividend yielding stocks to boost their income. One product that I have actively used and would like

Frazier: How I Got a 45.2% Gain in Less Than 60 Days

Click Here To Subscribe On A 100% Free-Trial Basis To The Bulletproof Wealth Report!

Hello David Frazier here, editor of the Bulletproof Wealth Report. I told subscribers to our Bulletproof Wealth Report on November 2nd that I expected U.S. stock prices