Understanding Bad and Good Debts through HCR Wealth Advisors Lens


HCR Wealth Advisors understands that your wealth has two significant components; assets and liabilities. Your total net worth is determined when you subtract total liabilities from total assets.

A considerable number of investors tend to overlook debts and focus only on assets. As the firm helps clients reach their financial goals, it also educates them that debts can be a good investment tool. It all depends on how you have used the amount borrowed.

Although you can use debt as a tool to invest and propel your net worth to the next level, you need to be cautious and not go beyond what is required. There are several rules that will guide you on debt.

One of the rules recommends that you should have a maximum of 28% of income before tax servicing property taxes, homeowner’s insurance, and mortgage principal and interest and that you should not have more than 36% of your household income servicing all liabilities.

The main goal of HCR Wealth Advisors is to help protect clients against risk and help them reach their financial goals. Therefore, the firm believes that investors should consider debt opportunities to help enhance overall financial wealth. The firm has been working with high net worth individuals by recommending favorable debts, especially the ones that are likely to lead to tax advantages or low financial costs.

HCR Wealth has been educating its clients on investment strategies by highlighting some of the good debts they should consider. Some of the best liabilities include debts financing an appreciating asset, affordable debts that fit the 28/36 rule, and debts financing college education.

However, HCR Wealth Advisors cautions investors against bad debts, most of which are characterized by high finance costs with no tax advantages. Personal loans and credit cards become bad loans if they are used to fund discretionary purchases, but they may be good debts if they fund the appropriate purchases.

HCR Wealth is a registered investment advisory firm. It can work with you to help you manage your investment portfolio. It knows that debts can be a powerful investment tool, especially when they are used as intended.


HCR Wealth Advisors is not affiliated with this website.


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