If you’re thinking about whether to finance a purchase or pay cash, consider this. If you can borrow money at a lower interest rate than you can earn on the money you invest, the option to borrow becomes cheaper than to pay cash.
Whether or not you pay cash for a large purchase or finance it, there are costs in addition to the price of the asset. The cost when you finance is the interest you will pay on the loan.
When you pay cash, however, there is an opportunity cost in the future interest or investment returns you could earn from keeping that cash.
While investing can be complex, the first step to getting started is simple. Educating yourself about investing and how it can be the right step in your financial future is all it takes.
