Mark Cuban Explains How to Make a 16% Guaranteed Return

You could be getting a 16% return on your money right now, and it’s not that hard to do. As Mark Cuban, the “Shark Tank” star, billionaire entrepreneur, and NBA franchise owner explains, just pay off your debts. Mitch Tuchman writes on MarketWatch:

Pay that off and you stop losing nearly 16% in compounding negative returns.

“The reason for that is whatever interest you have — it might be a student loan with a 7% interest rate — if you pay off that loan, you’re making 7%,” Cuban said.

“And so that’s your immediate return, which is a lot safer than trying to pick a stock, or trying to pick real estate or whatever it may be.”

Yet the cost of not paying off your high-interest debts is astronomical.

Let’s say you have exactly the typical American household credit balance of $6,929 and carry it for 20 years at 16%. You end up paying $135,038.

Now let’s say you invested that amount instead and earned 8.8% over 20 years. You end up with $37,486.

You should invest, the earlier the better. But, truthfully, the math strongly advises that you pay off any high-interest debt you carry as soon as humanly possible.