Don't Borrow To Invest

Megan and her husband received a $70,000 inheritance a year ago. They have $28,000 in debt. Should they pull $28,000 out of their investment to pay down the debt?

QUESTION: Megan in Indianapolis and her husband received a $70,000 inheritance a year ago. They put $50,000 in investments with a wealth management group and saved the rest. They have $28,000 in debt. Should they pull $28,000 out of their investment to pay down the debt? Dave tells her to pay the debt off now.

ANSWER: If you were sitting there with $22,000 in investments, would you go borrow $28,000 to increase the level of your investments? It’s effectively the same question. I would cash it in by the end of the day and be debt-free. Your wealth guy is going to go into orbit, but he’s wrong.