HCR Wealth Advisors is a registered investment advisory firm. The company helps its clients to create personalized financial strategies. In addition, HCR Wealth Advisors helps to educate its clients on investment as well as helping to protect them against risks. HCR Wealth puts the client’s confidentiality and security at heart in the process of serving them through trust and professionalism. The firm, based in Los Angeles, California, has made a name for itself in the investment advisory industry over the years.
According to HCR Wealth Advisors, there is a difference between good and bad debt. The firm points out that many investors overlook debts during their net worth calculations. To determine your net worth, you calculate the difference between your assets and your liabilities. HCR Wealth recognizes though that debt is an important part of many people’s financial picture.
HCR Wealth points out that the way the borrower uses the debt determines whether it is good or bad debt. As the firm explains, a person should consider the 28/36 rule to determine the amount to borrow. The 28 part indicates that you should not have more than about 28% of household income before tax to pay for home debt. The home debt covers your insurance, mortgage interest, as well as taxes against the properties.
The 36 part, on the other hand, addresses the entire amount of debt. You should ensure that no more than 36% of your pretax household income should service all debts, including home debt. HCR Wealth Advisors terms good debts as those that provide additional advantages to you. For example, low-cost loans for education and mortgages fall under this bracket because they have the potential for tax advantages. Many people can deduct the interest paid on such loans on the tax returns.
On the other hand, HCR Wealth identifies as bad debts the amount incurred either on personal loans or on high-interest credit cards. However, the wealth manager is quick to note that these loans can become bad if not paid in full on time. An example is taking a personal loan to finance a lavish vacation trip if you cannot really afford it. The consequences of not paying such a loan on time are harsh because some credit cards attract interest rates of as high as 19%. HCR Wealth offers advisory services to help to protect clients against risks involved in incurring such bad debt.
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