Sac à bouffe
Money Hammer just keeps getting better with each release. "Pay your debts" should be emblazoned on the back of a future MH shirt!
Favorite track: Why You Should Pay Off Debt Before Making Risky Investments.
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about
Hello! I make songs and videos that use brutal heavy metal to teach basic personal finance and investing. I see a lot of misguided advice about whether someone should be investing in risky assets like the stock market even if they have a lot of debt. I argue here that no, you shouldn't invest in risky assets while you're in debt. The return on a risky asset is uncertain but your debt is certain. If you lose money on your investment, you could be in big trouble! But if you can find risk-free investments where the return exceeds the interest rate on your debt, that makes sense because the risk-free return exceeds your debt interest rate.
Musically I tried to imagine what would have happened if the funk metal movement of the early '90s (bands like Living Colour and Faith No More) had influenced death metal. I tried to make funk death metal! I learned it's a LOT harder to play funky than it is to play brutal!
lyrics
In Volume 1 Chapter 2, I said to pay off your debts before investing and that investing while having debt is like borrowing money to invest: you owe someone money, and you're invested in a risky asset. I often see advice that if the interest rate on your debt is lower than a certain percentage, often 10%, then you should invest even if you still have that debt. This is misguided advice. Those rules are based on comparing your debt to the nominal historical average return on US Stocks, which is about 10%. If you have debt with an interest rate lower than this, but knew you could get a 10% return in the market, it would make sense to invest even though you have debt. But the problem is that this 10% number is an average. In any one year, the return is uncertain and could be much lower. You could even lose money. But the rate of interest on your debt is certain. You have to pay it no matter what happens. It makes sense to eliminate the debt which you definitely have before you make investments which may or may not make money. The comparison rule only applies if the investment is risk free. If you could find a risk free investment that paid a higher interest rate than your debt, it would make sense to invest while in debt. This is starting to be possible in today's market, with recent higher returns on inflation linked securities like I-bonds for example.
credits
released April 20, 2022
Performed, recorded, mixed, and mastered by Mark Cichra, CFA.
The metal’s band revelatory new record crosses genres and styles, effortlessly combining seemingly incompatible subgenres. Bandcamp Album of the Day Apr 26, 2024
