Financial markets get in between a rock and a hard place. While the sell off continues, there will be no new reason for any buying spree.  The market needs a catalyst without much news, so it will continue to stagnate with higher commodities prices and growing figures of unemployment.

The news drives the market, and we don’t know the exact reason behind this.  When the corporate earnings remain weak, the inflation is growing and the real estate market still contracts.  This market necessitates a strategy to recover.

In this case, it appears that the best investment is in your own debt.  There is no need to pull but a couple percentage points from a money market or bank account. The credit card debt should be at the top of your list, but it is generally something that should never be accepted.  At rates as high as 29% per year on the subprime cards, it will surely be harsh.

Auto loans may come as your next resort.  This is important not just because of the higher interest rates than home loans, but also for the growing used car market. The equity in a car should always exceed that of the rest of your loan.

Instead of gambling your money in a market that isn’t moving, you should go for personal finance.  You can save some cash in an emergency fund or contribute to college plans.  Saving at 2% interest is really not ideal.

This entry was posted on Tuesday, July 8th, 2008 at 4:14 pm and is filed under Investing Basics. You can follow any responses to this entry through the RSS 2.0 feed. You can leave a response, or trackback from your own site.