You want 21 percent risk free? Pay off your credit cards. — Andrew Tobias

You want 21 percent risk free? Pay off your credit cards.

Author: Andrew Tobias

Insight: Most of us have gotten used to thinking about money in terms of investments—stocks that might return 7 percent, bonds that yield 3 percent, real estate that could appreciate. We're always hunting for that elusive edge, that market inefficiency. But there's something strange about this hunt: many of us are simultaneously paying 18, 20, or 24 percent interest on credit card debt while we're trying to squeeze an extra percentage point out of our investment portfolio. The math here is almost embarrassingly simple, yet most people don't actually act on it. Paying off a credit card with a 21 percent interest rate isn't an investment that returns 21 percent—it's a guaranteed win. That money you'd spend trying to beat the market? It's already working for you the moment you swipe it toward that balance. There's no market risk, no waiting, no hoping. It just happens. The non-obvious part is that this reveals something about how we think: we're drawn to the excitement and possibility of investing, even when a boring, certain payoff is sitting right in front of us. Sometimes the smartest financial move feels too simple to bother with.