Should I Buy Medibank Shares?

Question


Hi Scott,

I have $6,500 in savings and $7,100 on two credit cards (which I’m paying off at $700 a fortnight). I also have $2,700 in household repairs to make. Is the chance to buy Medibank shares (my first shares ever) a good enough reason to use $2,000 of savings instead of using it to pay for the credit card or house repairs?

A note to my loyal readers: you’d be surprised how many otherwise intelligent people ask me this question. So, while I feel like a broken MP3 player, bear with me while I cover it one more time:

Tiffany

Scott's Answer


Tiff,

Don’t buy shares when you’ve got credit card debts. The easiest way you can earn a tax-free 18 per cent return on your money is to pay the bloody things off. So here’s what I’d do: cut your cards up, keep $4,700 in your savings account ($2,000 as a starter for your Mojo money, and $2,700 for the repairs) and pay the rest off your card. Then clear your debts. Then invest — but not in Medibank. Instead, invest in Argo Investments.

Scott