“Shark Tank” star Kevin O’Leary knows how start-ups succeed or fail.

Most businesses spend this crucial first year finding investors while keeping their costs under control.

“If you want to find financial freedom, you have to pay off all of your debt – and yes, that includes your mortgage,” O’Leary told CNBC

Your personal break-even point, that time when, as a business, you will prosper or fail, is 45, he says.

By then, O’Leary warns, you should be debt free. No mortgage, no credit card, no student loan.

It is a tall order. Large numbers of baby boomers turn 65, about 10,000 of them a day. Many also leave work, by choice or not.

And many of them, unfortunately, are in debt until they retire.

Debt free

The problem, as O’Leary explains, is that debt is piling up. It is extremely difficult to manage growing debt on a fixed income that does not increase.

He didn’t choose the age of 45 by chance. Even good savers need twenty years of compound investments to retire on their own terms.

If you pay off your debt after age 45, your retirement savings will increase less and you will pay more to cover outstanding debts.

Look, I know it’s extremely difficult to be debt free. But O’Leary’s point is well taken. You can’t prudently grow your money if your debt is growing faster.

It’s a key financial concept that a lot of people just don’t understand. It is a rare investment that grows faster than the economy and inflation.

But most debt grows absolutely faster, some much faster.

Consider a typical retirement portfolio of stocks and bonds. You might be able to get 6 or 7% per year, on average. Some years will be higher, others less. Go with more stocks and you might win a little more, with more ups and downs, of course.

Read: Average Fidelity Account Balance Goes Down – Why It May Surprise You

Getting 7% means your investments will double in about 10 years. Then, over the next 10 years, that existing balance can double even if you stop saving. Compound growth is a wonderful thing.

Unless it isn’t. Your mortgage may cost you less than 5%, but that only means that your mortgage debt accumulates a little more slowly than your retirement capital grows.

If you have student loans, it is the same. Credit card debt, on the other hand, consists of around 13%, 19% or more.

Suppose you have $ 10,000 on a 12.9% card. If you keep this for five years, the actual cost to you is $ 13,621. Wear it for 10 years and the mushrooms cost $ 17,846.

That’s almost $ 18,000 that you didn’t put into your own retirement plan. This is money that will not pile up on your behalf and buy nothing from you at all. It’s just a mess.

Small print

With regard to investment costs, the same dynamic is taking hold. If you pay 2% of your assets per year to a mutual fund manager or financial advisor, that does not represent 2% of your annual returns.

People miss this in the fine print all the time. A 2% annual charge on your total assets is a lot of money. For many investors, this is thousands of dollars a year.

And it is charged whether you have a good return or the market sells.

In fact, over time, high-fee funds can absorb almost all of your potential earnings. You take the investment risk and the managers and your advisor keep the returns.

Ideally, advisors should help reduce their investment costs by using index products and provide genuine conflict-free advice – like how much risk to take for your personal goals, when to rebalance and timely financial planning ideas.

O’Leary is right. If you can’t get her debt-free schedule to work right now, the best thing you can do is get started.

In the meantime, don’t forget to contribute to your own future with prudent and inexpensive investments. This way, your money will build a solid financial foundation for retirement.

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