One perception worth challenging — for the sake of long-term financial wellbeing — is the idea of “good debt.”

In my view, it’s a term often used to reduce anxiety around long-term banking contracts. Leverage is fundamental to many investment strategies, but the mindset of good versus bad debt can be misleading — and costly.

Investments can win or lose. Debt, however, magnifies outcomes in both directions.

Most investors have sound intentions and reasonable strategies. The issue is that when investments are promoted optimistically, the downside is rarely planned for properly. Leverage amplifies gains, but it also amplifies losses — and when loan-to-value ratios are pushed, even small negative adjustments can materially impact an entire portfolio.

History makes this clear. So-called “good debt” wiped trillions of dollars from global markets during the GFC, taking retirement plans and long-term portfolios with it. The problem wasn’t investing itself — it was unexamined leverage.

No debt is harmless. All debt deserves respect, scrutiny, and active management.

The more sustainable approach is balance. Invest thoughtfully, plan for contingencies, and ensure your portfolio can absorb pressure — not just growth. For non-investment debt, reduction strategies are essential. Within an investment framework, liquidity, disciplined planning, and risk awareness matter just as much as return.

Debt should support long-term outcomes — not quietly undermine them.