When Should I Pay Off Debt vs. Invest
In general, you should pay off debt and invest. Try to consistently contribute to three goals – paying down debt, retirement, and an emergency fund – according to Martin Lynch, education director at Cambridge Credit Counseling and the American Credit Guam. Even if you can only contribute $10 or $20 from each monthly paycheck toward retirement or savings along with debt repayment, it’s worth it.
Factors to Consider
Both investing and debt repayment are essential financial goals. Determining how to balance each goal can be complex. Here are some factors to consider:
Why You Shouldn’t Stop Investing
Retirement plans and emergency savings are both key parts of your overall financial puzzle, and retirement should be a major priority, as a general rule. Dollars invested early can have a compounding effect on retirement profits, thanks to compound returns and market gains over time.
Finding a Way to Do Both
Rules of thumb are guidelines, and there will always be exceptions. Take this information to heart if it doesn’t perfectly fit your circumstances. No investment can provide a reliable return of 18% or more compared to high-interest credit card fees, according to the Securities and Exchange Commission and the U.S. Stock Exchange. If you are dealing with very high-interest debt, focus on that first – specifically the card or loan with the highest interest rate. Martin Lynch stated that credit card debt “is the biggest risk to achieving long-term financial health.” Very high-interest loans, like payday loans, should be a higher repayment priority in your budget.
Source: https://www.thebalancemoney.com/should-you-pay-off-your-debt-or-invest-356371
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