Pay Off Debt or Invest for Retirement? Anastasia Wiese Helps GRBJ Readers Decide
In today’s climate of low interest rate loans, many investors have been asking a variation on the same question: Is “extra,” discretionary cash best used to pay down debt – such as mortgages, auto loans, student loans or credit card balances – or to invest toward retirement? In her February 22 Grand Rapids Business Journal column, Anastasia Wiese, JD, CFP® covers how to make good choices either way.
“Ultimately, every action you take to advance your overall financial picture should move you closer to a place of decreased anxiety and increased satisfaction with your financial situation,” she says.
Your individual circumstances guide the details from there. For example, tax ramifications are key, which is why you might prioritize maxing out an employer-sponsored retirement plan if you’ve not yet done so. That way, you are reducing current taxable income, plus saving for retirement at the same time.
Interest rates matter as well. Paying off high-interest credit card debt may top the priority list, but paying off a low-rate loan may not matter as much as adding to your savings. Then there’s your investment stamina. If you have the time and patience to stay put in the market long-term, you may be able to expect a higher rate of return than the rate attached to your debt.
A reputable financial planner can help you sort through the details, balancing your long-term goals with your financial peace of mind. “In the end,” says Anastasia, “both are of equal importance.”
To learn more, read Anastasia’s article here.
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