How to invest and pay off debt.

Most young families have several financial goals they would like to attain, from paying off student loans, credit cards, and other types of debt to saving for a home. Learn how to strike a balance between paying off debt and building up your assets.

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Why you should invest while paying off debt.

While you may feel tempted to pay off your debt as quickly as possible, you may want to consider setting aside some funds for retirement, insurance, and other things that can contribute to your financial success down the road.

Three reasons why investing while paying off debt is important:

  1. Striking a balance between financial goals. 
    Focusing all your efforts on getting out of the red may feel like the right thing to do, if only to cut down the amount you’re paying in interest. But if you fail to save or invest during this time period, you may have a net worth of zero when you eventually are free of debt. 

    By putting some money into savings while you simultaneously work to repay debt, you can make progress toward important financial goals (like saving for retirement through your company’s 401(k) plan) as you eliminate debt.

  2. There's an opportunity cost to waiting to invest.
    If you don't start saving while you are paying down debt, you may miss the chance to take advantage of the compounding returns you can earn in the market. In general, if you can expect a higher return on your investments than the interest rate that you pay on your debt, you should consider your investment options.

  3. Paying off debt is important, but you need to invest in your future.
    Imagine if you were to become disabled and no longer able to work, or if your spouse passed unexpectedly. Would you be prepared? The costs of dealing with these situations without proper protection and income strategies would be far greater than paying interest on your debt for a few months longer.

By investing and insuring appropriately, both in long-term savings and in appropriate protections for your assets and income, you can take a positive step toward building a solid future for you and your family.


Want to learn more about investing and financial strategies?

A NYLIFE Securities Registered Representative can help determine what’s right for you.

Investments are offered through NYLIFE Securities LLC (member FINRA/SIPC), a Licensed Insurance Agency and a New York Life company.