Should You Invest or Pay Off Your Debt?
Whenever you want to get more money in the bank, you may be tempted to make a smart investment, but if you’re already dealing with debt, should you grow your money by investing or should you focus instead on using the money that you have to pay off that debt?
Keep reading for a bit of helpful information that can help you make the right decision for your financial needs.
Get the Debt Off Your Back
The more you can pay down your debt, the more free you’ll be to make wise investments, whether you’re interested in investing in the stock market or you’re looking into agriculture investments through companies like Crawford Park Farming AG.
On the other hand, if you end up making investments, you won’t have as much money available to pay off your existing debt, and your debt will only continue to grow.
Even just making your minimum monthly payments will cause the balance to continually increase with each passing month as more interest is added to the total. But if you manage to pay off the debt, you can then be free to invest your money and watch it grow.
Create a Plan to Pay Off the Debt Sooner
To pay off your debt sooner, you’ll need to have a plan in place. You can start by organizing the debt that you have according to the interest on each outstanding amount. In this way, it will become clear where the majority of your money will need to go.
Once you figure out which loans have the highest interest rates, you should focus on paying those off first.
The more quickly you can pay them off, the more you‘ll end up saving in the long run, and then you can tackle the other payments that aren’t charging you as much interest.
Make Wise Investments
Once you have paid off all, or at least most, of your debt, you can then focus on investing your money wisely. You can trade stocks online, dive into peer-to-peer lending, invest in a retirement account, or keep it really safe and just invest your money in a certificate of deposit (CD) account at your local bank.
No matter what you decide, make sure that you have measured the risk ahead of time. You don’t want to get in over your head, as that will result in you losing more money in the long run, and you have already worked so hard at bringing down your debt to make these investments in the first place.
Just make sure that your decisions are based upon your focus for the future, whether that’s paying your kids’ college tuition or saving up for your retirement.
When it comes to making investments versus paying off your debt, it is often best to pay off your debt first. However, if you have any questions about your particular financial situation, it might be best to speak with a financial advisor who can look at your specific accounts and set you on the right track.
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Category: Debt, Family Finances
