While some people may feel as if they’ve got to pick between investing for their future or paying off their existing debt, experts from Fidelity Investments and other financial sectors have broken down how to do both of these in a couple of different steps.
Don’t Overthink the Investing Process
Experts are familiar with how often individuals tend to overthink the investing process, especially when they’re dealing with different forms of debt. But rather than put off investing until your debt has paid off, experts argue that it’s better not to overthink the investing process.
Online brokerages, automated investing apps, or even working with a financial advising firm may be an effective way to start investing what you can while you’re still working off existing debt. While returns on investments are nearly half that of the high interest rates that student loans or credit cards can carry, experts still believe that these simple changes can make a big impact over time.
Figure Out Your Monthly Income
With 80% of Americans budgeting their monthly income, financial authorities believe this is one of the first steps to effective debt and credit management. The experts from Fidelity Investments argue that budgets shouldn’t feel too restrictive or limiting, but the right budget can help you achieve what you truly want – including investing for your future.
Think About a Personal Loan
Debt may take a toll on the average American’s credit score, but if you need to pay off high-interest debt, a personal loan could be the solution. According to data from the Federal Reserve, the average interest rate for a personal loan is just under 10% while the average interest rate for a credit card could be as high as 24%.
Consider Refinancing Existing Debt
Another step that those in the finance sector back is to consider refinancing existing debt—although Americans should still be careful about refinancing federal student loans as this could mean losing some of the protections that come with subsidized federal student loans. But personal loans, credit debt, and private student loans could be worth refinancing if it means you’ll get a lower interest rate.
While investing and managing your current debt may seem like opposing goals, tips given from across the financial sector prove that Americans may be able to chip away at their existing debt while still investing in their future for retirement.
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