Investing with Debt
by of debt. Should I still be investing? This is one of the most common questions that we have to debate for ourselves. So first, going back to what I said a lot earlier in this presentation is this idea of what kind of debt are we talking about? Because certainly not all debt was created equal consumer debt, credit cards, anything else? It's high interest. Those need to get paid off because you're not likely to be seeing returns like that in the market again. We're going to come back to this caveat of retirement in a second. But if it's consumer debt, I want you to be aggressively paying that off now with student loans. It's that fun. Answer of it depends. So what exactly does that mean? You have to do the math. I pose this debt question to all the experts that I interviewed for the book, and they almost unanimously came back with this magic number of 5% what they're talking about. It's 5% interest rate on your student loans being a cut off. If you are paying 5% or higher on your stud...
ent loans and interest mathematically, it's probably going to make more sense for you to focus on paying down the debt than trying to be investing in a taxable account in tandem. But if it's under 5% the math could more easily work out in your favor to be doing both at the same time. But the other thing that you have to consider is, even if it mathematically makes the most sense. Does it emotionally make the most sense for you? Because I have yet to hear somebody say, I regret paying off my student loans quickly? Not usually something good said. So you have to decide for your mental health and your own debt and risk tolerance. If you want to be investing in a taxable account at the same time that you're paying off your student loans, that's really a call that's on you. But make sure that you do the math on your interest rates. Now there's always an exception to the rule and that exception Being retirement. I would like it the bare minimum, especially if you have student loans. Honestly, in a lot of cases, even if you have some credit card debt, if you have the option for an employer match, on your account for a 401 K or 403 b. Please take advantage of it, even if it's just a little bit.