Should I put all my money towards paying off debt before I invest or should I start putting away money now? This is an age old question that has been debated for years.
Steve here. I am a bit of an investing geek so Bridget asked me to chime in on this. Before I give my two cents, I must make it clear that I am not a financial expert. I am an educator! But I do like to invest. (You may not understand some of the lingo that I use, but you can get the skinny on investing from places like fidelity.com, CNN money, The Motley Fool, etc.)
I am an invest now guy! The earlier the better! The more you can sock away early, the better your chances of not outliving your money.
The Keys to Invest Now are Simple
Make It Automatic
If your company offers a 401k or 403b, do it now. For me, it is a 403b. The mark to hit is 10%. Set up an automatic withdrawal from your check and sit back and watch your money grow (you can look at any financial website to see growth tables for investments .. it is AMAZING). Setting something aside each month is called dollar cost averaging. This simply means you will invest in both low and high markets but, in the end, it will all average out.
Get The Match
Most companies offer up to a 5% investment match. If you cannot afford to plunk down the full 10%, at least put down what your company match is. IT IS FREE MONEY!
Don’t Overthink It
Don’t get caught up in all of the fancy schmancy investment products. Keep it simple. For me, I invest in index funds. I have a large, mid, and small cap fund in my portfolio. Index funds have low fees and are simple to understand. Many companies also offer Horizon Funds. Horizon Funds simply adjust your exposure to stocks as you age.
Look For Other Ways To Invest
If you are feeling good about your company investments, look for other ways to pack away the cash. In our family, I have a 403b through my work, but both Bridget and I have Roth IRAs. Roth’s are a good ‘after taxes’ way to invest your money. Also, things like gold, silver, art, etc. are all ways to invest your dough.
I often ask myself what revenue streams we will have when I retire?
It looks like this:
- Social security – maybe, right?
- Earnings from my 403b.
- My state gives educators the old style pension fund, so we will have that.
- Other investments like our IRAs.
Eventually, I would like to look at rental properties as well.
What will your revenue streams be? You might want to think about that! Whatever it may look like, I hope it includes investment monies that you have been socking away since your early twenties. If you have delayed investing, get in the game! Face it, we will always have debt. Invest now!