What Is Stopping You From Investing?
After spending time with our firm or our advisors, you will discover that we believe investing is for everyone. You may have even looked through our website and watched our videos. Though you may agree with our message and advice regarding long-term investments, you may be quick to point out that you don’t have the money to do so. You’re juggling a mortgage, student loans, and even the dreaded credit card debt. After you factor in utilities, car payments, and cell phone bills, there’s nothing left for retirement.
You Can Still Make Progress
One of the things Glen Wright, our CEO, advocates is that you should pay yourself first. The idea behind this is that you should never spend all your money. Whatever item you want, it’s not more important than having twelve months of living expenses. Two of those twelve can be in the bank, and the rest should be invested.
What if you don’t even have that? Can you still invest? Yes, and you can do so by having multiple goals. For instance, you work on paying your debts, building your emergency savings, and putting money aside for retirement. Is it going to be a lot? No, but it is better than what you are doing right now. Secondly, not all debts are created equal, and you need to tackle the ones with the highest interest rates, i.e., your credit cards.
Remember the rule of 72. If the interest rate on your credit card is 20%, divide it by 72. If you do that, you will come up with 3.6. That’s how many years it will take for your credit card debt to double. Get your credit card debt down to zero while making small but incremental deposits to your retirement and savings accounts.
The Benefits of Debt Stacking
Let’s pretend that you put $100 toward your credit card bill, retirement account, and savings ($300 in total). If you are disciplined enough to avoid using your card, you will eventually pay it off. When you do, you now have an extra $100. Instead of treating this as additional spending money, pay yourself first! Now, you can put more money into your retirement and savings. After you have 12 months of living expenses, that money can be parlayed into retirement.
Remember that paying off your debts is critical, but it should not eliminate your need to invest for your retirement and future. Compounding interest benefits those who start investing at a young age. Even though you may feel like you are doing the right thing by focusing entirely on your debts, you may be doing yourself and your future self a disservice.
Regardless of your financial position or concerns, everyone can benefit from investing. You aren’t in this alone, and our qualified team of financial advisors is here to support you and your financial goals. If you’re ready to get started, then we are too. Contact Worth Advisors, LLC, to schedule a time to meet us.
