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Tom Meaglia, ChFC®, AEP®,
CLU®, CRPC®, MSFS
Chartered Financial Consultant
Investment Advisor Representative
Chartered Retirement Planning Counselor
CA Insurance Lic. #0567507
Meaglia Financial Consulting
2105 Foothill Blvd., #B140, La Verne, CA 91750
Toll Free: 800-386-3700
Bus: 909-593-6105
Cell: 818-681-8600
Fax: 909-593-6120
Email: tom@meagliafinancialconsulting.com
Website: www.meagliafinancialconsulting.com
March/April 2020
Pay It Off or Invest?
Should you pay off your low-interest student loans first or make smaller payments and put the difference toward long-term goals, such as retirement?
Look Short Term
Student loan balances may be at record highs, but this may not necessarily mean that paying off student debt should be a borrower’s top priority. With interest rates on federal student loans still low, it may make more sense to pay the minimum monthly bill (or more if you have the extra cash) and put what’s left toward other financial goals.*In the short term, you might want to create an emergency fund that’s large enough to fund a few months of expenses should unemployment, disability or another financial crisis occur. This makes sense because using cash you’ve already saved for emergencies will cost less in the long run than running up high-interest credit card debt.
Look Long Term
Down the road, you might want to target other financial goals, such as saving for a down payment on a first home or putting money away for retirement. While millennials may believe they have plenty of time, a look at some numbers pulled from http://investor.gov may surprise them.Let’s say you have an extra $200 monthly and you put it into a traditional IRA. If you do this every month over 20 years and earn 6% compounded monthly, you would invest a total of $48,000 and see your IRA grow to more than $92,000. If you do the same for 30 years, $72,000 in contributions would grow to almost $201,000. **
Look at an IRA
As luck would have it, you can contribute up to $6,000 ($7,000 if at least age 50) annually. Better yet, you can still contribute for tax year 2019 up to your tax-filing deadline and reduce last year’s tax bite if you qualify. At the same time, you may also contribute for tax year 2020. Talk to a financial professional to learn more.* The sender of this newsletter does not issue or advise with regard to student loans.
** This information is intended to be for illustrative purposes only and does not reflect any particular investment or investment needs of any specific investor.
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Investment advisory services are offered through Fusion Capital Management, an SEC Registered Investment Advisor. The firm only transacts business in states where it is properly registered, or is excluded or exempted from registration requirements. SEC registration is not an endorsement of the firm by the commission and does not mean that the advisor has attained a specific level of skill or ability. All investment strategies have the potential for profit or loss.
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