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Robert A. Imparato, Jr CFP®
CERTIFIED FINANCIAL PLANNER™ professional
Craig A. Hyldahl CFP®
CERTIFIED FINANCIAL PLANNER™ professional
R.I.C.H. Planning Group, LLC
105 Fieldcrest Avenue, Suite #507
Edison, NJ 08837
Robert: 732-326-5240
Craig: 732-326-5240
Fax: 732-326-5331
Robert: robert@richplanninggroup.com
Craig: craig@richplanninggroup.com
Website: www.richplanninggroup.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.
GE-2763334(10/19)(exp.10/21)
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