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Beth A. Botti, CFP®, ChFC, CLU, CDFA™

Financial Consultant

California Insurance License #0G24537

 

612 Wheelers Farms Road, Milford, CT 06460

 

Phone:  203-877-6556 Ext. 169

Fax:      203-301-0736

Email: beth.botti@equitable.com

March/April 2020

Pay It Off or Invest?

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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Duly registered and licensed financial professionals offer securities through Equitable Advisors, LLC (NY, NY 212-314-4600), member FINRA,SIPC (Equitable Financial Advisors in MI & TN), offer investment advisory products and services through Equitable Advisors, LLC, an SEC-registered investment advisor, and offer annuity and insurance products through Equitable Network, LLC (Equitable Network Insurance Agency of Utah, LLC in UT; Equitable Network of Puerto Rico, Inc.). Equal Opportunity Employer - M/F/D/V. Equitable Advisors and its associates and affiliates do not provide tax, accounting, or legal advice or services. Representatives may transact business, which includes offering products and services and/or responding to inquiries, only in state(s) in which they are properly registered and/or licensed. Your connection to this website does not necessarily indicate that the sender is able to transact business in your state. The information in this website is not investment or securities advice and does not constitute an offer. For more information about Equitable Advisors, LLC you may visit https://equitable.com/crs to review the firm's Relationship Summary for Retail Investors and General Conflicts of Interest Disclosure.

GE-6572038.1 (4/24)(Exp. 4/26)

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