Can you invest while you are owed?

You know that you should save - for retirement, for a new home or car, for rainy day language - but you also receive monthly, by the panic attack by letter reminding you of your debt. Maybe you have a car loan or student loan to pay. Perhaps you have made a number of problematic financial options and delve into credit card debt. Whatever you owe, negative balances and strong reminders are AF stress.

But this is the million dollar question (literally): Can you invest when you are in debt?

The short answer is: Not really smart when you are in debt.

The longer answer is: It is quite complex and requires financial balancing, it requires you to be smart and the risk is necessary, you will feel like a circus performer.

Invest in your future no matter what you owe

Let's start by pointing out that investing in your future is a completely different kind of investment than what we'll discuss later. When it comes to investing, you have to start right now, regardless of your financial situation or how it looks. Even if it means paying a lower debt, look for money in your budget to put into your 401K, IRA or other retirement funds. Do it right now because the magic of compound interest will make that investment much more valuable than giving up the money to pay off the Visa a little faster.

Think long and hard about investing in the stock market if you still owe it

Outside of your retirement accounts, you will need to think long and hard about playing the stock market if you are still in debt. They all belong to the type of debt you are dealing with and the type of investment opportunity that arises. As the money goes below 30, "If you have a $ 2,500 loan at 6 percent APR, you can invest in another place and get a return on investment of 8% - invest more money instead of paying off the loan. "

If your debts are mainly in the form of student loans with low-interest rates or "good debt", like a mortgage payment, you do not necessarily have to pay each penny to pay them and, If smart, safe (but remember, "safe" is relative - no stock is completely safe) investing to the end, it really makes sense to put some money into it. In this scenario, it's all digital games. If the profit you are likely to make on your investment is greater than the interest rate on the debt you are carrying, then the investment is a viable option.

But if you have this kind of debt, now is not the time to invest more

While "good debt" seems like an oxymoron, it exists (to a degree) and if that's the kind of debt you're carrying, in any way, pay close attention to sound investment opportunities. But, if the type of debt you are carrying is more negligible, then your best offensive plan is to pay it now. Seriously: Cut off your supplements, stop buying $ 3 coffee, and only get the debt that was paid off.

We are talking, of course, about high-interest debt, credit-card-point-and-your-life. Credit card debt not only brings high-interest rates (which means any investment must have a higher return on investment) but, as Forbes points out, it also represents a burdensome burden. larger exposure. Even if, for example, you find a potentially profitable investment opportunity to justify your debt, it's worth considering how that debt makes you feel. And for most people, that debt makes them feel stressed, anxious and awful.

So, you should invest if you still owe it? Here is a quick breakdown:

If you are investing in retirement, there is absolute. Always.
If the debt you are carrying is low interest or "good debt" (think a low-interest loan or mortgage) it is possible.
If your return on investment is likely to be higher than the interest you paid, it could be a smart move.
If your debt is debt, high-interest credit card debt, do not, do not. Do not invest in your friends' great boot ideas. Do not gamble with a hot new stock tip.

Can you invest while you are owed?

Just pay off your debt and enjoy some emotion before you jump into the game of investing.