Empower Blog
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October 22, 2019

What Comes First: Debt or Investment?

Financial Planning

There are a few schools of thought when it comes to tackling debt while building a healthy financial future.

Paying down debt first

In this approach to money, people will use as much of their income as they can on only paying down debt, prioritizing paying it down before anything else, including investing or new purchases. The biggest argument in favor of this is the potential success that could come with the razor sharp focus it calls for.

This method takes on lots of strategies, from choosing the largest balance to the highest interest rate to pay down first; but ultimately, it’s the first step toward financial wellness and is the only step until it’s completed.

While many people have found success focusing on getting out of debt before building a portfolio or large savings, there are also people who advocate for investing alongside your debt efforts.

Starting with investment

Albert Einstein wrote that compound interest is the “8th wonder of the world.” This applies nicely to investing, specifically, because logically, the sooner you start, the longer you have time to potentially earn and grow that investment.

If you wait, you could lose out on years of potential earned interest. In essence, by starting to invest even a little bit at a time earlier, you could build a potential nest egg for your future that might be able to protect you from debt-risk situations in the first place.

However, nothing is a guarantee. But it’s possible that investing earlier could jumpstart the financial habits you want to keep in place for a long time.

Choosing the Right Path

Financial wellness, in the present and the future, comes down to good habits and behavior. It’s not all about income or debt levels. Before you commit to any financial plan for your future, sit down with a wealth management specialist and talk about your options to find what’s truly right for you. While financial planners do not specialize in debt planning, they can help determine what a financial future with investing looks like versus without.

 

Meet With an Advisor

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About the Author
Kat Hnatyshyn

Indirect Lending Program Director

Kat Hnatyshyn currently serves as the Indirect Lending Program Director at CommunityAmerica Credit Union, overseeing the program and our partnership with approximately 160 auto and Harley Davidson dealerships throughout the Kansas City metro. This partnership gives CommunityAmerica members a smooth auto buying experience by allowing them to finance their vehicle through us, directly from the dealership.

Securities and advisory services offered through Copper Financial Network, LLC (“Copper Financial”), a broker-dealer and SEC registered investment adviser. Member FINRA/SIPC. Copper Financial is a wholly-owned subsidiary of CommunityAmerica Credit Union (“CommunityAmerica”) and makes non-deposit investment products and services available to its members. Representatives are registered with Copper Financial. CommunityAmerica and Wealth Management by CommunityAmerica are not broker-dealers or investment advisers. For important disclosures from Copper Financial please visit here.

 

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