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Should You Pay Off Debt or Invest?

Should You Pay Off Debt or Invest?

July 25, 2022
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A topic that is brought up quite a bit in my meetings with clients, is whether you should make an extra payment on a loan or invest that money instead. In my opinion, there is no one size fits all answer to this question but alternatively I believe that it is a very personal choice of what is best for you and your unique financial situation.

Investing has historically gained more than the interest paid on most debt BUT if you get anxiety or are losing sleep over the debt you have accumulated then it often makes more sense to pay down your debt first. Some of my clients find that the best option may not be one or the other but rather to split it up and pay down some debt while simultaneously investing.

In recent times, the volatility in the stock market and rising interest rates are causing some to sway towards paying down debt whereas before (when the stock market was increasing and interest rates were historically low) they may have done the opposite. Ultimately, to the question of paying off debt vs investing, there is no one right answer. It comes down to making a very personal decision that your advisor is here to help you navigate through.