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Invest or pay off debt

Invest or pay off debt

It’s a dilemma worthy of Hamlet, were his story set in modern times: to invest, or to pay off debt?

The decision depends on your financial goals, net worth, cash flow, time horizon, and your attitude towards debt and risk. It also involves assumptions about investment returns and the direction of interest rates.

With so many factors to consider, it’s wise to bring this important question to a qualified financial professional. Yet many Canadians hesitate to do so. Why? Likely because they think of their financial advisor when it comes to investing, but they don’t necessarily think of them when it comes to debt management.

To set the record straight: investing and debt management are both areas we should discuss and integrate into your financial roadmap.

Here are three key areas I’d like to cover when we meet:

Assess your debt

What are your outstanding debts and what is the total? For each of your debts, what are your monthly payments? Of those amounts, how much is interest and how much is paying down principal? Does your income allow you to comfortably service the payments? With a handle on the big picture of your debt, I can make specific recommendations.

Set priorities

If you have high interest debt (such as credit card debt), it probably makes sense to deal with it as a first priority. We can look for ways to reduce your interest payments. For example, it may be possible to consolidate it into a lower rate option, such as a home equity line of credit. With lower payments, you’ll have extra cash to put towards other financial goals.

While many people prefer to prioritize debt repayment, a strategy that balances investing and paying down debt is worth considering. Today’s low interest rates make carrying some debt less of a burden, and investing sooner in a well-diversified portfolio will allow you to harness the power of compounding over time.

Set goals and timelines

I can help you create a financial roadmap with achievable goals and reasonable timelines. A consistent, disciplined approach will keep you on track. When you have debt, discipline is enforced by the need to maintain minimum monthly payments. Why not treat your investments the same way? Set up regular contributions to automatically move a set amount of money every month from your banking account to your investing account.

So, if you’re wrestling with the question of debt repayment versus investing, book a date with me.

Hi, I’m Tish Sogani, Wealth Advisor at North Peace Financial Planning.

I immigrated to Canada in 2014 as a student to complete a double master’s degree in both business administration and international business.

Like many, I was drawn to the North Peace for work and stayed for my love of the people and the great outdoors. I’ve been with North Peace Savings and Credit Union for almost a year, and I’m passionate about helping people become financially secure by understanding their life goals and providing financial advice at all stages of life.

I bring to my role the latest trends in financial markets, emerging issues, and strategies to support my client’s long-term success. I’ve completed a designation as a Charted Investment Manager, I am licensed to discuss life, travel and medical, and living insurance benefit solutions, and I’m close to finishing my Certified Financial Planner designation.

I’d love to help you map out your short and long-term financial plan.

Give me a call 250-794-3765

North Peace Saving & Credit Union / Credential Asset Management Inc.

The information contained herein is provided for general informational purposes only and is not intended to provide, and should not be relied upon as providing, legal, accounting, tax, financial, investment or other advice, or a solicitation to buy or sell any securities. Economic and market conditions are subject to change and past performance is not indicative of future results.

Mutual funds are offered through Credential Asset Management Inc. The information contained in this email was obtained from sources believed to be reliable; however, we cannot guarantee that it is accurate or complete and it should not be considered personal taxation advice. We are not tax advisors and we recommend that clients seek independent advice from a professional advisor on tax related matters. This email is provided as a general source of information and should not be considered personal investment advice or a solicitation to buy or sell any mutual funds.