Student Loans Vs. Investing Flagstaff AZ

A young grad wonders whether to start an investment plan or pay off her college student loan debts instead.

linda
(520) 822-9338
9321 s. van dr
tucson, AZ
 
Washington Mutual
(623) 435-5314
5849 W. Northern
Glendale, AZ
 
Wells Fargo #9901
(623) 875-0720
9901 W. Thunderbird Rd
Sun City, AZ
 
Community Loans
(480) 726-2920
25 W Warner Rd
Chandler, AZ
 
Washington Mutual
(602) 789-0303
5880 W. Thunderbird Rd, #2
Glendale, AZ
 
Wells Fargo Bank
(623) 875-0720
9901 W. Thunderbird Road
Sun City, AZ
 
Carcash Title Loans
(520) 791-2274
4373 E 22nd St
Tucson, AZ
 
Eazy Pickn Pawn
(480) 964-8701
118 N Alma School Rd
Mesa, AZ
 
Wells Fargo Bank - Bashas
(623) 842-6080
5503 W. Northern
Glendale, AZ
 
Wells Fargo #10733
(623) 583-4816
10733 W. Peoria Ave
Sun City, AZ
 

Student Loans Vs. Investing

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Dear YOUNG MONEY,

I am a young grad now making $33,000. I have $26,000 in college loan debts and I am looking to pay off $100-$200 a month. I want to start investing in a mutual fund, contributing to a Roth IRA and investing in my company's 401(k) plan. Is this too much [at one time]? I want to start some sort of investing/savings for my future and need some help. Thank you.

Sarah Nickerson

Dear Sarah,

You are wise to begin your investment/savings plan at a young age. At this point it is not the amount that matters, it is having a plan and the discipline to stick with it that will pay off down the road when the numbers are larger. Start by identifying your financial goals. In your question you mention several:

  • Pay off the student loans.
  • Roth IRA (Retirement)
  • 401k (Retirement)

Keep in mind that with this type of strategy you will be assuming greater risk. If you prefer to manage risk and be more conservative, then a more balanced allocation of equities, bonds and money market would be advisable. In this case, more information is needed before specific recommendations can be made.

You probably have some shorter-term goals as well, such as saving for a home or car.

You should definitely participate as much as possible in your company's 401(k) plan. Contribution limits for 401(k) plans are currently: $11,000 for '02, $12,000 for '03, $13,000 for '04, $14,000 for '05, $15,000 for '06, and then indexed for inflation thereafter. Pre-tax dollars go in, and depending on the plan, your employer may match part of your contribution. Free dollars! A Roth IRA is a good idea, but you should first max out your 401(k) before contributing to a Roth IRA....


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