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.

Community Loans
(480) 726-2920
25 W Warner Rd
Chandler, AZ
 
One Stop Check Cashing Payday and Title Loans
(480) 726-1509
940 N Alma School RD
Chandler, AZ
 
Washington Mutual
(602) 977-3988
3020 E. Camelback Rd
Phoenix, AZ
 
Meridian Bank
(623) 972-1740
13373 N. Plaza Del Rio Blvd
Peoria, AZ
 
Wells Fargo Bank
(623) 561-5248
20369 N. 59th Avenue
Glendale, AZ
 
Parkway Bank
(623) 487-1119
7581 W. Thunderbird Road
Peoria, AZ
 
College Financial Solutions Group
(888) 830-3544
20325 N. 51st Ave
Glendale, AZ
 
State Farm Insurance - Matt Woosley
(623) 412-2219
9184 W. Northern Ave
Glendale, AZ
 
Washington Mutual
(623) 376-7067
20219 N. 59th Avenue, #A-1
Glendale, AZ
 
Loan Mart Payday Loans
(520) 407-9566
5095 N La Canada Dr
Tucson, 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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