Pay off debt or invest my money: What is the right way to go?
"Should we pay off our debt, or invest the money we have accumulated?"
This is a question we often get from doctors. It is an interesting question, because there are a couple of opinions about what the right thing to do is. There is never a cookie-cutter answer.
Theories about balancing investments with debt vary widely. Some financial experts say freedom from debt is the most important goal. Others say it is more about the math.
Money should be allotted toward investing if the investments earn a higher rate of return than what debts cost. Still, other financial planners focus on the emotional aspect: How comfortable are you with a certain level of debt? There are doctors who are so relieved at having no debt that the actual comparison calculations became irrelevant.
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The right plan of action is to use a balanced approach to wealth management. Doctors should manage finances for both present and future needs. That means paying off some debt today, while simultaneously investing with an eye on the future.
Although decisions should take into account one's own needs and circumstances, consider the following guidelines for handling debt in light of investment goals.
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