Taking a Holistic View of Your Investment Strategies - Part I

One aspect of the investment strategies is paying off your debt.  Investing does not narrowly mean one must buy mutual funds or stocks.  If your credit card debt is costing you 15% of interest a year, pay off the credit card debt first.  You'll be saving 15% or more a year.  That's investing, investing for your future to be debt free.


If you are one of the lucky few who get the 0% balance transfer offers with a 2% to 4% fees, utilize them to minimize the interest expenses and pay off your debt.  One thing to keep in mind:  keep your revolving debt below 10% of your total credit limit.  Otherwise, it is going to hurt your credit score big time.

There are also a few other things to consider in addition to paying off your debt and investing in your 401(k):

Your income is your most important wealth-building tool. As long as it’s tied up in monthly debt payments, you can’t build wealth. And if you begin investing before you’ve built up your emergency fund, you’ll end up tapping your retirement investments when an emergency comes along.

If you’re still on Baby Steps 1-3, be patient. Put off investing for now. After all, avoiding a financial crisis with a fully funded emergency fund and paying off debt is a fantastic investment!
  1. Set aside at least $1,000 for an emergency fund.  This seems to be a lot of money.  Indeed, it is.  Start your saving with $50 per check.  There are 26 pay checks a year.  Before you know it, you'll have $1,300 in your bank after a year.  
  2. Keep saving that $50 per check for your emergency fund until you think you have enough money to survive in case you get laid off and you need to live off it for at least 3 months.  It does take that long to find a new job.  3 months is just the minimum.
  3. Invest as much as you can in 401(k) or Roth IRA.  Preferably, invest the minimum that your company will match 100% because your company's 100% match is free money.  You gain 100% guaranteed.  Take the absolute advantage of that.
Next, we'll talk about the investment vehicles.




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