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INTELLIGENT
INVESTING:
Pay
off High Interest Debt before Investing
Before you get
too excited about the prospect of investing and watching your money
grow, you must evaluate your personal financial situation. First
and foremost, get your priorities in order and pay off all of your
high-interest debt such as credit card debt. The benefits
of debt reduction are likely to exceed any guaranteed investment return,
especially after taxes are taken into consideration. A dollar of
debt can rapidly become hundreds of dollars of debt due to the power
of compounding, a concept which can also be responsible for sizeable
investment gains.
Pay
Yourself First
The high cost of
dental education, along with living expenses, probably has many of you
thinking that investing is impossible at this time in your life.
In some cases this will undoubtedly be true, but don't let this popular
misconception lead to regrets later in life. People's reluctance
or inability to set aside money to invest has spawned a simple concept
referred to as "Paying Yourself First". When you sit
down each month to pay your rent, gas, electric, cable, and credit card
bills, add this additional item to the list. If you treat
investing in your future in this manner, it will hopefully become an
automatic element of your personal financial management. In
addition, this theory also encourages investing at regular intervals, an
important concept often referred to as dollar cost
averaging.
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Copyright © 1999 University at Buffalo
School of Dental Medicine
Last modified: August 16, 1999
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