Why You Should Invest, Even When You’re Paying Down Debt

Don't let debt stop you from saving for the future.

It’s an unpopular opinion for sure, but I think you should start investing even if you have debt. Many personal finance experts will preach that you need to attack your debt with every dollar you have so that you pay as little interest as possible. That’s fair. I’m all for minimizing your interest costs, but I also think it’s important to build up a small nest egg of investments while you are crushing your debt.

Focusing on paying down your debt is a good thing. However, once it’s all said and done, if you’ve thrown every dollar you’ve ever made at your debt and you become debt-free, you’re still broke. So, no, you don’t owe anything, but you also don’t have a dollar to your name.

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While mathematically it might make more sense to focus solely on paying down your debt, building up a small investment portfolio is important for a few reasons. First, it enforces the habit of saving. Second, it allows you to get comfortable with the risk in the stock market, the idea of ups and downs and the understanding of long-term growth. Third, it leaves you with money in the end, as opposed to nothing — like when you only focus on debt pay off.

Starting with as little as $50 per month or per paycheck can mean thousands of dollars to your name by the time you’ve wiped out your debt balance. And, it’s OK to start small and increase the contributions to your investment account as your debt shrinks.

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I find that many people — millennials, in particular — are scared of losing money when it comes to investing. However, when you’re investing for 20, 30, even 40 years, you can take some risk. Your investment will recover. So, starting to invest as soon as you possibly can — even if you have debt — means you’ll weather the market storm better than anyone.

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