Today's Member Forum Highlight deals with paying off debt and investing:
Q: Is it wise to pay off loans before investing?
A: Technically speaking, you have to start off by analyzing the numbers – compare the interest rates you’re paying on the loans to the rates of return you can get in the investments. Whichever is higher is the better candidate for your dollars.
That said, you should always make these kinds of decisions in the context of your overall wealth plan. Make sure whichever way you go supports the end vision of that plan.
In this video, we begin taking a closer look at certain financial planning basics and other personal finance 101 topics.
Most financial advisors just focus on investment management and product sales -- after all, that's how they make money, and unfortunately, too often they're looking out for themselves first.
This is why you have to learn financial planning basics, which includes tax planning strategies and wealth planning, and be able to synthesize it all into a holistic financial planning approach.
Wealth planning involves understanding asset allocation strategies; tax planning strategies involve income and estate tax minimization.
Defensive financial planning encompasses a few key areas: financial planning basics, tax planning strategies, tax planning and management, insurance planning, and estate planning basics.
It's crucial that you examine and analyze where you stand in relation to each of these areas as you start to get serious about your financial planning efforts.
As you begin laying the foundation for your financial planning efforts (personal finance 101, as I like to call it), you need to have a clear starting point. This means you need to know your numbers: things like net income (after-tax income), net worth, your current lifestyle spending.
In this video, you'll learn how to calculate net monthly income, how to calculate your net worth, and how to analyze a balance sheet (your personal balance sheet).
Before you can develop a sound financial plan, you need to know your "why." This means understanding why you're even planning in the first place. What are you goals? What are your dreams? What and how much do you need to first achieve financial security?
Think of this process as personal finance 101.
In this video, we'll get you going on how to achieve financial security and how to start financial planning, by first determining that big question: "why?"
(We re-posted this video from our YouTube channel -- please click this link to subscribe!)
When we talk about "blocking and tackling" in terms of financial planning, we're referring to the defensive measures and mechanisms you need to have in place to have a solid foundation from which to grow.
Things like insurances, wills, estate planning, cash reserves and other topics are highly relevant to defensive planning.
Take a look at your financial foundation and check off each one of the categories you see in the attached graphic. If anything is lacking, drop us a line here and let's talk about how you can get back on track.