Investing Tips

Expert Advice from Joe Prokop, CFP, CRPC
Certified Financial Planner
Client CFO & Fiduciary
On Target Financial

I AM GETTING A TAX REFUND. SHOULD I PAY DOWN DEBT OR INVEST IT?

The main consideration is what interest rates are you paying on your debt and what rates can you realistically expect to earn on your investments.

There are good debts and bad debts. Owing money on something of value can be good debt. Credit cards and personal loans are considered bad debt. If your debt is on high interest credit cards or personal loans, then I would suggest paying down those debts before investing. If you think your investments can return you more than what you are paying in interest on your debts, then I would be inclined to invest my money.

Example: paying down your mortgage versus investing. With today’s mortgage rates being extremely low, I am confident I could invest my money long-term and earn more than what I was paying in interest on my home mortgage.

Investments and investing generate needed income for the future. What good is a paid off your home if you need money to live and do not have it? Each person’s financial circumstances are different, seeking the help of an expert to determine what is best for you is highly advised.

WHAT INVESTMENT OPTIONS SHOULD I CONSIDER BEYOND STOCKS AND BONDS?

Today there are many more investment types than ever before. Many of them can be complex in nature and often create confusion and disappointment. I prefer to keep things quite simple when it comes to investments. I want my clients to know and understand what they are invested in.

Here are a few alternatives to consider: Real Estate, Commodities, Cryptocurrencies, Derivatives, Interval Funds. While this is not an end all list, it covers most alternatives to stocks and bonds. Before investing in any of these types of investments be sure you know the facts and risks associated. Each person’s situation is different from the next. Because your friend or neighbor has done something does not make it right for you.

ARE INVESTING APPS SUCH AS STASH A GOOD IDEA?

Today’s generation of investors are different, due largely to the advancements in technology. People are more trusting of technology than ever before. New investors do not generally start off with a large stockpile of money and may feel like a financial advisor is not needed. For this reason, many new investors are do-it-yourselfers, and these tools can be good starting points. They can create good investing habits that take things off their plate of daily living, but what they lack is the ability to connect with someone personally.

Technology is not going to be able to help walk you through a tough life decision. It is not going to fully understand your situation. It removes the personal touch and interaction of human nature. While the generation today is do-it-yourself, there is still the need for local expert advice. Confirmation and personal guidance you are taking the right steps for your own situation is what technology misses. There is nothing wrong with using these types of platforms, but make sure you understand what you are getting and what you are not going to be getting.

Investment advisory services offered through Cambridge Investment Research Advisors, Joseph Prokop, Investment Adviser Representative. Cambridge Investment Research Advisors, and On Target Financial are not affiliated.