If that’s a major goal for you, you’ll have to pay more than the minimum amortizations to pay off your loans quickly. Some people would rather be debt-free before building a nest egg. Consider investing your money if you anticipate earning more than 6 percent Generally, if you were able to get an interest rate that’s lower than 6% on your student loan, your debt isn’t costing you too much. If the reverse is true, then you can consider investing your money. If your student loan interest rate is higher than what you’re expecting to receive from investments, prioritize repaying your debt since it’s costing you more. What Are Your Student Loan Interest Rates?Ĭompare your student loan interest rate with your potential investment returns. When deciding between repaying your student loan and investing, there are five things you should consider. Here’s a rundown of everything you need to know and consider before making a choice.Ī sound practice is to portion your budget into three categories: investment, debt repayment, and an emergency fund.Īs a fresh graduate, you won’t have a large nest egg yet and it’s unwise to funnel all your money into one category. What should you do? We suggest taking strategic decisions.
After all, there are no surefire investments and it is possible to lose your capital. There’s no telling what might happen in the market. However, investing can also be pretty tricky. If you do your research right, you can expect returns that are far higher than your student loan interest rate. Generally, investing is considered a better option. When you get a job after years of hitting the books at college, it's natural to find yourself torn between two choices: do you pay off student loans you’ve accumulated over the years or invest the disposable income from your new job? Paying Off Student Loans Or Investing: What Should You Do?
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