Should I invest or pay off my loans?

Should I invest or pay off my loans?

Well, the answer is ” it really depends!”

It really depends on your risk tolerance, your student loan amount and interest rate, your investment philosophy and your long term goals!

However, here are important points to help you decide if you should pay off your student loans first before investing.

  • Most doctors have six figure debt with high interest rate associated with them where they might have to take more than 5 years to pay them off. By not investing for 5 years, you could be missing out on the amazing benefits of compound interest.
  • You do not need a lot of money to invest. You can start investing in the stock market, crowdfunding, peer lending, real estate, etc. with very low money down. Some platforms let you start investing for $ 50, others for as low as $ 25! Just do your research.
  • It’s ok to pay off your loans and invest at the same time as long as you are not going deeper in debt to invest, understand what you are investing in and the risk associated with that investment, and your student loans are not making you anxious or keeping you up at night.
  • The sooner you start investing, the better. It’s all about the power of compound interest!
  • Investing always involves some degree of risk. Always do your research!

If your student loans are keeping you up at night or you are uncertain about investing, you might want to focus on paying off your student loans quickly.  As Mark Cuban once stated regarding high interest student loans “if you pay off that loan, you’re making 7%…and so that’s your immediate return, which is a lot safer than trying to pick a stock or trying to pick real estate or whatever it may be.” 

Disclaimer: The post is for informational and educational purposes only.  Please consult your financial adviser for appropriate financial advice. 

Caroline Clerisme, DMD

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