Should I invest or pay off my debt?

I have around $35,000 in mutual funds, but more than twice that in student loans. Should I use my mutual funds to pay down my loan or should I keep my funds as investments and grow them?

Debt, Investing, Mutual Funds
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November 2017

The mathematically right answer to this question is to keep your mutual funds for as long as they produce returns that exceed the rate of interest on your loans, or pay off the loans if the rate is higher.  But the best answer is to keep your mutual funds anyway, because (1) You could suddenly lose your job and need funds to live on; (2) you might want to move up in the world and buy something like a house or new car; (3) you or a family might have an emergency that requires cash; etc. If the return on your funds is lower than your loan interest rate then so what?  It costs you a couple of percent a year to have flexibility, a financial cushion.

Assuming you have a steady job, you can make student loan payments regularly and after some years be done with them (or pay them off when your investments are a lot bigger than they are today).  Good luck.

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