How do I Balance Paying Off Student Loans and Investing?

Did you know that over 43 million Americans are carrying student loan debt? Should student loans become an issue when you would also like to invest? Let me tell you that having student loan debt doesn’t mean you aren’t qualified to also invest!

Think about the Compound Interest

Working out how much debt you have and its interest will give you a clearer picture of whether you should invest or put your money towards paying your loans. But even if you decide that you might pay less interest on your student loans if you pay them faster, you might lose the opportunity of the compound interest attached to the stock market on the other side. Therefore, although that paying off your student loans seems like a good idea, you’d earn less over time by not investing in the stock market. 

Have an Emergency Fund

Before you decide, either way, you need to make sure you have an emergency fund in place, to secure your future no matter what. An emergency fund should be between 3 to 6 months’ worth of your regular wages.

Win-Win Scenario

And if you consider taking my advice and do both, depending on the amount of cash you’ve got left at the end of the month, you should split it in two and allocate it towards paying off student loans and also investing, in order to benefit from the compound interest!

This way you can benefit from both worlds, and while getting out of debt, you are also creating a stable financial ground for your future. Isn’t that a WIN-WIN situation?!