| Pay off student loan vs. saving or investing? |
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soybean
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Very good advice here about letting the 2.75% student loan run its course instead of paying it off early. However, I think the following is probably unrealistic in today's economy.
quote:
Originally posted by oldguy
Put the $8000 out at 11%/yr in long term products ...
Take a look the 5 year and 10 year columns shown at https://personal.vanguard.com:443/us/FundsByName. The returns there are far below 11%. With all the continuing turmoil in the U.S. and world economy, I think expecting to earn 11% from a fund may be unrealistic. But, the key point here is that you proabaly can find better return, whatever or wherever it is, on your money than aggressively paying off the student loan.
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Fri Jul 22, 2011 3:54 pm |
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coaster
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Sorry, the link you posted does not work for anyone else since it's https -- perhaps you were logged into your account at the time? If you can generate another link of the same information but http instead, please edit your post and insert the good link. Thanks..... 
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Fri Jul 22, 2011 5:14 pm |
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oldguy
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quote:
The returns there are far below 11%. With all the continuing turmoil in the U.S. and world economy, I think expecting to earn 11% from a fund may be unrealistic.
I wasn't talking about shortterm trades - the successes of the past purchased steadily and incrementally over a 30 or 40 yr period. As of the end of June, the 30-yr market index was 10.8%/yr.
But, you're right, every generation has been faced with that "turmoil" question - will MY 30-yr-block give me the historic return? And the ever present disclaimer - 'past performance is not an indicator of future performance'.
When I was young we went thru a 16 yr zero gain (1965 to 1981), the Jimmy Carter Depression, the 1987 Crash where the market fell about 30% in one day, the 1980's real estate bubble, and so forth. Yet with all of that plus a few wars averaged in, we still got the 11%/yr average for each 30 yr block.
So, while it may not happen over the next 30 yrs, I surely wouldn't want to bet against it. Maybe you will fail and only get 8%/yr? That's not exactly a wasted career - sure beats sitting in a 2% CD and waiting for the market to recover".
BTW, think about how dumb that phrase sounds - 'wait for the market to recover so that I can get back in' - isn't that the very definition of "buy high"?
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Fri Jul 22, 2011 5:16 pm |
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oldguy
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This is the first fund on that table of 443 - it's one that I use, 10.64%/yr since 1976. And near the bottom of the list is that old-time favorite, the Windsor Fund. It has returned 11.28%/yr for the past 53 years, ie, $10k invested in 1958 is now $2,880,000. (Unfortunately, I was still in college in 1958 - and I didn't even know what $10k looked like, LOL).
Fund - - - - - - - 1 Year 5 Year 10 Year SinceInception
500 Index VFINX - - 30.51% 2.86% 2.62% 10.64% 08/31/1976
Windsor - - - - - - 30.12% 1.05% 3.31% 11.28% 10/23/1958
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Fri Jul 22, 2011 5:37 pm |
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moneym8kr
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There have been a lot of good answers already. Personally, i HATE all kids of debt, and i'll do anything to get rid of it. It ways on my mind.
Prayers for money
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Fri Jul 22, 2011 8:28 pm |
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oldguy
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quote:
Prayer for Money to Relieve Debt
LOL - You pray for money to get out of debt?? Seems to me that hits on at least 4 of the 7 Cardinal Sins - ie, greed, sloth, gluttony, envy. First you want things that you haven't earned yet & can't afford - so you borrow from your neighbors against your future earnings (gluttony, greed, envy). And then complain about having to repay (sloth)?
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Sat Jul 23, 2011 4:35 pm |
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coaster
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 good one .... I was trying to come up with something, too, but I can't beat that.
If I remember right the Apostle Paul was told "my grace is sufficient for you" when he was having a rough time, not "OK, here's a few more denarii ......"
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Sun Jul 24, 2011 5:30 pm |
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oldguy
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Thanks. 
Coincidently, in Church this morning, the 'reading' was - "The Lord said to Solomon - because you have asked for this - not for a long life for yourself, nor for riches, nor for the death of your enemies, but for understanding & wisdom - I do as you requested."
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Sun Jul 24, 2011 8:15 pm |
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