For full disclosure I am a Scientist not a business person and I don’t really know many of the proper terms.
I have around $180,000 in student loans remaining after 5 years of minimum payments. $80,000 government and $100,000 in private loans.
I consolidated the private loans at 6.2% fixed. The government loans are around 5.3%. I’ve been out of school working a few years. I never worried about them too much and paid the minimum because I knew eventually I would get a bonus like I did this year and I would then just pay off my loans that way.
The year end bonus I received this year could pay off about 40% of my student loan debt. I live a pretty simple life and have enough savings that I can put the entire bonus towards the loans or investments.
I manage my own Investments, the past 3 years my return has been between 8%-10% and with all the extra time at home to learn, I have gained a much better understanding than I’ve had the past 3 years.
In theory it makes sense to just put a majority of the bonus in my IRA. I theoretically should net at least 2% more than if I put it all towards the loans.
I also am hesitant to put it all towards the loans because theoretically as my career progresses I should be compensated more. Does it makes sense to just stay the course and wait until I feel comfortable enough to just pay it all off. ( In a few years let’s say I owe $50,000 and have a higher salary.)
Sorry if this is confusing, but any advice would be appreciated.
I have had this mindset since I was 18 that when the day comes I have the ability to pay off my student loans I will and now that it’s here I am second guessing.
Thank you in advance
Edit: Since a few have asked my risk tolerance is very high. I have reached a point in my career where my bonuses will regularly be around what they were this year for next 20 or so years I am working.
Submitted January 09, 2021 at 12:24AM by OhhMelvin https://ift.tt/2XrJJrT
