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I think some of y'all are missing 6% annual vs 7% in six months isn't comparable when arguing which is better. 7% per six months would be 14.49% over 12 months
We didn't miss it. It's just not relevant. How he did is not the same as how he will do.
History suggests he'll be around 7-9% annually, not 14.49% annually. 7-9% is over 6%, but it's certainly not guaranteed. What if we hit a 10-year recession starting tomorrow?
I'll take 6% guaranteed any day over something where return is not guaranteed at all.
Thank you everyone for replying. I acquired the bulk of this massive loan from medical school. But I am not an Attending yet. So, let's be realistic - I can't pay off these loans anytime soon. Right now, I need access to cash until my income increases. I can always take money out of stock market but I can't ask banks for my money back after I paid them.
I assume you have some savings in cash as an emergency fund. Given you are still in training, I would focus on making the monthly payments on your loans and saving the rest. Contribute to a Roth IRA up to the limit now since your taxes are low. If you can afford to defer more income, then contribute up the match with your institutions 403b. Take advantage of the student loan tax deduction now, because you won't get it once you're in practice.
Once you are in practice and have a larger monthly surplus, then I would start to aggressively pay down your debt. This is precisely what I did.
We didn't miss it. It's just not relevant. How he did is not the same as how he will do.
History suggests he'll be around 7-9% annually, not 14.49% annually. 7-9% is over 6%, but it's certainly not guaranteed. What if we hit a 10-year recession starting tomorrow?
I'll take 6% guaranteed any day over something where return is not guaranteed at all.
No it actually was missed by multiple people and I was simply pointing it out.
Thank you everyone for replying. I acquired the bulk of this massive loan from medical school. But I am not an Attending yet. So, let's be realistic - I can't pay off these loans anytime soon. Right now, I need access to cash until my income increases. I can always take money out of stock market but I can't ask banks for my money back after I paid them.
7% figure was for 6 months only. So, annual rate would be ~14% (more if I use compounding). But of course I am aware past performance does not reflect future. On the other hand, I won't be making rookie mistakes like investing in IPO or selling call prior to QE.
But the guaranteed 6% return looks so tempting!
Do you have a 3-6 month emergency fund? Do this first, then try to at least make IBR or interest-only payments to keep the debt from growing too much, and also put something towards retirement, even if just 5% or 10% of your income.
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