September 16, 2015
Don’t pay off your student loans — yet
And since student loan interest rates are usually relatively low, a borrower’s money may be put to better work elsewhere, says Dash. For example, if a borrower is paying 4% in interest on a student loan and is looking at an investment that could provide them with a 6% return, it makes more sense for them to invest that money — as long as they’re comfortable with the risk involved, he said.
Says Stephen Dash, the founder and CEO of Credible, a company in the student loan refinance business.
Why is this "borrow money to buy risk assets" story rarely told near market bottoms? It's both a mystery and a conundrum.
The CEO of Credible is incredible! He should not be refinancing student loans, he should be passing them out at maximum leverage since 6% is a guaranteed return on any old investment.
ReplyDeleteAs a Sicilian would say, inconceivable!
I need a second, third, and fourth mortgage so I can clean up on the low hanging 6% fruit dangling in my face.
Mr Slippery,
ReplyDelete6% fruit dangling in your face?
How to Invest in Bonds
Assume that Acme Corporation issues a $1,000 6% bond with a maturity date of 5 years.
1. Assume that Acme isn't non-investment grade junk.
2. Assume that you can purchase the bond without paying Wall Street a fee.
3. Assume Acme's sole customer isn't taking excessive risks when using Acme's products in futile attempts to catch roadrunners.
4. Assume that the interest keeps on coming and that you will get all of your principal back when the bond matures.
5. Assume that you don't need to pay the IRS taxes on the interest.
6%? Easy peasy with the proper assumptions!! ;)