Can you invest while paying off your student loan? Or should you clear your loan first before investing?

Hi Anon,

I would suggest repaying your tuition fee loan first before delving into investing.

For a couple of reasons. Firstly, we should only invest money that we can afford to lose, we wouldn't want to end up with unnecessary debt, especially as a fresh grad. Secondly, while the interest on your student loan is guaranteed while returns on your investments are not, and the form is pretty hefty.

Let me redirect you to a couple of other community questions in the event they resonate with your situation as well:

• Should I invest my 30K or should I use it to repay my tuition fee bank loan in one lump sum?

• Been wanting to start investing in robos but need the money to repay student loan in Jun 2021... Any thoughts on whether I should start since my investment horizon now might be pretty short...?

• Just wondering, is there anyone out there who's like me, investing without having an emergency fund set aside? Is it really that dangerous? I'm only investing in robos now though?

Hope this helps! 🙌​​​

Hi anon,

I did both at the same time. But if we are talking about priorities, then you should try and repay back your loan asap since your loan interest is guaranteed for now while your investment returns are not. And its also a matter of allocation. Will I allocate all the money i have to invest and not pay off my loan? Unlikely. So it is possible to do both at the same time. Just be watchful of your investment strategy. If you have a monthly allocation of paying off your loan, you can do a dollar cost strategy in an index fund for better cost-effective diversification instead of hitting hard on individual shares.

Financial planning is an integral part of life. You can reach me here to find out more.​​​

My student loan was going to start at 4.75% p.a. so I proceeded to get rid of it immediately. Between guaranteed 4.75% p.a. and unguaranteed investment returns (I'm an amateur), I am more confident about dealing with the former first.

You have to check out interest of your student loan and depends on how much income you get per month.

If you are able to take risk and interest is low, with steady income, some people do abitrage. Do make sure you have 6 months of expenses including loan payments in liquid forms and you can sleep soundly no matter which you option you choose