Edited 16d ago
Currently an undergrad, was thinking if I should put $30k into Endowus' new Ultra Defensive Portfolio (100% bonds) assuming that I will need these funds to pay off my tuition fees in 3 years' time?
Or am I better off leaving the money which guarantees 2% p.a? I took up the interest-free tuition loan since it's interest-free, let my money work harder to get some free cash (interest), and pay off the tuition fee loan fully upon graduation before the interest kicks in
Hi Anon, broadly in finance 101, it's a function of: ability & willingness to take risk, liquidity needs, time horizon. Given the short span of time (3yrs), purpose of funds is (at least for me) the very important need to fund education expenses, it may be wise to go for a high-yielding savings account instead. Even an ultra-defensive bond portfolio is subject to market risk (e.g. interest rate risk) and last thing you want is to erode principal and face a shortfall paying off your tuition bill.
Investing is for the long term. 3 yrs is kinda short to see the benefits of investing.
The rule of thumb is to not invest money that you need to use in the next 5 to 10 years.
I suggest to keep your 30k in cold hard cash. Consider repaying your loans early too, so you can start saving and investing
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