facebookI am a fresh grad and just got a job. Should I pay off my CPF education loan first or start investing? - Seedly



09 Mar 2020


I am a fresh grad and just got a job. Should I pay off my CPF education loan first or start investing?

My take home pay is about 2.2K and I have roughly 22k of CPF Education Loan debt. I have literally 0 knowledge on investment, just trying to learn here and there bit by bit. How should I partition my pay to maximise whatever I have/ clear my debt?

Discussion (13)

What are your thoughts?

Personally I will clear off the debt first if the interest is more than 3%, just my personal guidelines. If the interest is less than 3%, there is high chance you can make more than 3% return from investing. Otherwise, clearing off the debt could be a better options.

In this order:

1 pay down any debt as rapidly as possible

2 build emergency fund

3 invest with buy & hold strategy into passive indexing ETFs and a small part into physical gold

Don't forget to protect yourself and your family, but do so with minimal cashflow stress - for example, it is possible to get $1 million of coverage for only $312 a year (= $26 a month). See https://thelobang.com/index.php/2019/08/27/insu...

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Victor Lye

Victor Lye

01 Sep 2019

Level 6·Founder & CEO at SquirrelSave

First, do your budget for at least the next 5 years. Make sure you do not overspend and can generate a surplus each year.

Second, use the surplus and decide the proportion to pay down debt, invest and build an emergency fund.

I recommend building an emergency fund of 3X to 6X your monthly salary. Once you achieve that, consider your investment risk profile. If your potential return based on your risk profile is significantly greater than the loan rate, you can invest, especially if you are young. If not, pay down the debt.

All the best!

Vincent Tan Wen Bin

Vincent Tan Wen Bin

16 Jul 2019

Level 7·Assistant Vice President at Thinkers Alliance

Save 20% of your income and set aside 10% for your investment and 10% for clearing off your debt. In...

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