Should I invest or save up to clear my student loan debt?

I am currently in year 3 of university. Should I begin investing in blue chips in small amounts like $100/month or should I save these money to pay back my student loan. My student loans are interest free so clearing my debt as soon as possible is not an issue.

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This post is no longer accepting new comments because it has been merged with I just started working and I am left with $29k student loan but my savings is only at $2k. Can I get some advice on which should I prioritise? Should I save more or invest or settle the debt first?

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Pang Zhe Liang

13 Dec 2019

Fee-Based Financial Advisory Manager at Financial Alliance Pte Ltd (IFA Firm)

Assuming that you are using the local university student loan from OCBC, it is interest free during your course of study. Upon graduation, you will have up to 5 years to clear the loan without interest. Otherwise, the interest will be 4.5% per annum (subject to change based on prevailing rate).

Now, you have to decide if you are able to invest and earn the entire school fee beofre the end of 5 years upon graduation. Otherwise just pay off the loan and earn 4.5% return immediately.

By clearing your loan, you earn a guaranteed return of 4.5% while your investment return is not guaranteed. This is a choice that you will have to understand and choose wisely.

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