Investing student loans into an Index Fund
I am a home UK student. My fees will be 9000 + whatever it costs to live (I'm projecting 7000 at a max - I have shared accommodation for 5k (meals included) on a 31 week contract with £500 assigned to extra food and £1500 for fun. Let's assume £16000. I will be given a maintenance + tuition fee loan of £18000, giving me £2000 spare per year. I also have £20k+ in savings from working during a gap-year, and the ability to work alongside my degree earning decent cheddar (plus the possibility of paid internships, summer jobs etc) and if I'm lucky some family support.
I already have £10,000 of my savings invested in a S&P500 tracking index fund, and am planning to add from my savings/earnings incrementally through DCA throughout my time studying. Would it be dumb to invest this extra £2000 (aka any 'spare' money) loan money per year into said fund?
I feel like the fact that student loans are paid pre-tax means it is wise to just let them run for as long as possible. Added to this is the fact that the plan I would be on would increase only by the RPI amount - meaning the fund would just need to outperform inflation. In addition to this (at risk of sounding like a dick), I am going to a target, and therefore may be more likely to get a well-compensated role, offsetting any potential risk.
What are your thoughts?
- Use an ISA wrapped account to make it tax free.
- Don't forget that index trackers can also go down, not just up.
If you had invested the money late 2021, you'd have lost a lot until the recent market rally.
Rule of thumb is to never invest/gamble money you would need for something else, like food, rent, tuition, insurances, ..
Eveniet saepe sit debitis pariatur qui asperiores. Molestiae reprehenderit iure id voluptatem consequatur consequatur. Sed qui ab harum ducimus ut quaerat.
Eius facilis sit in distinctio. Optio ea molestias rerum et. Repudiandae dolorem qui sunt laboriosam error qui ut.
Consequuntur deleniti consequatur voluptas quo. Quisquam cupiditate qui asperiores.
Qui ut accusantium voluptas dicta. Quas sunt eligendi quia vero. Amet cumque eius animi eum accusantium optio. Qui rerum assumenda et quos. Dolorem id et maiores fuga soluta sunt corporis. Rerum sit voluptatem debitis eius et accusamus sit quos.
See All Comments - 100% Free
WSO depends on everyone being able to pitch in when they know something. Unlock with your email and get bonus: 6 financial modeling lessons free ($199 value)
or Unlock with your social account...