We’re answering listener questions about gold, stock options, coupons, investing, and how to avoid student loan debt.
1. Should I invest in gold and silver? The short answer is no. It’s risky and speculative. Gold and silver prices fluctuate wildly from ridiculous highs to tremendous lows. To make money this way you would have to time the market and we’ve discussed before that it is inadvisable to do so.
2. Should I buy company stock at a 15% discount or continue with Betterment? This question was detailed but at the end of the day, the company was getting a year long loan and the money was not accessible. It’s also the problem of too many eggs in one basket. Having your income and investments coming from the same place is risky. Continue putting the money into Betterment.
3. Are coupons worth your time? Coupons are to get you into the store knowing that once you’re there, you’ll buy more than what you came in for. If you have a lot of self control and are using the coupon to buy something you normally buy, than they can be a good thing.
4. I have an $8000 loan with 3.45% interest. Should I pay it off before investing or invest and make a lower monthly loan payment? Andrew calculated this out. If you put $1000 into investing every year for eight years and got a return of 7%, you would make $410.90 more than if you did the same with the $1000 by buying off the loan. But that was on paper and actual life is variable so you can’t count on 7%. Also, the interest rate on this loan is very low. So in a vacuum, you would invest the money rather than pay down the loan but in the real world, pay off the loan before investing.
5. How do I avoid going deep into debt during my two year graduate program? If you have to take out loans, take out federal loans over private when possible. The interest rate is lower and there are programs for debt forgiveness for federal loans. Put any savings into an investment account. The day you graduate, pull it out and pay on your loans. They don’t accrue interest while in school. Even if your program is full time, find a few hours a week for a side hustle. An Uber driver sets their own hours and has clients seek them out. Take everything you just learned in class and create a blog or a Youtube video. It’s tutoring but to a potentially huge audience. I’ve added our student loan episodes to the show notes.
Thanks guys, we love these episodes so keep sending in your questions.
LMM Episode 32: Adam Carrol educates us about student loans.
LMM Episode 70: Student loan expert Heather Jarvis talks about student loan repayment and forgiveness programs.
Smart Passive Income: Pat Flynn’s site that teaches ways to make passive income.
Betterment: The easy to use investment tool. Use this link and get six months free.