Have you guys ever heard of this sort of thing? What would you tell him? I saw a thread over at Bogleheads of a young guy (who is apparently in the military) being offered a "career starter loan" at a ridiculously low rate. He's a student and doesn't have a job yet. This is what he asked:
I am 20 y/o and my college has a special offer for students to take out a 36k loan at a 0.75% interest. Yes, 0.75%. I plan to open a Roth and max it out but not exactly sure what to do with the rest. Is there any suggestions to where to put this much money for long term gains? Thanks
My initial thoughts are no way, don't take it. That's coming from someone who has lots of low interest loans in my name right now and I see this sort of loan as a slippery slope. Even if he invests it wisely now and comes out way ahead in the end, the risk is that he'll continue to have this mindset of "oh it's low interest debt, so it's good debt."
Funny thing is that a bunch of people are replying to him saying to "definitely" take it. Seems like a bad idea to me. Maybe if you're certain that you're someone who will never borrow money for anything else the rest of your life and you definitely only use it to put in the stock market and let it ride for 30+ years it would be smart. But, he's 20 years old. Chances are he will end up using it for something dumb like the rest of his class mates.
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