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https://www.sofi.com/resource-center/investing/should-i-invest-if-i-still-have-student-loan-debt-a-planner-weighs-in/?utm_campaign=WEALTH_BalancingDebt_Part1_11132017&utm_source=EXP&utm_medium=EMAIL&cid=17247&mid=262195839
Some interesting and surprising points being covered here:
- recommending leverage at a student loan interest rate of 3.5%. Now, SoFi actually stands to profit from letting more interest accrue on the money they're owed, so while this is something I would have an individual consider were I planning their overall finance situation...but I do think that could be a bit of a conflict of interest.
- this point about doing a house fund before an IRA on top of a matched 401(k): "First, a house is often one of the the only assets on your balance sheet from which you get utility. In other words, it’s the only thing you can use now! Second, in the current housing market, the return on a home is likely higher than the interest rate on your student loan." ...I have issues with considering a primary residence to be an investment asset *and* with expecting a return on it in a housing market. I think home ownership is being put on a bit of a pedestal here. The also call it a "tax benefit," which I also very much dislike since spending money on mortgage interest is still spending money, just spending slightly less money.
- "If it’s going to take you more than three years to save for a house, consider putting your money in an investing account and give it the best chance of growing. SoFi Wealth is a great option for first time home-buyers who are looking to invest their way toward a down payment." Come on. This is an ad all the way. Three years is too short a time horizon to take that much risk in an equity-heavy portfolio.
While I do generally agree with this sort of leverage, I think this is way more of a way to get them more interest income and let them manage your funds for money than it is a piece of financial advice and education...but, then again, salesmen masquerade as teachers all the time.
Some interesting and surprising points being covered here:
- recommending leverage at a student loan interest rate of 3.5%. Now, SoFi actually stands to profit from letting more interest accrue on the money they're owed, so while this is something I would have an individual consider were I planning their overall finance situation...but I do think that could be a bit of a conflict of interest.
- this point about doing a house fund before an IRA on top of a matched 401(k): "First, a house is often one of the the only assets on your balance sheet from which you get utility. In other words, it’s the only thing you can use now! Second, in the current housing market, the return on a home is likely higher than the interest rate on your student loan." ...I have issues with considering a primary residence to be an investment asset *and* with expecting a return on it in a housing market. I think home ownership is being put on a bit of a pedestal here. The also call it a "tax benefit," which I also very much dislike since spending money on mortgage interest is still spending money, just spending slightly less money.
- "If it’s going to take you more than three years to save for a house, consider putting your money in an investing account and give it the best chance of growing. SoFi Wealth is a great option for first time home-buyers who are looking to invest their way toward a down payment." Come on. This is an ad all the way. Three years is too short a time horizon to take that much risk in an equity-heavy portfolio.
While I do generally agree with this sort of leverage, I think this is way more of a way to get them more interest income and let them manage your funds for money than it is a piece of financial advice and education...but, then again, salesmen masquerade as teachers all the time.
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