Should I pay off this debt or invest in the market?
by Mortgage Rates on Friday, September 24th, 2010 | 4 Comments
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Pay off your debts.
I wouldn’t be tempted to invest in the markets at the moment.
Don’t forget though, that most loans have early redemption charges and so it may actually work out more expensive to pay back the loans early – what you save in interest payments will not often not offset the early redemption charge.
Generally over an extended period of time stockmarkets tend to give better returns than the interest rates that you are paying, but if you want to pay off the loans by December next year, there’s a good chance the markets may have fallen further without recovering.
If you have decent lump sums it might be better to invest in a high interest savings account and withdraw funds regularly to pay off the loans. That way you accrue interest and avoid the early redemption penalties.
Pay off #3 and #5 first.
Only invest in the stock market if you have a stable job to pay your living expenses.
Pay off your debts before you start investing in the stock market.