Stock market:
Quote:
|
The average return has been about 6 %-points above the return of long risk-free bond.
|
http://www.evanomics.com/intro/introtsld002.shtml
30-year AAA bond:
http://www.neatideas.com/interest-ra...bond-yield.htm
Historically, you'd expect about 11.58% from investing in the stock market around now.
Assuming a tax rate of 30% and student loans being non-tax-deductable, and a 5% student loan rate:
8.1% after tax return from stock market
-5% student loan
---
3.1% return
At that rate, it will take ~ 23 years for your investment's face value to double, ignoring the requirement that you repay your student loan. If you work in real dollars it will take 57.2 years for your investment to double.
Note, however, that this return rate will fluxuate significantly. Anything from -20% to +20% is reasonable in any one year.
As an aside, current inflation rate (USA) :
http://www.neatideas.com/cpi.htm
If your debt is tax deductable, it is more tempting to invest. However...
Another way of looking at it is, 3 month Tbills are at 0.8%. 5 year AAA bonds are under 4%. Paying off your debt is a guaranteed, flexable rate, investment that is giving you a better rate of return than any other "zero risk" investments you could make.
Then again, at your age it is probably that zero risk investments are a bad idea for you. =)