I've been thinking long and hard about whether to pay off my student loans with the smaller interest rates as quickly as possible or just pay the minimums and start investing.
After reading bunch of articles examining that topic, almost all came out saying you should invest and just pay the minimums on the lower interest debt, and the main reason is because they said the expected returns from the stock market are around 7-9%(ish).
But in the debt-payoff-first scenario, I'd be wiping out my debt in two years. It would take several more years if I were to just pay the minimums and put the extra money toward investing instead.
Given that short time frame, it doesn't seem relevant to be comparing the long-term returns of the stock market to the amount of interest I'm paying. In two years it seems impossible to estimate the returns given the volatility of the stock market.
Or, since I'd be leaving the money in the stock market until retirement, would that make it the better choice?
And this is a separate (but related) issue, but since bonds seem to return roughly the same or lower than my student loans (around 3.5% to 4.5%), if I'm going to be using that extra money to invest it shouldn't be in bonds, correct? That seems obvious but I've only heard you should invest in both stocks and bonds for diversification purposes.