Wise Investment

If you need to borrow for higher education, smart borrowing for education is a wise choice.

Consider student loans needed to complete your post-secondary education as an investment in your future. A college degree in any subject will usually pay for itself, many times over during your career life. Some types of degrees more than others. The value of borrowing for any purpose should be carefully evaluated. Educational loans, especially those which are federally subsidized, have low or subsidized interest and the repayment duration of 10 years usually allows ample time to settle into a good career.

In economic terms, the advantage of borrowing as an investment in future wealth is of most benefit to those who have a long earning horizon, namely the young college graduate. Once firmly settled into a good career, with educational loans repaid, the strategy changes. At this point in life the advantage of investing changes from wise borrowing to wise lending. What is wise lending? Saving and investing to put your money to work to increase wealth is wise lending.

Whenever your earnings make it possible, plan to use some part it for savings and for investments. You may, for example, combine savings and investment in a longer term money market account. This is like a savings account, but you are restricted from taking the money out for certain period of time with the advantage that the savings will earn a higher interest and rate of return. Albert Einstein is quoted as saying " compound interest is the strongest force in the universe." There are many types of investments and this paper is not aimed at describing any investment strategy, except to stress that the return on money wisely invested over a long period of time will compound and grow into wealth that can be used later in your life when your earning horizon before retirement is short.