This question is a no-brainer for me; of course, my answer will be INVEST. If you read Permanentinvestor, you won’t get any other response 🙂 If you want to benefit from my advice and are curious about my story, read on.
Table of Contents
What is Student Loan Investing?
This concept is not well-known by most students who have graduated from high school. Therefore, they are faced with questions such as “Should I take out a student loan or not? Should I pay it off early if I do?” Student loan investing is essentially investing in any market by using the student loan as capital. It is an invaluable opportunity and a smart move for those who do not have capital. Your expectation is to cover your debts with your investments.
The Decision to Take Out a Student Loan
Taking out a student loan is probably one of the most important decisions of my life. Although the example I will give is entirely related to the student loan system in Turkey, as far as I know, many countries around the world provide various forms of loans or scholarships to students. Since I attended a public university, I did not have to pay any money to attend. As an engineering student, it was not easy to study and work, especially in a Middle Eastern country. Therefore, I applied for the student loan that the government provided, even if it was a small amount.
Everyone who applies for a student loan in Turkey is entitled to receive it. The system works roughly as follows: You start paying back the loan, which is taken out in monthly installments, two years after you graduate from a four-year program, also in installments. A two-year deferral and applying legal inflation rates to the repayment actually means an incredible deal that you cannot find at banks.
How Should I Use Student Loan
Most students spend their student loans on daily expenses or entertainment. Few people make an effort to save this money or turn it into an investment. Therefore, if they cannot find a job after graduation, they start life with a score of 1-0. One of my biggest blessings was that my family was sending me a monthly allowance. This allowed me to have the chance to use this debt effectively. I was buying USD or gold with the money that came in every month. As a young engineering student, I couldn’t say that I understood much about investments. However, it was clear that I would be at an advantage when I paid back the loan, regardless of what I bought, against the Turkish Lira.
I also had friends who were financially well-off but did not take out a student loan. Some did it for religious reasons, and some did it to avoid getting into debt. However, no one would give such a good loan to anyone else. The math is clear. The important thing is to be able to see these opportunities and use the incoming money wisely. When I discovered arbitrage betting and surebets in 2017, I invested the capital I had in it and quickly doubled or tripled it. I won’t go into depth about arbitrage betting; there is quite a bit of information available if you search on Google. It’s not a concept that will make you rich, but every penny counts for a university student. You never know what can happen when you work hard, earn money, and invest it.
I also took out a student loan without even thinking about it while doing my master’s degree abroad. If I had done a Ph.D., I would definitely take it out again. Not taking out a sweet loan is foolish. Today, while credit card interest rates in Turkey are around 10-15%, the official inflation rate is around 70% and in reality, might be 150%. Everyone can have their credit card statements installment plans of up to 12 months. I’m sure that while such things may not be possible in every country, you can come up with solutions based on your own country’s situation.
Can I Get a Student Loan?
Since there are over 208 countries in the world, I don’t have specific information about every country. If your country does not offer government student loans, I’m sure some banks offer low-interest loans. Just being a student should be enough to qualify for a loan. This is a big advantage. Under normal circumstances, you would not be able to access a personal loan if you are not employed.
If you live in Europe, you can take out a student loan in a lump sum and pay it back over many years. What will you do with the capital you obtain? If you buy a car or something that does not generate any income, then good luck. You have guaranteed yourself a lifetime of poverty. If you can get a student loan with a 20-year, low-interest repayment plan, the next step is to create a basket of the right stocks, Bitcoin, and bonds from high-risk countries. Depending on inflation, your investments will easily surpass your debt, and when you finish school, you will not cry like your other friends and start life ahead 1-0. You can share your own story in the comments.
Advantages of a Student Loan
One of the best things about a student loan is that there is no margin call. Of course, if you don’t repay one of your monthly installments, you will have a problem with the bank, but you can continue on your way without having to liquidate your entire portfolio due to short-term losses caused by a volatile market. You may have to sell some of your portfolios that is temporarily in the red, but if you become a long-term investor, I guarantee that you will beat the system.
You have to push the boundaries to create the capital to invest. Focus on alternative ways to earn money and make regular investments with money that is not dependent on the amount. It should not be forgotten that the purchasing power of cash will always be weak. Until the global monetary system changes, you will create financial advantages for yourself with low-interest, long-term debt.
Who is Not Suitable for a Student Loan?
Dear readers, everything I have written here is based on my own experiences and my own perspective. Therefore, your character plays a significant role in your borrowing or investment decisions. Being an investor is not for everyone. Inexperienced individuals with spending habits after taking out a student loan often experience significant difficulties during the repayment period. Know yourself well. Your entire life will be spent taking risks. We are trying to find the optimum balance between low risk and high returns. No investment is guaranteed. Investments that seem like guarantees can bring you to the brink of bankruptcy. Investments that are holding 100% cash or 100% bonds will guarantee you will be poor in the long run. It is essential to understand your risk tolerance and investment style.
As summary;
- As soon as you start university, research the student loan options in detail.
- Find low-interest offers. Find out which bank will offer the longest term.
- Find alternatives that you can start paying back 1-2 years after graduation.
- Don’t use the student loan you receive for luxury items such as clothes or cars. Invest instead. Create a balanced portfolio.
- Be patient. If you think you can’t do these things, reconsider getting a student loan.
Please do not hesitate to share your comments. I am especially curious about those who have invested in student loans. How was your story?