Last Payment on Student Loans!

[namethatsmell]

If one were to use math to answer this question, the correct answer is that he should invest that money in any asset which has generally been shown to return over 3.85% less taxes and fees. The answers are probably:
1. Max out pretax 401k or equivalent
2. Max out Roth IRA
3. Invest in a combination of low cost mutual / index funds

In my first post I recommended max'ing out the 401k and roth, so I think we're on the same page there.

Show me an investment that's assured to get a 4% ROI. Who knows what's ahead for the market? Sure, things recovered quickly after 2008, but who can say we aren't approaching some prolonged doldrums? If you started investing in the market in 1965 you likely saw zero gain until the 80s. Over time I agree the market genearlly goes up but it's always a questions of what timeframe you're looking at.

There are other combinations of more complex things that can be done, including real estate investment and individual equities, which in general are not beneficial to the average investor as it tends to require more time and is difficult to do well.

There is also another big advantage when one elects this approach rather than paying a loan down early: liquidity.

I agree with the benefits of liquidity. While paying off my loans I kept some cash on hand in an ally 1% account and because I was fresh out of residency and could still live fairly frugally I didn't need that much. If/when your lifestyle jumps over time you'll need more liquity.

But hey, to each their own. And I freely admit there's some "non-math" factors playing into my opinion on paying off student loans.

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