Bad Economic Advice

Dave thinks the advice Brett's economics teacher gave him is STUPID! Invest the refund in paying down the student loan.

QUESTION: Brett is a college senior who just got a $2,300 refund on his $7,000 loan from his university. His economics teacher told him to invest it and let it grow. Does Dave agree? Dave absolutely does not.

ANSWER: That’s stupid advice. Unless you leave the invested money alone at least five years, then you shouldn’t put the money in the stock market. It’s too volatile for a five-year period. Apply this money directly to the student loan now. Send it back to the student loan people and tell them to apply it to the principal balance.