best investment for a student loan

mchughjcf

i didnt have to use my student loan so i have around £3200 in put somewhere. what should i do with it??

is it worth putting anywhere or should i just head down to the pub.

its worth putting in premium bonds

i have no idea

any ideas welcome

thanks

james

ps i wont need to use the money this year at all so and will be having another
£3200 this year from the loans company

Chrismaths

If you don't want any risk, stick it in a mini cash ISA - you can put in £3,000 per year, and the interest in it is tax-free. If you want to save it longer term, then taking on some risk can lead to increased returns. Check Martin's savings articles.

cheggers

Just pay off the student loan is my advise, if you don't need the loan dont take it out to try and make a few quid more interest elsewhere.

Sillychuckie

I disagree.
Take the loan out... you'll pay 2% (ish) on it, but putting the money into a mini cash ISA will get you 5% (ish). Net gain: 3% (ish).
There are better ways of making more from the money interest wise (regular savers, paying 10%), but the best thing you could do (financially wise) is to take the maximum loan out and put it in a mini-cash ISA.
Pay the loan back as slowly as possible whilst you work throughout your life.
Provided you leave the loan funds in the ISA untouched, it will always be making you a marginal profit (provided ISA AER > loan repayment AER, which i'm sure it will, or they'd scrap the loans).

Don't let the fact you are (most probably) not a tax payer now put you off the ISA route. It is about building your tax free portfolio now, to reap the benefits in the future.

Note: Obviously rates and AER's vary, take my 'ish' usage with a pinch of salt. As a general rule though, you can be pretty certain that you'd get more in a savings account than you would have to pay on loan repayments.
Happy saving.

Chrismaths

Student loans are priced off RPI (inflation). So long as we have real interest rates, then you will be quids (or pence) in. And if inflation outstrips interest rates, you can always pay it off. No risk no brainer really.

Snich

Just wanted to point out that current interest is 3.2% on student loan. Therefore an ISA will do the job quite nicely as no tax issues and can earn about 5%. That's the easiest way. However, I would calculate how much you actually earn doing this to see if it's worth the bother...

ie over 1 year, will pay 96 pounds in interest approx on 3000, but will earn 156 interest. Therefore, profit 50pounds. Obviously increases as time goes on. Depending on how much faff you want, if you don't pay tax a regular saver will add a bit more to that pot.

My only reservation is that every single person I know who tried to do this, ended up spending some most or all of the money... Cheaper than alternative loans for if you need to buy a car though so probably still worth it.
Good luck!

littlemissmoney

Put in an ISA and make sure you don't spend any of it. This is what I did. The difference in interest you pay and receive isn't that great *however* you end up with about £12K that you can put towards a deposit on a house and pay back really slowly at a very low interest. It's the cheapest loan you will ever be offered, so take it now and make money on it whilst you are waiting until you need it!

zag2me

My friend did this but she said it wasnt worth it in the end for the 1-2% gain she recieved.

The only reason I can think of doing it is to get a bigger mortgage when you leave uni, as many providers dont take the student loans into account.

Personally I would rather have as little debt as possible when I left uni.

cheggers

There must be better ways to earn £50 (the small amount of interest you will earn for your trouble) like getting a part time job!!!