Student Loan Series #11: Should You Invest in the Stock Market or Go to College?

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What if your family has money for you to attend college but instead of paying for school they invest it in the S&P? You'd be surprised by the returns we uncover in this episode.

What if your family has money for you to attend college but instead of paying for school they invest it in the S&P? You'd be surprised by the returns we uncover in this episode.

In this episode:

  • The perspective of saving the family money [1:00]

  • Investments as an option instead of going to school have an average return rate of 9.8% in the S&P [2:00]

  • What if you just invested that 120K into the market instead of sending your kid to school?  [2:00]

  • 2.9 Milllion after taxes when they are 65 instead of paying for school right now with family money [5:00]

  • Lifetime additional 600K of earnings w/college also means the kid has to work whereas the 2.9 is free. [8:00]

  • 420K additional earnings after taxes - math of lifetime earnings does not equate to what you’d get back if you invested it right now [11:30]

  • Wealth left on the table to hire more administrators, facilities etc. Universities need to correct this [12:00]

  • Math is upside down against the students based on the social security admin and Pew research [13:00]

  • Once again, the school you went to doesn’t really matter. [16:30]

  • Increases in tuition and room and board has created this flip flop on return on investment [22:00]

  • House example - you will pay more when buying a home when someone else has renovated it and its move in ready. 

  • Similar to investing 150K in house for a 50K return. Why spend more on education than your house? [24:00]

  • Is your kid able to earn 3 million in a lifetime? Is it worth it? [27:00]

  • In order for the math to work, for the additional earning power of 655K, college needs to cost between 25 and 30K [28:30]

Resources:

Michael Santoli, CNBC.com The S&P Has Already Met Its Average Return for a Full Year, But Don’t Expect it to Stay Here