Your house loans and student loans are probably the last things you should be putting money into.
Their interest rates are between 2%-3%, which is very managable. As long as you can expect a higher yield than 3% on your assets then you're earning by investing.
The stock market gives on average 10% per year (over the last 100 years), so even just putting your money into an index fund will outperform your loan interests.
Secondly, inflation. Your loan amount stays the same, but inflation is making that amount worth less every year. So while inflation is hurting your savings, it's helping you with your loans, they're getting devalued.
Ok, but what about risk?
If we're talking about the risk for runaway inflation, then you should definitly not put extra money into paying back loans, as they will devalue too.
And if we're seeing massive inflation, why would the price of things denominated in the inflationary asset go down? Presumably they would go up. Just because there's massive inflation doesn't mean that stocks will crash.
In times of high inflation, people want to borrow money. Which means more money in circulation, which means securities and correlated assets should be expected to go up, because where else would you put your money?
If the stock market crashes, and you are young, let's say in your 20s or even 30s, then you're probably still fine since historically the 10% return has remained even through rough times, if you give it a couple of decades.
Real estate is not as profitable as most people think, unless you're a deveolper. Just buying a home you should think more about as something you're doing for the next generation. If it weren't for the costs associated, it'd be a better move than an index fund. But because of the costs, unless you can afford unexpected expenses, and hard times where taxes are still due, then the risk is higher than some index fund.
Your house loans and student loans are probably the last things you should be putting money into.
Their interest rates are between 2%-3%, which is very managable. As long as you can expect a higher yield than 3% on your assets then you're earning by investing.
The stock market gives on average 10% per year (over the last 100 years), so even just putting your money into an index fund will outperform your loan interests.
Secondly, inflation. Your loan amount stays the same, but inflation is making that amount worth less every year. So while inflation is hurting your savings, it's helping you with your loans, they're getting devalued.
Ok, but what about risk?
If we're talking about the risk for runaway inflation, then you should definitly not put extra money into paying back loans, as they will devalue too.
And if we're seeing massive inflation, why would the price of things denominated in the inflationary asset go down? Presumably they would go up. Just because there's massive inflation doesn't mean that stocks will crash.
In times of high inflation, people want to borrow money. Which means more money in circulation, which means securities and correlated assets should be expected to go up, because where else would you put your money?
If the stock market crashes, and you are young, let's say in your 20s or even 30s, then you're probably still fine since historically the 10% return has remained even through rough times, if you give it a couple of decades.
Real estate is not as profitable as most people think, unless you're a deveolper. Just buying a home you should think more about as something you're doing for the next generation. If it weren't for the costs associated, it'd be a better move than an index fund. But because of the costs, unless you can afford unexpected expenses, and hard times where taxes are still due, then the risk is higher than some index fund.