I have about 100k student debt with 9.8% interest rate. I have around 80k worth of RSUs that vested. Should I keep the RSUs as they will go up more or pay back the loan??
9.8% - for sure pay off debt or refinance to 5% and then you can keep in amazon.
Would you take a loan with 9.8% interest to buy amazon stock? If the answer is no (and it really has to be no) then pay back your loan. Like others have mentioned repaying this monstrous loan is a guaranteed 9.8% return on investment. Historically stocks do bout 8% with huge variance. Amazons last performance does NOT imply it will continue to go up. The stock can also go down.
Loan. That's a high interest rate. I would shovel money into anything that gives a guaranteed 10% return. And that's what it is when you're paying off this debt.
First and most important peace of mind is to live debt free
My guess is that the 9.8% loan is not in the US and in a developing country instead. If that is truly the case, I guess you are missing a point here. I am an Indian so let me explain this assuming this loan is in India. You need to factor in USD to INR currency conversion as value. Lets say the fixed rates in India are at 8% while in the US are at 3%. In the long term, it is expected that the INR will devalue against the USD by 5%. You need to factor this into your calculations as well as if your sell RSU and transfer now, you will be transferring at the current exchange rate while if you do half of it now and half of it, a year from now, the second one is expected to get you 5% more INR than the current transfer
I disagree. The moment you are able to pay off your loan, you should do it specially if you are early in your career. Had it been a home loan, you can get tax breaks in US for home loan in foreign country. Ask your CPA on how to get these tax breaks. You do not get any tax benefits for the interest you pay on the student loan. Becoming debt free should be a priority. As others have said, its a guaranteed 10% return. The money saved from your monthly installment can then be invested back into stocks/401k/mutual funds. If you plan to invest into real estate sometime in future, banks do check your assets and liabilities(in US and also in India). Upto you, do you want to be debt free or stick onto your stock. Which one do you value the most.
I'm wondering who pumped 80k on loan for BS/MS here. Seems like it's a loan in US and not India.
Refinance student loan at approx 5%, and bring it down to 50k
Pay back the loan.
I would say keep the stocks. AMZN has great potential and 10% is smaller compared to that potential. You are inside Amazon, so you probably know what the stock will be worth in next couple of years. But I will also say that compromise on lifestyle a little, save and payoff loan as soon as possible. You will get bonuses, put them directly into loan and things like that...
Refinance your loan. I refinanced with Darien rowthaway bank / laurel road down to 5%. I’m refinancing now with first republic down to 2%. For the latter you must be in sf.
Thanks for the information. I am not in SF. Are Darien Rowthaway and Laurel Road seperate companies?
Same company they rebranded last year: https://www.laurelroad.com/refinance-student-loans/
If you pay your loan it’s a 9.8% guaranteed return (I’m not bringing taxes in mix). Up to you but that would be a good return of investment for me.