There's no such thing as an 'average ETF return' -- there's only the historical return on whichever ETF you choose to invest in, and even that isn't predictive.

Pay off your student loans. You're not ready to be investing solo.

The basics:

1) Investors (that's you) want high returns and low risk. Not surprisingly, you can't get both. To get people to make higher-risk investments, average returns have to be higher. So money market returns are pretty low, bonds are bit higher (and little riskier), and stock returns are significantly higher and much riskier.

2) The rate you can borrow at is generally higher than you can invest at; that's how banks make money.
2a) Mortgage rates are generally lower than student loan rates because they are guaranteed by your house.

3) Paying down a loan is the same as investment money at the rate of the loan.

4) Therefore, paying down your student loans is likely the best deal.

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:It's correct to check the interest rates

ETF generally return 7% a year so I would invest vs pay the mortgage

If student loans are higher than 7% pay them otherwise invest

This is the dumbest financial statement I have heard in a while, and that includes the woman who stopped her husband's retirement funds to pay for a nanny.

Op here: please tell me more (I am dumb and don’t know what the average ETF return is, although I understand it is the long term trend that matter)

No one and absolutely no one knows what a broad stock market ETF will return over some discrete period of time. The average return stock market return since the 1920s is under 8% but you had 20 year periods where it could be half of that or even double that.

Because the market has had fairly healthy return over the last decade I would expect below average returns in the immediate future. But as I said no one knows these things.

The only thing you know is what the interest rate on your debt is. Pay off the high interest debt first. Once you are done paying that put savings in a diversified portfolio of stocks (e.g. ETF) and bonds (e.g. saving accounts, bond etf).

The S&P has never returned less than 6.4% over a 20 year period and has topped out at 18%. A guaranteed 4% return is not awful, but it is pretty dang low over 20 years and over 27 years even crazier.

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:It's correct to check the interest rates

ETF generally return 7% a year so I would invest vs pay the mortgage

If student loans are higher than 7% pay them otherwise invest

This is the dumbest financial statement I have heard in a while, and that includes the woman who stopped her husband's retirement funds to pay for a nanny.

Op here: please tell me more (I am dumb and don’t know what the average ETF return is, although I understand it is the long term trend that matter)

NP. If you pay $10k extra on your mortgage this year, the total amount you owe will drop by roughly $10,400 (i.e., a 4% return). This will keep growing every year until the mortgage is paid off due to compounding. If you put 10k in an ETF and the market grew by 4%, you would have $10,400 at the end of the year. Ignoring tax differences and fees, you would be in the same place. Most people think an ETF will grow faster than 4% over the long term and hence paying off a 4% loan is not a good investment.

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:It's correct to check the interest rates

ETF generally return 7% a year so I would invest vs pay the mortgage

If student loans are higher than 7% pay them otherwise invest

This is the dumbest financial statement I have heard in a while, and that includes the woman who stopped her husband's retirement funds to pay for a nanny.

Op here: please tell me more (I am dumb and don’t know what the average ETF return is, although I understand it is the long term trend that matter)

No one and absolutely no one knows what a broad stock market ETF will return over some discrete period of time. The average return stock market return since the 1920s is under 8% but you had 20 year periods where it could be half of that or even double that.

Because the market has had fairly healthy return over the last decade I would expect below average returns in the immediate future. But as I said no one knows these things.

The only thing you know is what the interest rate on your debt is. Pay off the high interest debt first. Once you are done paying that put savings in a diversified portfolio of stocks (e.g. ETF) and bonds (e.g. saving accounts, bond etf).

Anonymous wrote:

Anonymous wrote:

Anonymous wrote:It's correct to check the interest rates

ETF generally return 7% a year so I would invest vs pay the mortgage

If student loans are higher than 7% pay them otherwise invest

This is the dumbest financial statement I have heard in a while, and that includes the woman who stopped her husband's retirement funds to pay for a nanny.

Op here: please tell me more (I am dumb and don’t know what the average ETF return is, although I understand it is the long term trend that matter)

dumbest financial statement eh I posted the 7% I'm very curious on your response...

OP you might like this basic overview

https://www.moneyunder30.com/pay-off-student-loans-or-invest

Anonymous wrote:

Anonymous wrote:It's correct to check the interest rates

ETF generally return 7% a year so I would invest vs pay the mortgage

If student loans are higher than 7% pay them otherwise invest

This is the dumbest financial statement I have heard in a while, and that includes the woman who stopped her husband's retirement funds to pay for a nanny.

Op here: please tell me more (I am dumb and don’t know what the average ETF return is, although I understand it is the long term trend that matter)

Anonymous wrote:It's correct to check the interest rates

ETF generally return 7% a year so I would invest vs pay the mortgage

If student loans are higher than 7% pay them otherwise invest

This is the dumbest financial statement I have heard in a while, and that includes the woman who stopped her husband's retirement funds to pay for a nanny.

It's correct to check the interest rates

ETF generally return 7% a year so I would invest vs pay the mortgage

If student loans are higher than 7% pay them otherwise invest

Are student loans at a higher interest rate than mortgage? If so then do that first.

Pay off what ever has the highest interest rate. Pay to principate and make it in writing its for principal only.

ETF

you should pay off your student loans first.

I would pay down the mortgage.

I have 750$/1000$ a month to invest (already done 20% retirement, upped payments of student loans and 1000$ contribution to two 529). Would you make extra payments to a 4% interest rate mortgage (I am in year 3 of a 30 year mortage and considering paying in 15) or put that money In the stock market (vanguard ETF, i know nothing about investment)?

Looks like right now i wouldn’t get 4% return in an ETF ?