You’ve probably heard of President Biden’s student loan forgiveness announcement.

Key points to remember

• This could be the perfect opportunity to start investing, paying off other debts, or boosting investments you’ve already made.
• The first way to invest this money is to create a cash reserve so that you have cash on hand, just in case.
• On the one hand, you might just want to focus on paying off all your loans so you’re debt free. On the other hand, investing may seem more appealing if you think you can get a decent return on your money.

This news has spread and many people are wondering if they are eligible or not. Those who qualify are excited about the potential extra $10,000 available to them now that they no longer have to worry about paying off debt.

It is well known that the financial burden of student loans prevents many people from buying real estate and building wealth. This is why it is so essential to take advantage of this student loan forgiveness program.

Let’s dive into how you can invest $10,000 after confirming your student loan forgiveness to build your wealth and focus on building your financial health.

How do you know if you qualify for student loan forgiveness?

Nearly 8 million Americans are immediately eligible for student loan forgiveness without any application. If your annual income is less than $125,000 (or $250,000 as a married couple), you will be eligible for $10,000 in student loan forgiveness.

The Federal Student Aid website stated that relief can be expected within 4-6 weeks of application. The website recommends completing your application by November 15, 2022 if you want to see relief before 2023.

If you qualify, you will have freed up $10,000 which you can now invest. This money should be used to create financial momentum for millions of Americans.

How should you invest $10,000?

Here’s the best way to invest the money you no longer need to allocate to your student debt.

Build up a cash reserve

The first way to invest this money is to create a cash reserve so that you have money on hand in case something goes wrong. Some experts recommend that you save three months of expenses as a cash reserve to help you deal with possible job loss or some other type of disaster.

Your parents or grandparents probably advised you on the importance of saving money for a rainy day. Think: your car breaks down, a broken bone, or one of life’s unintended consequences.

If you already have a cash reserve fund, we suggest supplementing it to ensure you have enough money to be ready for whatever life throws at you.

Start saving for your retirement

The earlier you start saving for your retirement, the more comfortable your life will be in your golden years. Saving for retirement isn’t something you do later in life. Although getting older is the last thing on your mind when you’re young, you need to plan for your older life so you don’t get stuck working longer than you want because you haven’t prepared.

How do you start saving for retirement?

• See what options your employer offers. Determine if your employer matches your contributions to the company-sponsored 401(k) plan.
• Set aside money from each salary. Individual Retirement Accounts (IRAs) and 401(k)s allow for tax-free or tax-free growth. They are available in traditional or Roth options.

It’s important to start planning for your retirement as early as possible so you don’t have to spend your golden years working when you could be relaxing with your family.

Invest in index funds and stocks you believe in

Have you thought about trying investing in the stock market? Since you will have more money to invest, you will want to put some of it where it will grow.

It’s usually best to start investing in index funds that contain companies you believe in. You may want to try your luck investing in individual stocks, but it’s wise to wait until you have more experience and confidence as an investor. Sometimes the best investments are the boring ones that deliver consistent results. Targeting 6% to 8% over the long term will provide strong growth over time.

Invest in yourself/your development

This $10,000 could be spent on your personal development or career growth. You may have heard that the best investment is to invest in yourself. Increasing your skills and knowledge will result in more income, which will help you build more wealth over time.

How can you invest this money in yourself?

Take that course you’ve been thinking about. Is there a course that could improve your position at work or help you earn more money on the side?

Learn a new skill. Could you use that money to learn a new skill, like graphic design, coding, sales, or writing?

Try a community college program. Since your debt has been forgiven, you can use this money to improve your education at a community college near you.

This $10,000 financial aid could be the financial help you need to make a career change or advancement that concerns you.

Pay off your other debts

Although it is not technically an investment, you can use this money to settle other debts. Chances are $10,000 isn’t enough to wipe out all of your student loans. While $10,000 is nothing to sneeze at, you may not be completely debt free after your student loan is forgiven. You may also qualify for additional federal and private student loans, depending on the amount of financial aid you have obtained for your education. You may also have other debts ranging from credit card debt to a car loan. Use the money you have allocated for student loan repayments to reduce your overall debt.

What you shouldn’t invest the $10,000 in

Since we’ve looked at the best ways to invest that student loan forgiveness money, it’s only fair that we look at what you shouldn’t invest in so you don’t waste this unique opportunity. It can be tempting to chase the promise of high returns that are “guaranteed” by a random person on social media. Remember, if it sounds too good to be true, it usually is.

Here are some ways not to invest that $10,000:

1. Buy meme stocks based on hype and speculation. While Reddit and social media are full of meme stock success stories, many people have lost money on these investments because they chased the hype without doing any research.
2. Random cryptocurrency tokens you hear about. Many innocent people have lost money in cryptocurrency because they chased the ridiculous returns the tokens promised them.
3. Penny stocks and other risky investments. High risks come with high rewards, but they can also cause you to lose all your money.

The purpose of this student loan relief is to help ease the strain on your finances. Don’t make matters worse by taking unnecessary risks.

The final word on the $10,000

If you find out that you are approved for student loan forgiveness, $10,000 of your balance will be wiped off, which should significantly ease the financial burden of student debt. This could be the perfect opportunity to start investing, paying off other debts, or boosting investments you’ve already made.

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