Returning to School or Investing Your Money: Which One is More Profitable?

While many people ponder the benefits of receiving an advanced degree, not everyone considers the financial implications that the attainment of that degree actually has. While it may be necessary in some careers to be more educated, should you have enough education to satisfactorily perform your job, putting off going back to school may be better off financially in the long run. In the following scenario, consider a person who is age thirty two, and has saved up $12,000 for their master's program.

Should a person decide to take that money and invest it in an interest-bearing certificate of deposit with a 5.5% annual percentage yield, the payoff would not be immediate, however, by retirement age, that person would actually have more money in the bank, then a person who went straight to school. This is particularly true for people who are in teaching or writing careers. Most school districts only pay an extra $1,000 a year per advanced degree. Over a thirty year period, that would amount to only $30,000; which after taxes is significantly less. On the other hand, if someone follows the investment route, after thirty years, that $12,000 amounts to almost $60,000. For people who wish to retire at age sixty-five, allowing your money to mature and extra three years, now brings the total amount to over $71,000. Whichever term you choose, the safest choice to get a payout of that amount is a certificate of deposit with your bank or credit union, and allow all dividends to be returned into the CD.

Another key piece of financial advice is if both spouses choose to pursue this option, do not combine your amounts you plan on to invest, and keep separate individual CD's. This is not only to ensure a smoother financial outcome should divorce occur, but it is mainly intended to protect an investor even more. FDIC and NCUA insurance only covers borrowers up to $100,000, so if in the event your assets were combined, and the worst case scenario ever happened, both spouses would actually have to suffer a loss because the total amount would be at almost $120,000. If the accounts were kept individually, both investors would be able to keep their full amount of money without suffering a loss. It is also advisable that the beneficiary named be a child or parent of the investor, and records be updated as new births, deaths, and other changes in your family life occur.

Whichever decision you choose to pursue, be it the advanced degree, or the investment option, do your research and plan ahead financially, so in the long-run you are able to enjoy the most amount of money possible during your retirement years.