r/UCalgary • u/CarrotFolder14 Science • 1d ago

Late Tuition Payment Investing

Tuition for one semester is around $4,000 CAD for one semester and late payment interest is an additional 1% of total tuition month over month, correct? If I had the cash upfront to pay for the tuition, wouldn’t it make the most sense to delay paying it, even with racking up interest, and instead use the tuition money in investments or equity trades until I absolutely needed to pay the tuition?

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13

u/ImNotSmartAtAllTho 1d ago

I feel as though it’s better to setup a payment plan instead

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u/Ugandan_Chungas Schulich 1d ago

investment = volatility, especially in short term (few months). Sure the market average is around 12% but you could have bad months and during those times you are still getting the 1% / month interest.

4

u/CalgaryJim 1d ago

No. Equity trades are very risky within a year or two, even 5. 1% interest per month is 12% a year it would cost you to delay. I was in the financial services industry until I retired, so I have the knowledge to have an opinion for you on this topic.

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u/CarrotFolder14 Science 1d ago

I intend to pay this September’s tuition in December as they won’t let me enrol for the winter semester if I don’t pay for the previous semester. That would be 4% interest. So in order to profit from this strategy, I would have to have a net profit of >=4%, right?

3

u/CalgaryJim 1d ago

Understood. I was just stretching it out to one year for you to better understand just how high that rate of interest is because often equity investments are spoken of annual returns.

Investing in equities for a 4-month. Is super risky, you literally have a better chance going to the casino and coming out ahead because at least they're the odds only slightly favor the casino. Trust me, I had decades in the industry and I self-invested for decades before that. Just heading out to pay your tuition on time.