Immediate Debt Payoff vs Investing
Pay debt or invest: Which strategy wins?
You have the funds to end your debt today but should you?
Analyze whether investing your lump sum can outperform your interest rates and effectively pay for your debt while keeping your principal intact.
đ¯Debt & Investment Details
Total debt amount in dollars to be paid off (e.g., $5,000)
Annual percentage rate on debt (e.g., 10 for 10%). This becomes your guaranteed return if you pay directly
Number of years to pay off the debt (e.g., 3 for 3 years)
Optional extra monthly payment on top of the standard amortized payment. Leave 0 for standard amortization only
Current High-Yield Savings Account APY (e.g., 4.5). Typical range: 4% - 5.5%
Expected annual change in HYSA rate (e.g., -0.5 means rate drops 0.5% per year). Typical range: -1% to +0.5%
Tax rate on interest income. Typical marginal tax rate: 12% - 37% depending on bracket
Expected annual stock return percentage (e.g., 7 for 7%). This value is converted to an exact monthly rate for compounding.
Annual dividend yield as percentage (e.g., 1.7 for 1.7% annual yield on S&P 500)
Tax rate on qualified dividends. Typical qualified dividend rate: 0% - 20% depending on income