By May 29, 2012 Read More →

Pay Down Debt or Invest?

Compare the after-tax cost of your debt to the after-tax return on your investments
Try the calculator below>

If you find yourself with some extra money, should you pay down debt or invest?

If you  have a high level of debt and are struggling to make your monthly payments, or if your debt is mainly high interest rate credit card debt, then you should pay down your debt.

If you have your debt under control and the debt is made up of lower interest rate loans, two variables should be considered.

  1. The after-tax rate you are paying on your debt
  2. The after-tax rate of return you expect to make on your investments.
If a higher after-tax return on investments can be earned, investing should be considered.

If the after-tax rate on your debt is higher, then you should pay down your debt.

Use this Ativa calculator to compare the after-tax cost of your debt to the after-tax return on your investments to help you make this decision.

 

Pay Down Debt or Invest Calculator
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