Investment vs Debt Calculator

Got a lump sum? Compare the guaranteed return of paying down debt against the expected return of investing it, and see which grows your net worth more.

Scenario Details

Recommendation

Pay Debt
Potential Investment Value$14,693
Interest Saved on Debt$20,114
Difference$5,420

After 5 years

Invest the money$14,693
Pay off the debt$20,114

Paying the debt comes out ahead by $5,420, and it's risk-free. Clear the high-interest debt first.

Paying off debt is a guaranteed 15% return. Investing might earn 8%, but that isn't guaranteed.

Have credit card debt? See your payoff timeline →Model the investing side in detail →

A simplified comparison: it ignores taxes, employer 401(k) matches and the peace of mind of being debt-free. High-interest debt almost always wins.

Related guides

How to invest for beginnersSnowball vs avalanche

Methodology

How this calculator works

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Formula

  • Investing: amount × (1 + expected return)^years
  • Paying off debt: amount × (1 + debt rate)^years (the interest you avoid)

Assumptions & limits

  • Both options compound yearly over the same period.
  • Paying debt is a guaranteed return; investment returns are not, and may be taxed.
  • Tax deductions on interest (e.g. mortgages or student loans) are not considered.

Educational estimates, not financial advice. Check important decisions with your lender or a licensed advisor.

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