Compare extra loan payments vs investing the same cash after tax drag.
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Wealth if extra goes to loan
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Wealth if extra is invested
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Interest saved
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Dollar gap
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Verdict
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dyndisc.com/payoff-vs-invest
Minimum payment amortizes the balance over the years you enter. Extra is on top of that. After-tax return is expected return × (1 − tax drag). If extra pays the loan off early, leftover cash is invested for the rest of the window. Net wealth is investments minus remaining balance. Not advice.
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FAQ
Should I pay off debt or invest extra money?
If the loan APR is meaningfully higher than your expected after-tax return, extra payments usually win. If the market return after tax drag is higher, investing the extra usually builds more wealth. This page compares ending net worth both ways.
What is tax drag on investments?
Tax drag is the share of investment returns lost to tax. Use 0 in a 401(k) or IRA. A taxable brokerage account might use 15 for long-term gains. The loan APR is not reduced by this field.
Does paying extra on a loan always save interest?
Yes on that loan: extra principal cuts interest and can shorten the term. Whether you come out ahead depends on what that extra could have earned invested instead. If the loan is paid off early, leftover payments are treated as invested for the rest of the window.
