Calculate Whether It Is Worth Investing or Pay Off the Loan Faster
Let’s say you have low-interest debt, maybe a student loan, and you can easily pay your minimum monthly payment. If you have money to spare, what would be the smarter financial move: pay off the loan early or invest the money instead? The answer depends on a number of variables, and Student Loan Hero has a handy calculator to help you figure it out.
We’ve shown you how to balance your debt goals and retirement goals . Two things are certain: First, you want to take advantage of your employer’s 401 (k) match, if offered. Second, you should pay off your debt at high interest rates before you even think about investing. Obviously, the money you spend on interest outweighs the average return you get from the market. We even gave you a rule of thumb: if the debt is less than 6%, consider investing.
But the rules of thumb are general and do not account for other variables. The Student Loan Hero Calculator offers more personalized feedback for making your decision. Just provide details of your credit situation: how much more should you invest in your loan each month, what is your tax rate, what is your loan balance, and so on. From there click “Calculate” and you will find out which makes more mathematical sense: early loan repayment or investment.
Student Loan Payoff Versus Investment Calculator | Student Loan Hero