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Debt

Extra payment vs invest

Same extra dollar each month. After the loan is gone, that cash (minimum + extra) is invested to the horizon. Net worth is invested assets minus leftover debt.

Cash flow

What you still owe. One loan at a time in this model.
$
Annual rate used to accrue interest each month. Variable or penalty rates are not modeled.
%
What you would pay if you only made the floor. Must cover monthly interest or the extra-to-loan path is infeasible.
$
Same extra dollar in both paths: added to the loan, or invested, every month.
$
Constant annual return on the invest path. Not guaranteed — a planning rate, before taxes and fees.
%
How far out to compare net worth. After the loan is paid, leftover cash (minimum + extra) is invested to this date.

Invest the extra

$224

Net worth gap at the horizon

Pay extra NW

$36,505

Invest extra NW

$36,729

Payoff extra path: 2 yrs 11 mo

How this extra payment vs invest compare is built

Once the minimum is covered, the next dollar can retire debt faster or buy investments. This page runs two monthly paths to the same horizon and scores them by net worth (invested assets minus leftover debt).

  1. Pay extra on the loan. After payoff, the former minimum + extra is invested at your assumed return.
  2. Invest extra while paying only the minimum. After the loan still pays off (if it can), both streams are invested.

High-APR balances usually favor extra principal: a 22% card is a 22% guaranteed return if you pay it down, which a modeled 7% portfolio does not beat. Cheap mortgage debt plus a higher modeled return can favor investing — returns are not guaranteed.

If the minimum does not cover interest, the extra-to-loan path is marked infeasible. Raise the payment.

If the horizon is shorter than the minimum-only payoff, the invest path still carries leftover debt and net worth subtracts it. A rising investment line next to an unpaid card is not a win.

Keep a cash floor first (emergency fund). Then run this compare inside the paying off debt playbook. Guide: extra loan payment vs investing the extra.

Frequently asked questions

Read extra payment vs invest

Why can investing win on a cheap loan?

If the modeled investment return exceeds the loan rate, leftover debt shrinks slowly while the extra dollars compound. High-rate debt usually favors extra payments. Returns are not guaranteed.

Paying off debt playbook