1. What Is Investment Vs Mortgage Payoff Comparison?

This calculator compares the potential returns from investing a lump sum versus using that same amount to pay down your mortgage. It helps you make an informed financial decision based on your specific circumstances.

2. How Does The Calculator Work?

The calculator uses two formulas:

Where:

• P — Principal investment amount ($)
• r — Annual interest rate (as decimal)
• n — Time period in years
• M — Mortgage balance ($)

Explanation: The calculator compares compound investment growth against simple mortgage interest savings to determine which option provides greater financial benefit.

3. Importance Of Financial Comparison

Details: Making the right choice between investing and mortgage payoff can significantly impact your long-term financial health and wealth accumulation strategy.

4. Using The Calculator

Tips: Enter your available principal, expected investment return rate, time horizon, and current mortgage balance. All values must be positive numbers.

5. Frequently Asked Questions (FAQ)

Q1: Should I always choose the option with higher calculated value?
A: Not necessarily. Consider risk tolerance, investment volatility, tax implications, and personal financial goals before deciding.

Q2: Does this account for compound interest on mortgages?
A: Most mortgages use simple interest calculations, which is why we use the simple interest formula for mortgage savings.

Q3: What about tax considerations?
A: This calculator doesn't account for taxes. Investment gains may be taxable, while mortgage interest may be tax-deductible in some countries.

Q4: How accurate are these projections?
A: These are estimates based on constant rates. Actual investment returns may vary, and mortgage terms might change.

Q5: Should I consider other factors beyond these calculations?
A: Yes, consider liquidity needs, emergency funds, retirement planning, and overall debt management strategy.