By James Moore

December 4, 2023

Dealing with a sudden windfall such as contest winnings or a legal settlement can present some difficult decisions for debt-laden investors. Should you put a lump sum into your investments and let them grow over time, or focus on eliminating your debt now? Conventional financial wisdom suggests that it may be worth investing if your after-tax returns are projected to be high enough. Let us help you crunch the numbers with our Investment vs. Debt Calculator below.

Calculator Terms

Interest Rate on Debt

The amount of time in years that you plan to save money. The longer you save, the greater the potential impact of interest on your savings.

Interest Questions

Be sure to state whether the interest paid on your loan is deductible or taxable in the provided drop-down menus.

Before-Tax Return on Investment

The rate of return you expect on your money (annually compounded and before taxes). If you plan to keep your money in a standard savings account, leave this value at 0% or enter the interest rate your savings account offers. The average rate of return on the S&P 500, including reinvestment of dividends, was 11.3% between Jan. 1, 1970, and Dec. 31, 2022.

Also check out: Rule of 72 Calculator

Please note that all projections using this calculator are entirely hypothetical. Despite our best efforts to offer accurate financial information based on previous data, it’s impossible for anyone to predict future market conditions. Calculator projections do not constitute financial advice. Any investment carries a level of risk, including the risk of loss on investment. We recommend consulting a financial adviser before deciding on the investment strategy that’s right for you.

Marginal Tax Bracket

The tax bracket you expect to occupy based on your income. Use the table below to estimate your tax bracket.

Marginal Tax Bracket

How To Act

Hopefully, this calculator has helped you decide whether to prioritize investing or eliminating debt. As you decide on the next steps in your financial journey, consider some of these tips to keep the momentum building:

  • Consult a financial adviser: Using devices like this calculator is a great way to begin planning for debt elimination and smart investing, but expert advice can make a huge impact on your overall investment strategy. Consider a legal-services provider such as LegalZoom or Nolo to find the right adviser for your needs.
  • Create a budget: Paying off debt and sowing seeds through investing are often long-term efforts, and a lot of life goes on between college and retirement. Set yourself up for success by creating a shorter-term budget that accounts for things such as groceries and other monthly expenses, as well as bigger milestones such as home remodels and family travel. Use our Savings Goal Calculator to create a plan, and see where your money is actually going by checking out our Personal Budget Calculator.
  • Start early: Getting a head start on your financial journey can make a huge difference — even if it’s just a few years. Inflation and taxes can slow your savings over time, but time can also play a role in boosting your financial momentum. Crunch the numbers using our Early Savings Calculator for an even clearer picture of the difference a few years can make.