Pay Down Debt or Invest?

Should you pay down or invest if you have extra money?
Alberta
Taxable income
75,000
Info
Taxable Income
Enter the taxable income amount from line 260 of your personal income tax return.
Debt
Interest rate on debt
7.99%
X
Input Error: Interest rate on debt
Enter a value between and %.
After-tax cost of debt
7.99%
Investment
Rate of return
6.00%
X
Input Error: Rate of return
Enter a value between and %.
Rate of return breakdown: Info
Rate of return breakdown
This shows how the rate of return for the taxable investment is broken down between Interest, Eligible Dividends and Capital Gains. For example, the return on a savings account would typically be 100% interest. The return for a mutual fund with stock and bond holdings could be made up of Interest, Eligible Dividends and Capital Gains.

Interest
33.33%
Eligible dividends
33.33%
Capital Gains
33.40%
Input Error: Rate of return breakdown
The percentage figures for interest, dividends and capital gains do not add up to 100%. Please correct your entries.
After-tax rate of return
6.00%
Pay down debt
After-Tax Cost of Debt
After-Tax Rate of Return




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Assumptions
Calculations use marginal tax rates as of . Rates take all federal and provincial taxes and surtaxes into account and the basic personal tax credit.


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