GLOSSARY · VISA-HOLDER FINANCE

Prepay debt or invest

Comparing the guaranteed return of paying down a loan, its interest rate after any tax effect, with the uncertain after-tax return of investing the same money. For a loan in another currency, the exchange rate becomes part of the comparison.

Also called: pay off loan or invest, prepay education loan

COMPUTE IT WITH YOUR NUMBERS

Prepay home-country education loan vs invest in USD →Should I prepay my home-country education loan or invest in USD?Pay off debt or invest →At my debt rate, does extra cash do more paying debt or investing?

LEARN IT PROPERLY

CHAPTER · UNDERSTANDING YOUR DEBT · FOUNDATIONSGood Debt and Bad Debt: Judging What a Loan Buys CHAPTER · UNDERSTANDING YOUR DEBT · FOUNDATIONSAvalanche or Snowball: Choosing a Payoff Order

RELATED TERMS

Real return Emergency fund

SOURCES

The Theory of Interest. Irving Fisher, 1930.

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