Key takeaways
- If safe expected returns are below loan rate, prepayment often dominates.
- Investing may win when return potential exceeds loan cost and liquidity is adequate.
- Never prepay aggressively without adequate emergency buffer.
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Prepay loan vs invest surplus: what wins?
The better option depends on your loan rate, post-tax expected return, cash reserve strength, and risk comfort.
Action path
- Use loan prepayment tool to estimate interest savings clearly.
- Model investment outcomes with conservative assumptions.
- Apply partial strategy: some prepayment, some investing.