Recently subra wrote an article on Payoff Mortgage or Invest…continued. Here is a calculator to fortify the argument
I have modified my financial freedom calculator to accommodate immediate lump sum investment to the lender to check if that option is better than investing the money for retirement (aka financial freedom)
The excel file explains the options available when you have a home loan and tells you which route is quicker (in terms of years to financial freedom):
1. Pay off home loan as quickly as possible with all the money you can spare (lump sum) and each month
2. Let the home loan run its natural course with EMIs alone while you invest all you can towards retirement.
Try out the calculator and let us know which do you think is better for:
(a) a person who wishes to retire early, say by age 45-50
(b) a person who wishes to retire normally (by age 60)
As usual suggestions to improve the calculator are always welcome.
Download the updated Pay off loan or invest calculator (May 8th 2013)
Download the Pay off loan or invest calculator (April 30 2013)