Short answer
Repayment provides an almost guaranteed return equal to avoided debt interest. Investing offers an expected but volatile return. The mathematical crossover is not a risk assessment.
Important variables
- Debt rate
- Expected gross return
- Tax and cost
- Horizon, liquidity and risk
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Worked example
At a 4.2% debt rate and 26.375% tax, an investment needs about 5.7% gross in a simplified model to produce 4.2% net. Market variation remains.
Break-even: What changes the result?
A higher debt rate favours repayment. A longer investment horizon increases the range of market outcomes, not their certainty.
Common mistakes
- Equating gross return with guaranteed saving
- Ignoring tax and cost
- Repaying the emergency reserve
- Reading volatility out of the result
Terms in this guide
Sources & assumptions
- RATIOXA — Methodology and formulas (2026-08-17)
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