Debt drag calculator
How much of your investment growth is offset by interest? Compare the annual dollar cost of your debts with an assumed investment return, even when the balances and rates are very different.
Your assumptions
Use one currency for all amounts. Changing this label does not convert values.
Example values are editable assumptions. Inputs are not saved or sent to NetCarry.
157.1% of assumed investment growth is offset by interest.
- Assumed investment growth
- +$7,000
- Growth less debt interest
- -$4,000
- Return needed to cover interest
- 11.00%
Balances held constant. Excludes home appreciation, repayments, fees, and within-year compounding; actual lender interest may differ.
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What is debt drag?
Here, debt drag means the estimated annual interest cost working against the growth of your assets. A rate alone does not tell the whole story: a lower-rate mortgage with a large balance can cost more in annual dollars than a small, higher-rate loan.
Multiply each balance by its annual interest rate, then add the results. Compare that total with investment value multiplied by an assumed annual return. The result shows whether modeled investment growth covers the modeled interest cost.
Compare dollar amounts before comparing rates
A $100,000 portfolio growing at an assumed 7% produces $7,000 in estimated annual growth. A $20,000 card balance at 20% costs about $4,000 per year if the balance is held constant. That one debt offsets roughly 57% of the modeled investment growth.
The calculator also shows the investment return needed to match the interest total: annual debt cost divided by investment balance. This is a mathematical comparison. It is not a forecast of achievable returns or a rule for choosing between repayment and investing.
A starting point for a repayment scenario
Balances are held constant here. Scheduled payments, new borrowing, rate changes, daily compounding, and fees change actual interest. The mortgage line is not an amortization schedule, and the card line is not a payoff calculator.
Reducing debt and investing also differ in risk, access to cash, taxes, and loan terms. This comparison does not decide which is right for you. Use NetCarry’s forecast to explore contributions and payments alongside your other assets and liabilities.
Why a growing portfolio can still feel like standing still
| Item | Amount |
|---|---|
| Investments: $100,000 × 7% | +$7,000 |
| Mortgage: $200,000 × 5% | −$10,000 |
| Credit card: $5,000 × 20% | −$1,000 |
| Investment growth less interest | −$4,000 |
| Return needed to cover $11,000 of interest | 11% |
The comparison excludes home appreciation. Add it in the net worth growth calculator to see the broader balance sheet.
Common questions
Does debt drag include principal repayments?
No. Principal repayment reduces what you owe; interest is the borrowing cost. Moving existing cash to repay principal reduces an asset and a liability together. Keep payments separate from this growth-versus-interest comparison.
What if I have several loans?
Use the separate mortgage and credit card inputs, then group remaining loans in other debt. For grouped loans, use total annual interest divided by total balance as the weighted average rate. Do not simply average the interest rates.
What if investment growth is zero or negative?
The dollar interest total still applies. The share of growth consumed by debt is only shown when assumed investment growth is positive; otherwise that percentage would be misleading.
Sources & methodology
Examples are illustrative. Product descriptions reflect NetCarry’s current calculations and account features.