Investment Loans
An investment loan has the potential to generate greater returns than a traditional investment strategy.
Here’s why:
- Accelerates savings through a larger initial upfront investment and compound returns.
- Compound returns on an investment means that returns are calculated not only on the initial investment, but also on the accumulated growth from year-to-year.
- Generally speaking, interest paid to borrow money to earn investment income is tax deductible. When the interest is deducted, it can be an effective way of reducing the overall cost of an investment lending strategy. Interest is not deductible in all circumstances.
For example, if the only earnings produced by the investment are capital gains, interest paid cannot be claimed
What are the benefits for our clients?
- Investment gains have the potential to reach financial goals faster.
- A lump sum investment starts compounding right away, rather than waiting to build your savings with a traditional strategy.
- There are potential opportunities to reduce overall cost of an investment lending strategy through tax deductions.
What are the risks involved
- Leveraging involves greater risk than purchasing investments using only your own cash resources because it has the potential to magnify investment losses.
- You are required to repay the loan, including interest, regardless of the investment return.
- An investment loan may limit your access to credit due to the outstanding debt of the loan. (specifically access to other credit products, e.g. mortgages, HELOC, etc)