Investment loans are a unique Canadian financial leverage product with the advantages of being unsecured and repaying interest without repaying principal, which can help investors quickly realize their financial goals through a sound investment strategy.
Unsecured
Investment loans are credit loans and do not require physical collateral.
Interest only, no capital repayment
Reduce the stress of repayment by making interest-only payments each month.
No margin call
When the market fluctuates or falls, there will be no forced liquidation.
Traditional Investments
VS Investment Loans
In a traditional savings plan, only your investment in the first year has room to grow for a full 20 years. Each subsequent year, you have less time to grow the money you put in. This means that your second year's contribution will only grow for 19 years, your third year's contribution will only grow for 18 years, and so on, losing the opportunity for compounding returns compared to a larger lump sum investment.
Assuming you have $400 to invest each year for 20 years, at a 7% rate of return, it would take you 15 years to build your wealth to $10,000. 20 years later, your wealth would be $17,546 in total.
However, if you pay only $400 per year in interest on a $10,000 investment loan, the entire loan amount will benefit you for the entire 20 years, and the value of your investment will be $28,696 (after repayment of the $10,000 loan), which is $11,150 more than in a traditional savings plan. this is the benefit of leveraging an investment loan, which is far greater than a traditional investment.