Investor STRATEGIC Line of Credit

Investor strategic Line of Credit

Borrowing strategies to invest

This line of credit allows you to establish an investment strategy that aims to generate after-tax income that is greater than the after-tax interest on a loan.

Get this product - Investor STRATEGIC Line of Credit

Key features

  • Amount available Minimum line of credit of $25,000
  • Variable rate Based on the loan amount and other criteria, including total savings
  • Flexible payment options Weekly or monthly, in part or in full before maturity
  • Investor profile Seasoned, with a high risk tolerance and a long-term investment horizon

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Who is it for?

Investors who:

  • have excess cash flow
  • have a high risk tolerance
  • understand the potential benefits of leveraging
  • want to get Desjardins savings products
  • have a long-term investment horizon

Features

Interest rate

  • Variable rate based on the loan amount and other criteria, including total savings

Amount available

  • Minimum line of credit of $25,000

Payment options

  • Weekly or monthly frequency.
  • Pay off your loan whenever you want, in part or in full, without being charged a prepayment penalty.

Collateral

  • No collateral required in most cases (depending on your caisse's financing criteria)

Other

  • Only available only in Quebec

Leveraging example (with or without loan)

With loan Without loan
Principal on hand $5,000 $5,000
Amount borrowed $25,000 $0
Amount invested $30,000 $5,000
Loan rate1 7% N.A.
Rate of return1 10% 10%
Earnings $3,000 $500
Tax deductible loan interest (7%) $1,750 N.A.
Earnings less interest paid $1,250 $500
Return on principal on hand2 25% 10%

In this scenario, by leveraging to invest with the same initial $5,000 principal, the investor generated a return of 25% as opposed to the potential 10% return they would have generated without borrowing.

By borrowing to invest, you can generate potentially-higher returns. However, the potential losses you may incur are also greater.

What is leveraging?

Leveraging is an investment strategy whereby a person borrows to invest a greater amount. They have an opportunity to generate a greater return than they would have had they invested only the money they had on hand1.

  1. Fictional example based on a 10% rate of return and a 7% loan rate. Does not necessarily reflect the market.
  2. The return on principal on hand is the result of dividing net earnings by the initial principal on hand.
  3. This strategy requires a review of the investor's profile and may not be appropriate. A Desjardins advisor should discuss the risks of borrowing to invest with the investor.