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Investor STRATEGIC Line of Credit

Ideal for borrowers with excess cash flow, few financial obligations, a high risk tolerance and who understand the power of leveraging (borrowing to invest).

Available only in Quebec

Features

For borrowers with excess cash flow, few financial obligations, a high risk tolerance and who understand the power of leveraging (borrowing to invest).

This line of credit can be especially useful if you've already contributed the maximum to your RRSP. Borrowing to invest is a long-term investment strategy for investors who want to generate after-tax income that is greater than the after-tax interest on the loan1. You can invest in stocks and shares or non-registered investment funds and potentially benefit from income tax deductions, because the loan interest rate and fees are generally tax deductible2.

Interest rate

Variable rate based on the loan amount and other criteria.

Amount available

Minimum line of credit of $25,000

Repayment

  • Loan payment frequency: weekly or monthly.
  • No prepayment penalties. Pay off your loan whenever you want, in part or in full, without being charged extra fees.

Other

  • Create a customized plan with your financial planner, who will provide information about the advantages and drawbacks of leveraging, anticipated returns on investments and investment periods, your tax rate and repayment terms.
  • No collateral required in most cases (depending on your caisse's financing criteria).

The following example illustrates the difference between an investment strategy with a loan (leverage loan) or without a loan:

Example of potential returns (with or without loan)
Calculating potential returns With $25,000 loan Without loan
Returns 10%3 10%
Principal on hand $5,000 $5,000
Principal invested $30,000 $5,000
Earnings $3,000 $500
Borrowing rate 7%3 0
Tax deductible loan interest $1,750 N.A.
Earnings less interest charges $1,250 $500
Returns on principal on hand 25%4 10%

As you can see, potential returns on the same $5,000 investment are higher using a leverage strategy (borrowing to invest). On the other hand, the potential loss is also higher. Each case must be evaluated individually.

Calculate

  1. Borrowing to invest is a leverage opportunity. Using borrowed money to purchase securities carries greater risk than purchasing them with cash. If you borrow money to purchase securities, you have an obligation to repay the loan and any interest required by the loan terms even if the value of the securities purchased declines. See a Mutual Fund Representative to learn more.
  2. The caisse shall not be held responsible if interest earned is not deductible.
  3. Earnings and borrowing rate are provided as examples only and do not necessarily reflect the market.
  4. 25% is the result of dividing net earnings ($950) by the principal on hand ($5,000).

Useful links

Desjardins Personal Line of Credit
As of September 30, 2016
Amount Rate
$5,000 to $12,500 10.20%

Other rates - Line of credit

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