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You are here: Home > Personal > Cards, loans and credit > Lines of credit > Investor STRATEGIC Line of Credit

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Investor STRATEGIC Line of Credit

Borrowing to invest

Ideal if you have excess cash flow, few financial obligations and a high risk tolerance

  • Take advantage of a long-term strategy for investors who want to generate after-tax income that is greater than the after-tax interest on the loan.
  • Pay off your loan whenever you want, in part or in full, without being charged extra fees.

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

  • Available only in Quebec.
  • 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. Earnings and borrowing rate are provided as examples only and do not necessarily reflect the market.
  2. 25% is the result of dividing net earnings ($950) by the principal on hand ($5,000).

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