Clients usually borrow for one of two reasons, either: To buy a big ticket item, like a car, which generally decreases in value over time or, To purchase a big-ticket that has the potential to increase in value over time, like a home or RSP. With an investment loan, clients borrow to make a lump sum investment purchase that has the potential to grow in value over time.

An investment loan has the potential to generate greater returns for your client 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. Additional restrictions apply for residents of Quebec. Please consult with a tax specialist for information on deducting interest.