INVESTMENT LEVERAGE LOAN
Investment Loans and RRSP Loans are also known as Leverage Loans. This investment strategy is based on Sir John Templeton’s (November 29, 1912 – July 8, 2008) personal experience in 1939 where he borrowed $10,000 from his former boss with the purpose of investing to make a profit. He purchased $100 dollars worth of every stock on the stock exchanges that were valued less than a dollar. Within the year, he managed to repay his former boss, and he and his partner had more than $30,000 remaining.
SOURCE (1) SIR JOHN TEMPLETON, SUPPORTING SCIENTIFIC RESEARCH FOR SPIRITUAL DISCOVERIES, REVISED EDITION, ROBERT L. HERRMANN
Any mortgage holder is familiar with leveraging. In fact, they already have a leveraged investment, their home.
Similarly, if you have $25,000 to invest, with a leverage loan, you can have $100,000 fully invested and working for you. This can be a prudent and wise investment strategy to help create wealth for your retirement.
It is ever more difficult to yield high returns on investments in a short period of time without increasing exposure to risk. Borrowing to invest is a calculated risk that should be considered carefully.
Contact your Independent Advisor to discuss this strategy.