Investment Loan

There are many ways to finance your investments. You can allocate a portion of your regular income to invest with, you can participate in an employer sponsored retirement or investment program where they match your investment contributions, or you can borrow money for investing. While this final method of financing your investments gives you more money to develop your investment portfolio with, it also creates an added element of risk. If your investment doesn't pay off, you are then stuck paying off the money that you borrowed to invest, as well as the loan interest and fees.

By changing any value in the following form fields, calculated values are immediately provided for displayed output values. Click the view report button to see all of your results.

Investment Loan Calculator

*This entry is Required. indicates required.

Loan inputs:
This loan has a $738.99 monthly payment for 25 years.

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Loan amount:*This entry is Required.Enter an amount between $20,000 and $1,000,000

Loan term in years:*This entry is Required.Enter an amount between 1 and 30

Loan interest rate:*This entry is Required.Enter an amount between 0% and 25%

Investment inputs:
The return is $583.33 a month, 100% of which is reinvested.

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Starting investment value:*This entry is Required.Enter an amount between $20,000 and $1,000,000

Rate of return:*This entry is Required.Enter an amount between 0% and 20%

Percent reinvested:*This entry is Required.Enter an amount between 0% and 100%

Investment is worth $572,542 after 25 years Line Graph: Please view the report to see detailed calculation results in tabular form.

Investment is worth $572,542 after 25 years.

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Definitions

Loan amount

This is the total loan amount you are planning on taking out. This amount is also used as the initial value of the appreciable asset or investment that you are making.

Loan term in years

The number of years you wish to analyze for this loan. This can be any number from one to 30 years.

Loan interest rate

The annual interest rate you are charged for this loan. This calculator assumes that your payments are made monthly and that interest is compounded monthly.

Starting investment value

The starting value of your investment. This may be higher than your loan amount if you either had an immediate gain or invested outside money (not received from the loan). This could be lower than your loan amount if not all of your loan value went directly into your investment. For example, if you had fees associated with the investment, or if you paid more than you could immediately receive on a sale of the investment.

Investment rate of return

This is the annually compounded rate of return you expect from your investments. For the purposes of this calculator, taxation is not factored into the results. If you pay taxes on the interest, dividends or capital gains from these investments you may wish to enter your after-tax rate of return.

The actual rate of return is largely dependent on the types of investments you select. The Standard & Poor's 500® (S&P 500®) for the 10 years ending December 31^st 2018, had an annual compounded rate of return of 12.1%, including reinvestment of dividends. From January 1, 1970 to December 31^st 2018, the average annual compounded rate of return for the S&P 500®, including reinvestment of dividends, was approximately 10.2% (source: www.standardandpoors.com). Since 1970, the highest 12-month return was 61% (June 1982 through June 1983). The lowest 12-month return was -43% (March 2008 to March 2009). Savings accounts at a financial institution may pay as little as 0.25% or less but carry significantly lower risk of loss of principal balances.

It is important to remember that these scenarios are hypothetical and that future rates of return can't be predicted with certainty and that investments that pay higher rates of return are generally subject to higher risk and volatility. The actual rate of return on investments can vary widely over time, especially for long-term investments. This includes the potential loss of principal on your investment. It is not possible to invest directly in an index and the compounded rate of return noted above does not reflect sales charges and other fees that investment funds and/or investment companies may charge.

Percent reinvested

This is the percentage of the return generated by your investment that is reinvested. For example, if your investment generates $1,000 per month and you reinvest 50%, the value of your investment will increase by $500.

Why use the Investment Loan Calculator?

The purpose of the Investment Loan Calculator is to illustrate how financing your investments with borrowed money can increase your return potential. To use this financial tool you will need to enter information about your loan terms, as well as information about the investment that you are considering.

The Investment Loan Calculator doesn’t only help to illustrate the potential benefits for a particular investment; it can also help you to determine what loan terms you need to make the transaction profitable. Knowing exactly how much you stand to gain is essential when balancing the risk against the potential rewards associated with investment loans.

How to use the Investment Loan Calculator

Here's how it works:

Enter the amount you intend to borrow by typing into the box or using the slider next to it
Input the number of years you will repay your loan over
Specify your loan’s interest rate
Enter the value of your initial investment – often this is the same as the loan amount, unless you are splitting your loan across multiple investments or have your own capital to invest alongside the loan
Add your predicted rate of return on your investment – it is recommended you make a cautious estimate to give yourself extra breathing room
Enter the percentage of your profits you intend to reinvest on an annual basis
Click View Report to see information on your loan, investment, and how they interact and affect your net value.

Who is this calculator for?

This calculator is most useful if you:

Are looking into the possibility of making an investment with borrowed money
Want to measure your investment’s projected rate of return against your monthly payments
Would like to calculate the difference in return based on the percentage you reinvest.

How can I predict my annual rate of return?

Firstly, remember that no investment prediction is guaranteed to be correct. The results shown by the Investment Loan Calculator uses rate of return as an average, as in reality this can fluctuate a great deal from year to year. Typically, investments with higher returns come hand in hand with higher risk due to increased volatility.

Despite this, you can look back at the history of the company you are investing in, as well as its competitors. This information, combined with your knowledge of the current economic climate, will enable you to make an educated estimate of what your average rate of return could be over the course of your loan at least. When in doubt, estimate conservatively.

I am also thinking about investing in property; where do I start?

Investing in property is another highly worthy financial avenue that you can take if you feel you are in the position to do so. It is similar to an Investment Loan in that you are borrowing money to have a stake in something real, or tangible.

Click "Get FREE Quote," above, and answer the brief set of questions. We'll then find mortgage loan providers serving your area who can offer you a solution tailored to your exact requirements. The lenders will then contact you directly with their best offers. It couldn’t be simpler!

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