Investment Loan
This calculator helps illustrate the effect of using a loan to purchase an investment or appreciable asset. Using debt as leverage to purchase investments can magnify your return. The downside is that you also increase your risk.
How the investment loan calculator works
It grows the borrowed amount at your expected investment return over the term, amortizes the loan to find its total cost, and subtracts the two to show whether leverage left you ahead or behind.
Worked example: with amount borrowed of $50,000, loan interest rate of 8.00% and loan term (years) of 5, the investment loan calculator shows net gain from leverage of $16,102.
- Investment value
- $76,931
- Total loan cost
- $60,829
- Net result
- $16,102
- Loan payment
- $1,013.82
The formula
Net result = amount × (1 + investment return)^term − total of loan payments. Leverage profits only when the return exceeds the loan rate.
Results are estimates for educational purposes and are not financial advice. Confirm exact figures with your lender, plan administrator or advisor.
Questions about the investment loan
Is borrowing to invest a good idea?
Only when you are confident returns will beat the loan rate, and you can withstand a loss. Leverage magnifies gains and losses alike, so it raises both reward and risk.
What is the main danger of leveraged investing?
If the investment falls, you still owe the full loan — so losses are amplified and you can end up owing more than the investment is worth. Never assume the return is guaranteed.
When does an investment loan make sense?
Mainly for disciplined investors with a long horizon, stable income to cover payments, and a clear-eyed view of the risk. For most, paying down debt first is safer.
Is the Investment Loan free to use?
Yes. Every calculator on FinCalculators is completely free, with no sign-up, login or paywall. You can run as many scenarios as you like.