CALCULATOR
Leverage vs TFSA Calculator
Borrowing to invest amplifies whatever happens next, in both directions. This compares the after-tax outcome against putting the same monthly cash into a TFSA, so the trade-off is explicit.
Borrow to invest
Same cash into a TFSA
How the two strategies track over time
Borrowing to invest magnifies losses as well as gains. If your return is below your loan rate (—) you lose money, and you owe the loan whatever the market does. Interest is only deductible where the borrowed money is genuinely invested to earn income — confirm your position with a tax professional. This illustration assumes interest-only payments and a steady return, and is not a recommendation to borrow.
These numbers are a starting point. Talk to an advisor about your own situation.
Talk to an AdvisorIs borrowing to invest worth the risk?
Borrowing to invest only pays if your after-tax return exceeds the loan rate, and it magnifies losses exactly as much as gains. The loan has to be repaid whatever the market does. Where the borrowed money is genuinely invested to earn income the interest is usually tax deductible, which lowers the effective cost — but that does not remove the risk, and this strategy is not suitable for most people.
Common questions
When does leveraged investing lose money?
Whenever your investment return falls below your loan rate. At a 5.20% loan rate, a portfolio returning 3% loses you 2.2% a year on the borrowed money, and you still owe the full loan.
Is the loan interest tax deductible?
Generally yes if the borrowed money is used to earn investment income, but the rules are specific and depend on how the funds are actually used and traced. Confirm your own position with a tax professional before relying on it.
How is the investment taxed when I sell?
As a capital gain, of which 50% is included in taxable income at your marginal rate. The calculator applies this to the gain before comparing outcomes.
Why compare against a TFSA?
Because it is the honest alternative. The comparison puts the same monthly cash — the loan interest you would be paying — into a TFSA instead, where growth is tax free and there is no borrowing risk at all.
Figures and sources
This calculator uses 2026 figures. Government amounts are reset regularly — CPP each January, OAS every quarter, tax brackets each January.
Last reviewed: 19 August 2026
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