Gary and Eva are not sure whether putting the extra $1,500 a month into traditional savings strategy will achieve their financial goals.
On the advice of Eva’s co-worker, the couple meet with an accredited financial advisor, Thomas, with 20 years experience. Working together, they review Gary and Eva’s current financial objectives, risk tolerance, cash flow and retirement goals. They agree that a traditional approach may not reach their goal of winters spent in the sun on a beach - they need to accelerate their savings.
Thomas recommends a borrowing to invest strategy as a way to increase the couple’s retirement savings.
- $200,000 investment loan
- Interest rate of 3.75% (Prime +0.75%)
- Amortization period of 15 year
- Loan paid off before the couple plans on retiring at 65
- Monthly payment of $1,454.44 includes principal and interest
The combination of amortization period and payment types means the loan will be paid off before the couple reaches their planned retirement age of 65.