Loan or Liquidating Investments

Hallix

I'm considering a sizeable purchase and trying to get my head around whether I should liquidate ISA investments or take out a personal loan.  Does anyone know of a calculator where I can play around with % investment returns and interest rates to calculate which is the most beneficial option.

Voyager2002

Hallix said:

I'm considering a sizeable purchase and trying to get my head around whether I should liquidate ISA investments or take out a personal loan.  Does anyone know of a calculator where I can play around with % investment returns and interest rates to calculate which is the most beneficial option.

I don't think you need a calculator...

The lender could buy any investment that you could make in an ISA, so they would do so if such an investment offered a higher return at lower risk than lending to you. The only exception would be if the personal loan were some kind of loss-leader, such as many 0 per cent offers on credit cards. In any case you will know the interest rate on the loan, and if the AER they quote is higher than about 7 per cent you would do better to liquidate investments.

Hallix

Thanks Voyager for getting back to me.  You are probably right. I think the issue I couldn't  get my head around is to do with the opportunity value of investing the equivalent of loan repayments if I choose the liquidate investments option and also some vague idea about net present day value as if I took out a loan, the repayments will have less value as the loan matures.