Both let you invest with borrowed money. The difference only becomes visible on a bad day — and by then it is not adjustable.
| Investment loan | Margin account | |
|---|---|---|
| Payment | Interest only, fixed monthly | Interest accrues inside the account |
| Forced sale | None on a 100% no-margin-call structure | Yes — the broker can liquidate |
| Rate | Set at approval, tied to Prime | Broker rate, changes |
| Assessed on | Debt service and net worth, once | Position value, continuously |
| Ongoing obligation | A predictable monthly payment | An open-ended exposure |
A margin account is assessed continuously. If the position falls far enough, the broker can sell — at the market, on their timing, not yours.
An investment loan is assessed once, at approval. On a no-margin-call structure the lender has no mechanism to force a sale. Your obligation is the monthly interest, and it does not change because the market did.
A margin account can suit someone actively trading with capital they can afford to have called.
An investment loan suits someone building a long-term position who needs the plan to survive a bad year without a forced decision. If a 20% drawdown would make you sell, neither structure is the problem — the leverage is.
Scope
Borrowing to invest involves risk, including the risk that the value of your investment falls while the loan remains payable in full. This page describes how these arrangements work in general and is not a recommendation to borrow or an offer of credit. Suitability depends on individual circumstances.