Some people balk at the fact that you can actually make an infinite return on your investment. Infinite return is essentially what happens when you invest on margin (or borrow) and make money from the spread of the interest you pay on the borrowed money versus the gain on the investment.

If you have zero cash and a line of credit then you can potentially take your zero cash position to positive (or conversely, negative) by debiting your line of credit and putting it into a dividend earning stock (preferably in a real estate or utility fund).

I am currently paying 5.75% on my TD Bank line of credit. Killam Properties is currently $5.50/share with monthly dividends of $0.046667/share ($0.56/share yearly). Killam’s dividend yield is therefore 0.56/5.50*100% = ~10%. So the spread would be 10.2%-5.75% = 4.45%. Therefore I could make 4.45% on any money TD wants to give me at 5.75%.

I put $5,500 from my line of credit into the investment and purchase 1000 shares. At the end of the year I will have deposited $5500*4.45% = $244.75 in my gains account. You may think that $244.75 is not a lot of money but when you take into account the amount of time it takes you to set this up (not long with brokerage accounts) its not bad hourly pay.

I invest $0 of my own funds (all money comes from TD’s line of credit). Return on investment is calculated by money earned divided by money invested. Since money invested is $0 (of my own money) and anything divided by zero is infinite, therefore my ROI is infinite.

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