Benefit: Retirement Savings Can Benefit

As you begin to make the repayments on your loan into your 401k account, they’re usually allocated back into your portfolio’s investments. You’ll repay a bit more into the account than you borrowed from it, and the difference becomes interest.

The 401k loan doesn’t produce an impact on your retirement if any lost investment earnings match the “interest” paid. Profit possibilities are offset dollar-for-dollar by interest payments.

Taking out this type of loan can boost your retirement savings if the interest you pay surpasses any lost investment earnings. Just remember that this will proportionally decrease your personal, non-retirement savings.