Global securities lending is booming. It reached a whopping $2 trillion last year.
Stock loans are common and can be a great way to diversify risk.
Here's everything you need to know about the fees associated with doing a stock loan and how it impacts cost so that you can make the best decision:
As with any investment, you're going to pay fees. A stock loan fee is what is charged in accordance with a securities lending agreement.
It's important to fully understand what your agreement says before you do a stock loan.
Stock market investments are among the most preferred investments for Americans -- 52% say they have money invested in the stock market.
Stock investments are especially beneficial for those who want to invest in for the long term. Instead of worrying about every downturn the stock market takes, you can ride them out comfortably, knowing that the nature of the stock market involves ups and downs.
There are several advantages to using a stock loan.
First of all, they're non-recourse loans. In other words, you are not personally liable for the loan repayment and it will not affect your credit rating. Also, depending on which lender you use, you can select terms and interest rates that match your needs.
Before moving forward, you need to be aware of how fees impact you.
Lenders generally charge between one percentage point (1%) up to eight percentage points (8%) as a fee to lend money. So if you are borrowing $ 200,000 against your stock loan portfolio and being charged 2 points that would equal $ 2,000. Its important to ask what are the points you will be charged to borrow the money.
Stock Loan Solutions offers over 58 years of combined experience in securities lending and the stock market.
Contact us today so we can help you with your next stock loan and lower your cost of borrowing!
The information contained herein is presented solely for the purposes of discussion and under no circumstances should this be considered an offer to buy or a solicitation of an offer to sell any security. Stock Loan Solutions is not a registered securities broker-dealer or an investment adviser with the U.S. Securities and Exchange Commission (the “SEC”) or with any state securities regulatory authority. Stock Loan Solutions, its managers or affiliates have not been registered and do not plan to be registered under the Investment Advisers Act of 1940 or any similar state or foreign securities laws. Stock Loan Solutions is not registered under the Investment Company Act of 1940 or under any similar state or international securities laws. Stock Loan Solutions does not offer any form of investment (buy or sell) advice, tax counseling, estate planning, or any other securities or financial advice whatsoever. No statements on this website or any verbal or written statement by any representative shall be construed as such advice. We are neither licensed nor qualified to provide investment advice.
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