Why You Should Be Borrowing Against Stocks
69 percent of adults have little or no money in their savings accounts. That 69 reasons why you should invest in your financial future.
Purchasing and borrowing against stocks helps you finance and save for retirement.
Having a regular savings isn’t enough, considering most people aren’t faithful savers. Buying stocks is a solid investment that pays off in the long run. If you don’t have a 401(k) plan or you’re self-employed, stocks fill the financial void.
And since the average US worker makes less than $45k a year, stocks act as a secondary income.
If you want to make money off stock and lock down some long-term finances, read on. Here are some compelling reasons why you should be borrowing against stocks.
Buy a New Home
The average person dreams of owning a new home but lacks the finances to do so. Taking funds from a stock portfolio will help you secure the capital you need to buy your dream home.
It’s called a securities-based loan.
An SBL allows a person to use their stock as collateral in exchange for a loan. The strength of the stock portfolio determines the value of the loan. An investor can borrow between 50 to 95 percent of the stocks’ market value.
The interest rates on securities-based loans are typically low. This makes it easy for an aspiring homebuyer to buy a home without liquidating other investments.
Borrowing Against Stocks Offers More Flexible Finance Options
SBLs have minor restrictions on how investors spend the loan money. They have financial freedom, as long as they don’t use the money to finagle margin debt or reinvest.
Repayment options are versatile. Most of the loans offer a grace or cure period. Others come with an interest-only payment feature. This is perfect for investors with smaller stock portfolio values.
Based on LIBOR, larger portfolios experience lower interest rates. Smaller portfolios don’t see an extreme difference. But because LIBOR can vary, larger stock portfolios have an advantage.
So, having an interest-only payment feature sweetens the loan.
In a fluctuating economy, it’s beneficial to have more expendable cash on hand. Borrowing against stock without selling is the right financial aid for investors.
Serious, enterprising people invest in the stock market to make money. They know the risk but also understand the concept of investment building. Instead of waiting out a stock for hopes profits, an investor can gamble against his own portfolio.
Borrowing money against the value of stocks makes money readily available. Ready cash covers immediate and future needs while your stocks continue to build.
Try an SBL
There’re many reasons why you should be borrowing against stocks. Securities-based borrowing locks down finances for the present.
Investors can use the value of their stock portfolios to fund startups, buy property, or land. Consider your future and check into borrow against your stock without selling.
Want to learn more? Contact us today and find out how our Stock Loan 101 Program Works.