Borrowing Against Stocks
The cluster discusses using stock portfolios or other assets as collateral for loans to access cash without selling investments and triggering capital gains taxes, including strategies like 'buy, borrow, die' used by wealthy individuals. Commenters debate the advantages, mechanics, and comparisons to home equity or crypto lending.
Activity Over Time
Top Contributors
Keywords
Sample Comments
They take loans using the stock as collateral
You'd borrow against it, giving a bank the shares as collateral.
What is disturbing about taking a loan out using an asset as collateral?
Why would someone borrow when they already have funds? For example I heard of one guy locking up $600k collateral to borrow $300k. Makes no sense.
They get loans using their portfolios as collateral and then use the loans to buy stocks. This is very standard.
The investments remain if they borrow against them. They just become collateral for the loan.
I am not sure how does your borrowing scheme work. You have to service the loan after you got it, and to do that you have to sell some of your capital holdings and pay taxes.
What's the advantage of doing that? Don't you have to eventually sell your assets to pay off the loan?
Wrong. I'm not passing anything around.I'm borrowing against my existing equity.Just like I own a house. I can go to the bank, ask for a loan against the equity in my house. The bank then hands me cash.That's a totally valid use case and possible today. The best part is that I don't need any sort of permission to do so. No credit checks. No banks. No government involvement.In fact, it is so possible, the market for this on a single platform is over $7.8 BILLION. <
What’s the point of the loan then? Why not just use the collateral at 0%?