Financial Model Blog

Securities Backed - huh?


Photo by Ben White on Unsplash

You want to add liquidity to your finances and you have a ton of options, but may not know or realize this could be one if you're working with the right firm.  There are a ton of reasons why someone may want or need to add some flexibility to their current situation.  Tax-time is here and for some that can pose short-term cashflow issues, they'll need to address.  You don't NEED to sell your investments or other assets to pay for short-term obligations to then further magnify a tax obligation. What are we talking about? A Securities-backed line of credit - also known as an SBLOC.  

First, you have to know what it is.  We have talked about it on our #PennyWiseFinancialPodcast in the past, but it's a line of credit that uses your investment portfolio as collateral.  That means you don't have to liquidate securities at an inopportune time, pay the tax, or worse, sell on a market dip.  You can then draw on that line of credit when and if you need to use the funds any way you want.  It will provide you with a ton of flexibility. 

Let's list some of the benefits to better understand the details of how they work.  The application process is streamlined because of our partnership with various lenders.  Again - you have to be working with the right firm and the advisors who know where and how to unlock access to these types of programs.  There is zero application fee, annual fee, or monthly fee for access to these programs.  You might wonder how fees are assessed to the account if there aren't any application fees or annual fees.  The account is charged interest based on the amount you borrow from the line.  So it's only the portion of the line you're using that will be charged anything.  Common uses are for taxes, tuition, real estate transactions, estate settlements, business investment, and other purchases. 

In a nutshell, this program can be another outlet for you so you don't have to submit to using emergency funds, credit cards, selling investments or other assets, or your home equity line of credit if you don't have to.  This is another tool that can make sense for clients that want an outlet to have access to capital they may need in a pinch.  If you have questions about how this works or if you want to learn more about this strategy, SCHEDULE A MEETING NOW!

Disclaimer: The content is developed from sources believed to be providing accurate information. The information in this material is not intended as tax or legal advice. Please consult legal or tax professionals for specific information regarding your individual situation. Some of this material was developed and produced by Basch Solutions to provide information on a topic that may be of interest. Basch Solutions is not affiliated with the named representative, broker-dealer, state- or SEC-registered investment advisory firm. The opinions expressed and material provided are for general information, and should not be considered a solicitation for the purchase or sale of any security.

Securities offered through LPL Financial, Member FINRA & SIPC. Investment advice offered through Private Advisor Group, a Registered Investment Advisor.

Private Advisor Group and Monarch Wealth Management are separate entities from LPL Financial. Access to BrokerCheck. The LPL Financial Registered Representatives associated with this site may only discuss and/or transact securities business with residents of the following states: NY, FL, OH, TX, NC, SC, IL, AZ.