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> you are probably better off borrowing against your investments if you need cash I don't understand what that means. Whom would you be borrowing from? Where w
by wfunction 10y ago
> you are probably better off borrowing against your investments if you need cash
I don't understand what that means. Whom would you be borrowing from? Where would the cash be coming from?
- supersaiyanverx 10y agoYou would borrow from the bank, using your stock holdings as collateral. Not as easy as he makes it sound, but not unheard of if you have even a meager amount. Say, at least 50k.
- rbcgerard 10y agoYour broker https://www.interactivebrokers.com/en/index.php?f=interest&p=schedule2 https://www.interactivebrokers.com/en/index.php?f=interest&p...
- wfunction 10y agoWhat happens if your stock goes to zero in the meantime while you've borrowed against it?
- agermanov 10y agoBroker will sell your stocks to prevent it's losses.
- wfunction 10y agoAlso, wouldn't this mean you have to pay interest on the ENTIRE amount of the loan, as opposed to tax on just the gains? So if you have $1000 that means at 2% interest (I assume that's yearly) you're paying $20/year, whereas if your stock went up 5% (= $50), that means you'd be paying (say) 25% of that, which is $12.50. So it should be only better if either have a high tax rate or your stocks /really/ increased in value (not just kept pace with inflation).
- agermanov 10y agoThat requires 110k$ and you can't just take money with that rate, it's margin. So you should have more than 110k$ to take some of that money and replace them with margin.