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> your brokerage will lend you money at a very low rate, secured by the equity I have not found one that will offer a very low rate, have you? For example her
by jjav 2y ago
> your brokerage will lend you money at a very low rate, secured by the equity
I have not found one that will offer a very low rate, have you?
For example here are Schwab's rates for a loan against equity:
https://www.schwab.com/pledged-asset-line/rates https://www.schwab.com/pledged-asset-line/rates
For 500K-1M rate is SOFR + 3.4%, so about 8.2%
For multimillionaires it gets better at SOFT + 2.4%, or about 7.2%
Not bad in this market but not one I'd call "very low"
Possibly there's an unpublished rate for billionaires, there usually is.
- nicolas_t 2y agoMy bank in Hong Kong (where I live) lends in USD against bonds or stock at around SOFR. If they lend in JPY it's around 0.8%
- ywvcbk 2y agoSwitch to a different broker? e.g. it’s just +0.5% https://www.interactivebrokers.com/en/trading/margin-rates.php https://www.interactivebrokers.com/en/trading/margin-rates.p...
- jjav 2y agoThe linked page is margin, not equity backed loans.
- ywvcbk 2y agoIs there a difference?
- Kon-Peki 2y agoYes. In a margin loan, the "things of value" never leave the institution handing out the loan. The borrower buys stock, for example. And the institution giving out the loan has the right to sell whatever you bought to prevent losses on the loan, without your permission if certain conditions are triggered. In a loan backed by collateral, all the money can leave into some external account controlled by the borrower. To get some or all of it back requires an expensive and lengthy process that doesn't guarantee success.
- ywvcbk 2y agoIBKR claims that you can establish a margin loan by: “Withdrawing funds in excess of settled cash in the denomination of the currency being withdrawn;” So as long as you have enough collateral it’s effectively the same?
- mixmastamyk 2y agoSounds like the GP is saying that there are additional protections with the equity loan. Such as portfolio liquidation prevention if you move assets to another bank.
- deleted 2y ago[deleted]
- FireBeyond 2y agoI think Adam Neumann and a couple of others notably got zero interest loans from banks from the bank wanting to court their business income too.