Securities-based lending

Sometimes liquidity needs arise, whether they’re planned or unexpected. With a securities-based line of credit in place, you’ll have ready access to capital without having to liquidate your investments. You can use your marketable securities, such as stocks, bonds and mutual funds, as collateral. And of course, we’ll consider how it all fits into your overall wealth plan—balancing your short-term needs with long-term goals to create the right approach for you.

Benefits that can make a securities-based line of credit a valuable complement to your investment portfolio:

  • Stay invested. Keep your investment plan and asset allocation in place without disrupting your long-term strategy
  • Financial flexibility. Quickly access liquidity for a range of uses—whether you’re meeting large financial obligations or seizing an opportunity
  • Cost-effective. There are no setup fees, and only the funds you use incur interest charges, which are often lower than other financing options.
  • Potentially tax-efficient. A securities-based line of credit can potentially be structured in a tax-efficient way, which may allow you to more effectively grow and preserve your wealth.

As with all investment decisions, it’s important to understand the risks of borrowing before moving forward. Events beyond your control, like market fluctuations that may reduce the value of your pledged securities, could lead to a margin call. We’re here to help you make the best decisions for your needs. Today and in the future.

Borrowing vs. Liquidating Portfolio Holdings: Which Strategy is Better?

Both examples posit a $10,000,000 portfolio and a $3,000,000 debt. In the first example, Client A sells $3,000,000 worth of securities. The remaining $7,000,000 portfolio earns $483,000 during the timeframe under consideration. In the second column, Client B uses a line of credit to pay the $3,000,000. His $10,000,000 portfolio remains untouched and returns $690,000 over the same timeframe. Though interest on the loan comes to $58,000, Client B still nets $631,500—which is $148,500 (31%) more than Client A received.