Blog Archives - NJ Financial Consultants | Lighthouse Financial Advisors, Inc.

In today’s market climate, fluctuation, volatility and downturn are disquieting terms we hear on a daily basis in the media. These terms, however, carry less weight for those that are prepared, or “insulated” from the market changes. A valuable tool to help further insulate you during turbulent times is a Securities-Backed Line of Credit (sometimes called an Asset-Backed Line of Credit or a Portfolio Line of Credit).

Securities-Backed Lines of Credit work similarly to a home equity line of credit except instead of tapping into the equity in your home, you borrow against the “equity” of your taxable accounts (non-retirement accounts). Essentially, your securities become collateral and are typically borrowed against up to a certain percentage of their total value. The typical percentage is 50-70% of your account value. Another important aspect to note is not only do you get to leverage on the equities you own, but you can also leverage on the fixed income and cash positions in your portfolio. This allows for increased borrowing power by taking advantage of even your more safe and secure positions in the account.

The best use for this type of borrowing is for short-term liquidity. A few situations that might require short-term cash needs are purchasing a new home prior to selling your existing property, funding your child’s wedding, or covering a large repair or replacement of a vehicle. The attraction is the ability to tap into a large amount of cash without having to use your emergency funds or sell equities in a down market which may result in losses and/or negative tax consequences. It allows you the freedom to stay fully invested and on track with your investment plan. Typically, there are no set up fees and you only pay interest on the funds you use which tend to be lower than other financing options.

Please feel free to reach out should you have any questions about Securities-Backed Lines of Credit. We aim to be a valuable resource to our clients and always welcome an opportunity to educate and share information.

Sources:

https://www.wsj.com/articles/buy-borrow-die-how-rich-americans-live-off-their-paper-wealth-11625909583

https://regentatlantic.com/blog/securities-backed-line-of-credit/

https://www.sec.gov/oiea/investor-alerts-and-bulletins/sbloc

August 29, 2022/by Oleksandr Vetoshko

Blog

Estate Planning – Tips For You

Estate Planning is important for people of all ages. Lighthouse Financial Advisors is here to help with our clients’ Estate Planning. If you do not have one in place, please feel free to contact us to schedule an appointment to discuss and plan for yours.

Here are some tips to help you with your Estate Planning:

Important steps when creating an Estate Plan:

Create Healthcare Directive or Living Will –

Choose a Medical Agent – to carry out your wishes for medical care in the case you are incapacitated and cannot make decisions for yourself.

Create a Durable Power of Attorney

Choose a Financial Agent – name this person or persons as your Power of Attorney, who can carry out your wishes and keep your finances in order if you are incapacitated.

Draft a Will –

Choose an Estate Administrator (Executor of Will)

Make a List of Assets as well as a list of your debts

Itemize Your Inventory (Financial as well as personal properties)

Decide the Beneficiaries

Once Will is finalized, Sign, Date and Keep in a Secure Place (and let your Executor know where it is and have access to it upon your demise)

Update Your Life Insurance
Create a Living Trust – if you have the need for one.

**Which is better, A Will or a Trust?

A will does not go into effect until after you die, whereas a living trust is active once it is created and funded. This means that a trust can provide protection and direct your assets if you become mentally incapacitated, something a will is unable to do.

July 25, 2022/by Tyrrell Donna