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

Happy Holidays! The New Year is just about here. We all hope 2022 will be a great year for everyone.
Resolutions for the New Year are somewhat a big part of our culture; however, we are not the best at sticking to them. Statistics show that only about 8% of people actually achieve their goals (or carry out their New Year’s Resolutions). If you are planning to make a New Year’s Resolution, here are some tips for you to help make your goals, promises and commitments stick! First – take time to reflect over the last year to see what worked and what did not. Then, think about your New Year resolution and make choices that can be tracked, manageable and meaningful to you. Try not to set goals for things you have no control over.
Tracking your progress helps you stay committed to your goal. It gives you something to celebrate each day and keeps you focused on continuing. However, if things start falling apart, try to remedy them, don’t just give up.
Manageable or realistic goals are more fitting for you to succeed with. Think about what your intentions are and if you will be able to carry them out. You will have a brighter outcome if you can achieve at least most of what you are aiming for.
Meaningful goals are just that!!! Meaningful to YOU. Even if others do not agree or see the benefit of your goal, it only matters that it is right for you.
To help achieve your goal and stick to your New Year’s resolution, try making habitual changes. Some minor changes can be life-altering and help you feel good about yourself and also feel successful.
Making your resolution stick:
Build on the good habits that you already have. You can enhance your habits by recognizing all the good in you and try to improve on them.
Make sure you have the time and capability of carrying out your resolution. Don’t set a goal for something that is way beyond your reach.
Set up a plan to reward yourself as you go along. This can allow you to stay motivated and pleased with yourself.
Some reasons your New Year’s resolution may fail:
You focus on the results and not the process – minor and slow changes and improvements are better than no improvements at all. It is easy to get off course, so instead of giving up completely, try, try again and maybe take smaller steps to achieving your goal.
False Hope – perhaps you are thinking and hoping for a change that you could accomplish, but high hopes can lead to not seeing results fast enough and giving up. Try thinking realistically about the goals you set for yourself.
Choose wisely – don’t pick a goal that may be too big for you that perhaps you will fail at in a few days and lose momentum and confidence that you can do it.
Have a clear plan in place – don’t try to do too many things at once. You need to prioritize and be realistic about what you can actually do. Taking on too much at once can easily cause failure.
Wishing you all good luck with your New Year Resolutions and wishing you all a very
Happy, Healthy and Prosperous New Year!