Borrowing against stocks may seem like a risky move, but when done correctly it can greatly improve your financial situation. Many investors especially those just starting out, find themselves having far less money than their net worth would indicate.

While you might be willing to wait years for a big financial payoff, the rest of the things in your life are not. It is of little consolation to look at your portfolio and see how much you are worth when you have bills that need liquid assets to pay.

Taking out a loan against your stocks is a way to have money for today`s needs without changing your plans for tomorrow. Additionally, if you are smart with your money, it is a way for you to improve your financial standing even further so that your future payoff`s will be even bigger. Growing an investment portfolio is like building a house. Right now you might only be laying the foundation, but the better you take care of your current financial needs, the stronger that foundation becomes and the better your overall house will be for it.

With stock market trends continually on the rise, borrowing against stocks is safer now than it has been for a decade. Anyone expecting to make money through stocks can safely borrow money for their current needs with the knowledge that their prudent investments will allow them to pay back the loans with their profit. And anyone not expecting to make money through stocks may want to reevaluate their choice to play the stock market to begin with.

If you own stocks, you should put the money to use and borrow against them. They will likely appreciate for much more than the interest rate you will pay for the loan.

Single Stock Collateral

We have the proficiency to accept single stock as collateral without liquidating your stocks. This tactic allows you to keep your long-term investment plan on track, so you will receive the dividends, interest or capital appreciation that may accrue.

You may have amassed significant shares in your employer’s company, sold a business in return for company shares, or hold a portfolio with concentrated stock positions. You may use your concentrated portfolio as collateral to obtain the financing you need without disturbing your long-term goals.

Risks of Leverage

  1. Amplified Losses – The use of leverage means that losses will be amplified if there is negative performance. Furthermore the loan will still need to be repaid.
  2. Collateral Maintenance – A fall in the value of your portfolio may result in a situation where the value of your collateral no longer covers the outstanding loan.
  3. Interest Rate Impact – An increase in interest rates will impact your portfolio’s performance. The return on your portfolio must be higher than your financing cost to generate a positive return.

You may want to leverage your portfolio to meet certain short‑term business needs, or you may benefit from refinancing an existing loan. We can work with you to determine the eligibility of your marketable securities portfolio.

The benefits of marketable securities backed finance include:

  • Liquidity to pursue your existing investment strategy and investment opportunities
  • Additional capital without selling securities
  • No interruption to your asset allocation and long-term investment strategy
  • Freedom to alter the strategy or focus of your portfolio being used as collateral
  • Credit lines/loans structured according to your individual needs with regards to type, amount, tenor, repayment and currency
  • Portfolio yield enhancement

Securities lending has never been easier and simpler.