Leverage is the use of borrowed money to invest, This type of debt can be a part of your personal financial strategy if you explore it in moderation and use the right tactics.
- To Achieve Your Financial Goals, Employing debt can serve as an intelligent financial and investment strategy
- One approach is to use liquid asset secured financing or home equity line of credit to leverage your investment portfolio.
- Additionally, you may consider specific life insurance policies and trusts that can aid in wealth transfer and reduce taxes for your beneficiaries.
Here Are The 3 Types of Debt To Achieve Your Financial Goals
1.Liquid asset secured financing
A liquid asset secured line of credit utilizes your investment portfolio as collateral instead of your home. By using this method, you can obtain liquidity without selling assets and possibly incurring capital gains taxes. Liquid asset secured financing is a suitable choice if you need to generate cash flow swiftly. Moreover, it offers lower interest rates as it is considered a lower-risk option.
Uses for liquid asset secured financing include:
- Funding special purchases
- Paying a tax bill
- Refinancing higher interest rate debt
Liquid asset secured financing is a dynamic line of credit that is secured by eligible assets held in one or multiple investment accounts.
In essence, your investment portfolio is used as collateral against a loan.” During a volatile market, it becomes crucial not to liquidate investment assets. With liquid asset secured financing, you can have greater liquidity and financial flexibility.
How to use your assets as cash
Liquid asset secured financing, also referred to as securities-based or portfolio line of credit, does not necessitate personal financial statements or tax returns for loans up to $5 million (although a loan application and underwriting are still required, similar to other lending options). This financing option provides competitive interest rates and adaptable principal repayment options for both commercial and consumer clients. Furthermore, liquid asset secured financing offers a straightforward application process, accelerated approval procedures, and immediate access to available funds.
You can use the cash to meet a wide range of financial needs:
- Pay taxes
- Quickly finance special purchases, such as a cash offer on real estate
- Manage short-term cash flow
- Serve as a bridge loan
- Refinance higher interest rate debt