Many investors assume that if they need cash, even for short-term expenses, they have one option: sell their investments. In Episode 30 of Return on Reason, we discuss a less widely understood option, borrowing against your investment portfolio. It may be one option for accessing short-term liquidity, but it also introduces tradeoffs that stretch beyond the interest rate. You’ll learn:

• Four ways to access cash from your portfolio
• Six criteria to consider when evaluating tradeoffs
• How to use this framework in three example situations

Chapters

00:00 Why Liquidity Builds Confidence Why having access to cash affects how confidently you invest your portfolio

02:15 Temporary Liquidity vs Permanent Leverage Why borrowing should be time-constrained and where it can become risky

04:30 The Four Ways to Access Cash Selling securities, portfolio lines, HELOCs, and traditional loans

07:45 The 6 Tradeoffs That Matter Origination, cost, taxes, rate structure, behavior, and risk

12:45 Case Study 1: Helping a Child Buy a Home A short-term need where avoiding capital gains can make a difference

15:45 Case Study 2: Business Working Capital Using a portfolio when traditional lending isn’t available or practical

18:45 Case Study 3: Funding a Major Purchase Why flexibility can become a downside without a repayment plan

21:30 Key Takeaways: Simplicity vs Flexibility Why selling is often the answer and when borrowing makes sense

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Meet with Pat & Marcus: https://outlook.office365.com/book/MarcusCalendaratGreenspringAdvisors@Greenspringos33.onmicrosoft.com

Sources

1Securities Backed Line of Credit Explained (FINRA. 2024)

2Know What Triggers a Margin Call (FINRA, 2023)

Information contained herein has been obtained from sources considered reliable, but its accuracy and completeness are not guaranteed. It is not intended as the primary basis for financial planning or investment decisions and should not be construed as advice meeting the particular investment needs of any investor. This material has been prepared for information purposes only and is not a solicitation or an offer to buy any security or instrument or to participate in any trading strategy. Past performance is no guarantee of future results.