Is it possible to borrow money on investments that I already have and If so what rates would I be charged and what percentage of my portfolio would I be lent.
2007-02-22 05:12:08 · 10 answers · asked by William M 2 in Business & Finance ➔ Investing
Yes you can borrow to invest. Most banks will be delighted to do so. The rates will vary from institution to institution. Brokerage firms will lend 50% on stocks in your account. Their rates normally drop with the more that your borrow. U S government bonds can normally be purchased with 10% margin. Not recommended. Banks will often lend 90 to 100% of the value of realestate. Well, they once did anyway. They may have learned their lesson by now.
2007-02-22 05:34:47 · answer #1 · answered by Anonymous · 0⤊ 0⤋
There are two that I know are easy to borrow from: life insurance and futures contracts. As for the life insurance it has to be a whole life or universal life type of product, term policies tend (but sometimes do) have no cash value. I have more than one friend who started their business by borrowing from their life insurance policies.
As for futures (or commonly called commodities), there are two "margins"--a maintenance and an opening. While the brokerage might have, say, a $1,000 margin to open a position on something, there might be a minimum or maintenance margin of, say, $750. If the price goes against your position, say you bought but the price fell, when the value of your contract falls below the maintenance margin, you have to either close the position (and take the loss), or cough up some more money to meet or exceed the minimum, or the brokerage closes the position and bills you for their loss (which has happened to me before). If and as long as the price is favorable to your position, however, that extra value is yours--you can use it on another trade (pyramiding the value, buying more contracts of the same without shelling out any more bucks), let it ride, or pull it out and spend it.
2007-02-22 05:46:00 · answer #2 · answered by Rabbit 7 · 0⤊ 0⤋
Well I would not borrow money from investments for more investments, if that is what you want to do. I knew a guy that would get credit cards with intro 0 %. He would use the money off those cards to buy investments. This way he was 100% leverage with no money of his own being used. Now if things went badly for him he would owe all that money back. If things went well, he would be making money with other peoples money. BE CAREFUL.
2007-02-22 09:07:07 · answer #3 · answered by mike 2 · 0⤊ 0⤋
No, no and no.
Not even if you were a master investing.
If you are very good investing, find other people that want to invest -and take some risks-, and charge a % of the profits.
But borrow to invest, never.
2007-02-22 12:19:11 · answer #4 · answered by Carlos G 3 · 0⤊ 0⤋
Some financial institutions allow borrowing against certain types of investments. Call around. You will find them.
2007-02-22 05:15:19 · answer #5 · answered by Anonymous · 0⤊ 0⤋
I believe you will lose money that way. It depends on the investment but some banks charge a penalty for doing that.
2007-02-22 05:14:39 · answer #6 · answered by DJ C 4 · 0⤊ 0⤋
Depends what your investments are, eg houses or commercial property you may get 80% depending on whether the rent covers the repayments. If you invested in mineral prospecting on Jupiter then you will not find it so easy.
2007-02-22 05:26:44 · answer #7 · answered by Anonymous · 0⤊ 0⤋
Not off an investment...the transaction would be treated like a capital gain and you'll get taxed on it....not to mention any other penalties and fees, depending on where you drew it from.
You CAN borrow off the value of a life insurance policy, but you will have to pay it back with interest as well.
2007-02-22 05:17:19 · answer #8 · answered by bradxschuman 6 · 0⤊ 2⤋
Bad idea unless your net worth excluding your primary residence is positive.
2007-02-22 07:36:59 · answer #9 · answered by Paul 3 · 1⤊ 0⤋