can i take out a loan on my stocks and bonds
2007-05-19 13:51:07 · 5 answers · asked by stocksan 1 in Business & Finance ➔ Investing
Yes, absolutely...and banks LOVE this type of business because you can't move your accounts till the loan is paid off:) The payouts are usually 50-80% on stock and 90% on treasuries, CD's, and AAA Municipal bonds. The interest is lower than taking out a regular loan. Obviously, the bigger your account, the lower the fee. You don't even have to pay the interest if you have enough in your account, it can keep rolling.
Simple Example-you have 100k in AAA Municipal bonds. The bank would loan you up to 90k in the account. (plus interest, which my bank would charge 3.2% on 500k). If the muni bonds go lower in price and you take out the full 90k, you will owe money for the difference. Example, if at the end of the month snapshot your muni bonds are worth 95k and you took total of 90k out, you would owe $4,500, because your "release rate" or loan amount was 90% of the portfolio. So my suggestion to you is try not to take out the full amount to give yourself a cushion.
Also, this is a highly competitive market right now. Shop around. The bigger brokerage houses, I know for a fact give the best rates, best right now is Merrill Lynch and UBS(because of their corporate credit rating is high), but you need more money then the smaller banks for them to do this. Whatever rate is best you can move your account to them and they will work with you.
Good luck.
2007-05-19 19:27:19 · answer #1 · answered by Anonymous · 0⤊ 0⤋
Any bank will loan against stock in your portfolio. All bankers have a book which lists ratings and loan ratio value. Some stock they might give you 50% on, others might be 80%, etc. -it all depends on the rating of the stock or bond or treasury. You also should be able to get a loan from the brokerage firm, but this is not their main line of business. Just talk to the loan officer of your local bank.
2007-05-19 14:00:30 · answer #2 · answered by Orion777 5 · 1⤊ 0⤋
If you are just talking about your standard stocks/bonds (i.e. not in an IRA or 401k, etc.), you cannot take a loan out...you have to sell them in order to take advantages of their value.
2007-05-19 13:54:10 · answer #3 · answered by CG 6 · 0⤊ 2⤋
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2007-05-19 14:30:26 · answer #4 · answered by Anonymous · 0⤊ 1⤋
debt?
2016-04-01 10:55:09 · answer #5 · answered by Anonymous · 0⤊ 0⤋