
Tax Free Stock Loans to Leverage Wealth
Taking out a loan against the value of stocks is a smart money move. Wealthy investors know that to increase wealth, you must reduce tax risk and invest with other people’s money. A stock loan allows a borrower to increase one’s own wealth without paying anything in taxes. Stock loans are not taxable.
When going the stock loan route, as long as you borrow against your own securities, even if it goes into default, in which case the lender keeps your collateralized stocks, it not a sale as regulated by the Internal Revenue Service. But default isn’t the end goal so what are the benefits to wealth by borrowing stock loans? With a stock loan, you can plan for your financial future by using a lender’s money to increase your personal wealth. If a borrower has a diversified stock portfolio, he or she can use this as leverage to take out loans to reinvest the money in additional stocks. If an investor is well advised and chooses wisely by buying stocks that are forecast to yield a profit by the culmination of the loan term, it will be a winning investment. The profits are then used to pay the loan and the borrower walks away with a more diversified, wealth building, portfolio.
Bad debt is a drain. However, smart investors know how to use debt as an opportunity for future growth. There is always risk in finance, but most investors are prudent enough to choose stocks that will deliver a solid ROI by the end of the loan term.
It’s a simple strategy - a stock loan should always be used to either leverage debt and increase your wealth or to better your financial future by paying off bad, high interest debt. It’s an age-old formula: money begets money. You need money to make money. The more money, the greater long-term wealth. The best way to achieve this, is to borrow against your already profitable stocks. Leverage your current wealth to grow your financial future. A stock loan offers you the secure leverage you need to increase your net worth.