Increasing my Wealth by Borrowing
Tax Free Against Appreciated Stocks
Borrowing money against the value of stocks is a smart more many investors
take to increase their own wealth without paying a dime in taxes.
Remember, loans are not taxable.
As long as you take out a loan against your securities, even if you default on the loan and the lender keeps your stocks that were held as collateral, this is not considered a sale in the eyes of the Internal Revenue Service. But that`s worst case scenario; there are many good things loans can do for your financial future as well. Many investors use loans to increase their personal wealth. Once they establish themselves with a stock portfolio, they use this as leverage to take out loans and then purchase additional stocks. Ideally, they are looking for stocks that will yield a profit before the end of the lending period so they can pay back the loan and walking away more financially secure than when they started.
No one likes the feeling of being in debt. But smart investors realize the that debt can be an opportunity for future growth. You may fear taking out a loan and not being able to pay it back, but this won`t happen as long as you are smart in your investments and in how you spend your lent money. A stock loan should always be used to either increase your wealth or to shore up your current financial situation (which will increase your wealth in the long run). As long as you understand that money is necessary to make more money, you only stand to gain from borrowing against your appreciated stocks.
Leverage is key to wealth appreciation and a stock loan offers you the leverage to increase your wealth and net worth.