Investor · Fort Collins, CO · Member since 2015 · 304 posts · 112 votes
Hey BPers,
I am currently working with a new money manager and they offer lines of credit against your current portfolio at LIBOR + 125 bps (overnight LIBOR). Which seems like fantastic for purchasing capabilities. Does anyone have experience doing this? Aside from extreme climbs in LIBOR rates do you see any negatives?
It is secured against your stock assets, and you can only leverage 40-50%. (maybe more but I would be concerned about doing so)
I have heard of this before the bubble. I guess the concern is what happens if your stock portfolio crashes(and how you hedge your portfolio). Do they allow this against retirement funds? And what is the LTV?
I have heard of this before the bubble. I guess the concern is what happens if your stock portfolio crashes(and how you hedge your portfolio). Do they allow this against retirement funds? And what is the LTV?
I was also thinking, lets say your portfolio does go down. Do they start doing margin calls or do the at least give you time to add money/securities to the account? You might have a long term positive view on a stock and just because it went down doesn't matter to you. Maybe you want to post cash instead of liquidating a position.