Simple and strategic.
For tax time or anytime.
A line of credit backed by your securities can be a strategic complement to your portfolio—especially in this low-rate environment. If you need to make a tax payment, using it to bridge a liquidity gap may lead to a better outcome than selling assets. A Portfolio Line of Credit is a flexible and cost-effective discretionary margin lending product. And it’s easy to set up, with no fees.
See how clients have used a Portfolio Line of Credit
The market was finally right for Jonathan to sell his business. For some time, he had wanted to pursue a different track so he could spend more time with his family. When the sale went through, he received proceeds of about $10 million that he subsequently invested. Some months later, facing a $3 million tax bill, Jonathan was left with two options: liquidate assets, or remain invested and borrow from his line of credit.
He and his J.P. Morgan Advisor worked together to evaluate the opportunity costs of selling assets ahead of the April filing date versus using borrowed funds to pay the taxes. With the low interest rate on his credit line, they found that if Jonathan received only modest portfolio gains that the cost of the loan would be recouped.
As it turned out, Jonathan’s portfolio realized an incremental value of about $160,000 compared to not liquidating holdings and using a line of credit. He was also better able to manage cash flow and avoid triggering capital gains taxes. All case studies are shown for illustrative purposes only, and are hypothetical. Any name referenced is fictional. Information is not a guarantee of future results.
All case studies are shown for illustrative purposes only, and are hypothetical. Any name referenced is fictional. Information is not a guarantee of future results.
Roger and his wife wanted to buy a residence in San Francisco, where large Victorian homes often receive multiple bids. Roger had an edge over other bidders because he already had a line of credit established. When the time came, he was able to offer cash for the $2 million home he and his wife most desired. The seller had slightly higher bids but chose Roger’s because payment was immediate and ensured. Following the deal, Roger and his wife took out a mortgage on the home for $750,000—which their tax advisor told them was the maximum allowed in order to take deductions on interest payments for mortgages under current law. Later, Roger and his wife were vacationing in Florida and saw an opportunity to flip a house. Their ability to pay in cash by tapping their line of credit netted them a discount on the price of the property, which increased their profit at resale. All case studies are shown for illustrative purposes only, and are hypothetical. Any name referenced is fictional. Information is not a guarantee of future results.
All case studies are shown for illustrative purposes only, and are hypothetical. Any name referenced is fictional. Information is not a guarantee of future results.
Sally is retired comfortably. In addition to her 401(k) and IRA accounts, she keeps a separate pool of money for taxable investments. Most of those funds are in a portfolio that she’s asked J.P. Morgan to manage conservatively. With another portion, she decided to venture into private direct investments, taking on more risk in search of greater potential returns.
Sally committed to investing in a tech startup, which in this case meant agreeing to meet that company’s capital call at least once in the next three years. Problem is, capital calls can be sudden, significant and unpredictable. Sally didn’t want to keep that much cash idle. She also didn’t want to disrupt her conservative portfolio with a sudden selloff for liquidity’s sake—as she knows a portfolio’s returns are generally better when steadily invested over the long term. What to do?
Her J.P. Morgan representative reminded her that she had her line of credit available, through which she would be able to meet her short-term obligations and design her timeline for paying the loan off.
All case studies are shown for illustrative purposes only, and are hypothetical. Any name referenced is fictional. Information is not a guarantee of future results.
Why using a Portfolio Line of Credit can be a smart alternative, and help you reach your goals:
Preserve available cash and keep your investment strategy and plans intact
Only the funds you use incur interest charges, which may be lower than other financing options
Quickly access liquidity for a range of uses—like a tax payment or a time-sensitive opportunity
Easy access to funds using
1Trust and entity accounts do not currently have online access.