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SBLOC (Securities-Backed Lines of Credit) Explained in 3 Minutes
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- Опубліковано 8 сер 2024
- In less than 3 minutes, I'm going to explain how the rich get richer and avoid paying taxes by using the SBLOCs. SBLOCs are non-purpose loans, which means you can use them for anything but to purchase or trade securities like stocks, bonds, or mutual funds.
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⏰ Table of Contents ⏰
0:00 Introduction
0:10 What is an SBLOC?
1:58 How do I get an SBLOC?
#FIREPsyChat #FinancialIndependence #SBLOC
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Thank you so much. I just realized I did this unintentionally 🙏🙏🙏🙏🙏 proof I’m not crazy
Thanks for sharing. Great information.
How is SBLOC paid back? Can the dividend you make in the account go towards paying back the loan?
EXCELLENT presentation, man.
Thanks for sharing this rich information in such a concise manner.
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Anytime!!
Is video is super helpful. Thank you !
Of course!
What are your thoughts on the SBLOCs? By the way, are you looking to join the FIRE journey? You can schedule a free 20-minute 1-on-1 financial coaching session by filling out the Introductory Forum ➡️ www.firepsychat.com/introductory
how does SBLOC affect your credit score? what are the terms? also, who offers SBLOC?
Great questions. I know HELOCs do get reported to credit bureaus but I don’t believe SBLOCs do. This is according to my research and I encourage you to do your own research before you apply for one. It is obviously not for everyone. You should contact your broker to see if they offer it.
Great info! Do you think it’s silly to use an SBLOC to buy a house that would be my primary residence? I just don’t understand how long it would take to repay the loan. Thanks.
Thanks so much, that was really amazing information. Do you know what kind of interest rates these usually go for!
Thanks! It depends so you’ll have to contact them!
Great video
Thanks!
Can you write off the interest on my tax return?
Succinct!
Question: Can you use a SBLOC to pay off a HELOC? Or is it only for regular bills like mortgages, credit card bills etc?
Good question I don't see why you can't since it's basically cash you're taking out. I would talk to a tax attorney tho
I am debating using a line of credit from my brokerage that only charges 1% above the federal funds rate to buy a house internationally where Bank financing is not an option , I was interested if you know how I would be able to buy or get a swap on the interest rate to swap it to a fixed rate I presume I would have to set a duration
To circumvent the restriction about buying stocks with SBLOCs, why not just buy another liquid asset, sell the asset immediately and use that money to buy stocks/securities ??
Ultimately the restriction seems pointless to the point that its just a hurdle.
@Psy. If I anyway have to sell my securities to pay back the SBLOC, what's the point of taking it?
You’ll have to talk to your bank about the “point” of taking a LOC. Some pay back using other sources of income. It isn’t for everyone
Also you have all your stocks working for you during that year, and pay no capital gain taxes when using the money.
Could you borrow each year? Like 5% of portfolio each year?
You’re thinking margin. This is a line of credit. I think it depends on the broker too so you should ask ✌️
@@FIREPsyChat I mean like taking 5% each year to pay for your expenses
That's up to you because in the end you're the one making the payments within your risk tolerance. Keep in mind this is just an educational video I'm not recommending anyone to borrow money.
Is SBLOC a fixed interest loan? How is it different than a margin loan other than not being able to buy more securities? Can you buy a home using an SBLOC? Is there any benefits to buying a home on an SBLOC as opposed to applying for an FHA Loan?
Great questions and make sure you talk to the bank about the SBLOC. When I talked to Chase, I could virtually buy anything with the SBLOC but it’s based on the balance I have in my taxable brokerage account. If you have 500k then you could prob get a revolving line of credit for 250k. But you have to be able to pay it back (obviously). Because it’s a form of debt, I always advice to only chew what you can bite. Again, I don’t know how every bank operates so you should ask yours. You can always visit our website at firepsychat.com/coaching if you need further consultation.
Thanks for the reply! Watching some of your videos while on my own FIRE journey. Great channel!
Nice and thank you!
Isn’t this how CEOs pay themselves and pay no taxes?
Is there a real estate-based type of loan that has the same characteristics and offers the benefits as an SBLOC?