I think the real play will be leveraging lines of credit against Bitcoin -- once the space evolves a bit more. 99% will be mined by 2030 but the following 1% will take 110 additional years causing a bit of an exponential curve and the ability to take a higher frequency of credit lines against it.
Completely agree and I look forward to when Bitcoin and perhaps some others get to that point. Though I do think we are many years away from that point.
If the point of the strategy is to leverage your existing assets to purchase more assets, then how do you service the interest payments without selling off the new or old assets? Earned incomed? Incoming producing real estate? Dividens from other assets?
Question: Why not just use a regular margin loan and accomplish the same thing? Also, from my understanding SBLOCs are for other types of investments beside securities. Right? I dont know, just asking.
Thanks! You technically can do an SBLOC against any publicly traded stock. However, I would never do one against one single stock like you mentioned. This can be extremely risky and get you in a lot of trouble like John Foley - Peloton founder. I think best practices are doing SBLOCs against S&P 500 index funds and safe large cap stocks.
Love this video!! If I transfer my brokerage to IKBR from E*Trade then take out SBLOC at IKBR. I can’t transfer back to E*trade until I pay off the loan?
Honest question what's your net worth? I'm asking cuz half these finance gurus are talking about how to invest make money when they don't even have results to show. Like getting fitness tips from someone out of shape
That's a really smart question. However, I prefer not to disclose my net worth publicly. I guess you will have to bank on the fact that you'll never see any pictures of ridiculous sports cars anywhere on my channel. That should probably offer a pretty good hint.
@sharonwinsmith- good video. What’s your take on the strategy of never paying back the margin loan, and just let it keep growing with interest. This is what the rich do, and allows you to keep more cash in investments . ( as long as the portfolio grows enough to keep it at least 50% above the loan amount )
Thank you! I never pay down the balance of the SBLOC. You are right that it is the strategy the wealthy do. I like to keep as close to 100% of my money invested at all times as possible.
@@sharonwinsmith - Follow up question - for retirees, if the portfolio is big enough, do you recommend using margin for all your living expenses, and not paying down any margin, and instead use the income from the portfolio’s high yield dividends to reinvest for the compounding effect ? ( as long as the portfolio stays ahead of the margin balance by 50%). ?
You don't need an LLC to do an SBLOC. However, many high net worth investors prefer to use the WY LLC for passive investments but that is not specific to the SBLOC strategy.
Ofcourse. Thats how they make money. Thats what i thought but i kept seeing videos where ppl claimed that you essentially paying yourself. Which we are but not the interest.
From a U.S. tax perspective, you should be able to get a deduction for the interest for your Italian rental property on your U.S. tax return. If you are asking as an Italian resident, I'm not super familiar with Italian tax law so wouldn't want to comment on that.
Where are you even seeing 4% interest rates on SBLOC?? Before you even say "at the time of this recording" no interest rates were even higher few months ago. 4% rates were 2021 era. You're talking 8% cuz it's based on SOFR. Also you're sayin you used conservative estimates on this... lol no these are just inaccurate estimates Edit: didn’t realize Interactive brokers was beating the competition that much!! I was wrong
This is wrong. It is not always based on SOFR. I am not currently paying 8% on my SBLOC. I am paying less than 7% right now. Not sure where you are getting your rates from but this is inaccurate information. I was paying less than 4% at the time of recording that video.
@@sharonwinsmith I apologize if I was wrong on this. I was going off what I saw at Schwab and chase. I had no idea you’re able to get under 7% still rn. Is that thru interactive brokers? Apologies again for the misunderstanding I did not mean for it to come off aggressively! Hope you have a beautiful day thanks for the amazing content!
I think this is one of the best questions to be asking. Finding a way to get in touch with quality real estate, private equity, VC, etc. fund sponsors was a gamechanger for me. I cover my personal approach to finding good deal flow in my Investment Tax Strategies course - taxplanninghq.com/investment-tax-strategies/
@@MR2trader can you think of any hacks that can get it done, that you can get to use the cash, but it can still stay in play?, and it’s still growing tax free in the Roth?
@@MR2trader how about this for a hack? You have some other big asset. For simplicity sake, you have a primary home with a bunch of equity in it. Put a HELOC on it. Then you use the mega Roth to earn the payments for the HELOC. The mega Roth should make enough tax free to service the debt . You’re leaving the mega Roth in the market to continue to work. You use the HELOC money to pursue whatever other investment that you’re interested in that makes a return also. Perhaps cash flow real estate. Worst case, you could still liquidate the Roth to take care of the HELOC in a pinch. Thoughts?
How do you compare the risk of this strategy to simply investing the original $2MM in a higher return / higher risk fund, say with an expected return of also 11%
It would depend on a lot of factors. If someone knows what they are doing and are a savvy investor, I personally don't think the SBLOC strategy is risky. However, easy to see how one could get themselves into trouble if they engage in stock picking, short-term trades, small cap stocks, etc.
It is crazy, but at the same time, these are floating interest rates. When rates are high like now, it's best to accelerate the payment period to avoid paying too much interest.
How to Do an SBLOC at IBKR ▶ ruclips.net/video/I098YVVPKNg/видео.html
Excellent content. Please keep these coming! This compressed 6 months of "be your own bank" learning into 15 min.
Thank you for watching! :)
You're a really helpful RUclipsr with real world experience thank you!
Thank you for watching!
Amazing video. Cant wait to build intergenerational wealth. Thank you, truly
Thank you! 😁
Just completed your Buy,Borrow Die course. As a layman I found it incredibly easy to understand. Best money I've ever spent. Thank you Sharon!
Thank you so much for your kind words! Glad you enjoyed the course 😁
I've done well enough to invest this way and live this way now. Thank you for this video. Sucking in all this information before I jump in. Subbed
Thank you - welcome aboard!
Great Insights which you dont normally find. Wonderful video Sharon ! thank you.
Thank you for your kind words and for watching!
thank you for your contribution to the betterment of society!
Thank you for watching!
I'm loving your videos. Please keep them coming. 🙏🏼🙏🏼
Thank you for watching!
Thanks so much for this information. You make it easy for a Layman to understand.
Thank you for your kind words! 😀
@@sharonwinsmith My pleasure
I've been looking for a specific example like this. Thank you
Thank you for watching!
I think the real play will be leveraging lines of credit against Bitcoin -- once the space evolves a bit more. 99% will be mined by 2030 but the following 1% will take 110 additional years causing a bit of an exponential curve and the ability to take a higher frequency of credit lines against it.
Completely agree and I look forward to when Bitcoin and perhaps some others get to that point. Though I do think we are many years away from that point.
As far as a margin call, your real estate investment would have to drop significantly at least 55% to trigger a margin call at 25% maintenance margin.
If the point of the strategy is to leverage your existing assets to purchase more assets, then how do you service the interest payments without selling off the new or old assets? Earned incomed? Incoming producing real estate? Dividens from other assets?
It depends… if you are still employed, single, married etc… but overall you can use your cash whether from your bank or gains.
Sharon, great scenario content on the SBLOC video. Could you do a video on which Real Estate Funds to invest into?
Thank you - I would start with this video ▶️ ruclips.net/video/JBJTOXRb-1s/видео.html
insightful
What about a repayment strategy. What's the best approach to pay back the margin loan so you don't have to 4% interest looming over forever.
Question: Why not just use a regular margin loan and accomplish the same thing? Also, from my understanding SBLOCs are for other types of investments beside securities. Right? I dont know, just asking.
I know of mortgage loan interests deductions but never heard of investment loan interests deductions. Is there such deductions?
Love it, great channel. Keep it going 🫡
Thank you so much for your kind words! 🙂
Any way to borrow against IRA’s?
Great job on all your videos. I have a biotech stock that's done well recently can I do an SBLOC on this one stock?
Thanks! You technically can do an SBLOC against any publicly traded stock. However, I would never do one against one single stock like you mentioned. This can be extremely risky and get you in a lot of trouble like John Foley - Peloton founder. I think best practices are doing SBLOCs against S&P 500 index funds and safe large cap stocks.
Love this video!!
If I transfer my brokerage to IKBR from E*Trade then take out SBLOC at IKBR. I can’t transfer back to E*trade until I pay off the loan?
That is correct
@@sharonwinsmith thank you so much - love your channel ! 👍
Honest question what's your net worth? I'm asking cuz half these finance gurus are talking about how to invest make money when they don't even have results to show. Like getting fitness tips from someone out of shape
That's a really smart question. However, I prefer not to disclose my net worth publicly. I guess you will have to bank on the fact that you'll never see any pictures of ridiculous sports cars anywhere on my channel. That should probably offer a pretty good hint.
Can i borrow against index fund investments in my portfolio?
Yes - you can take an SBLOC against index funds.
Where did you get $220,000 earlier in the video? I'm trying to figure the math out.
160 (from stock gains) + 100 (from real estate) - 40 (interest) = 220 total gain
@sharonwinsmith- good video. What’s your take on the strategy of never paying back the margin loan, and just let it keep growing with interest. This is what the rich do, and allows you to keep more cash in investments . ( as long as the portfolio grows enough to keep it at least 50% above the loan amount )
Thank you! I never pay down the balance of the SBLOC. You are right that it is the strategy the wealthy do. I like to keep as close to 100% of my money invested at all times as possible.
@@sharonwinsmith - Follow up question - for retirees, if the portfolio is big enough, do you recommend using margin for all your living expenses, and not paying down any margin, and instead use the income from the portfolio’s high yield dividends to reinvest for the compounding effect ?
( as long as the portfolio stays ahead of the margin balance by 50%). ?
Why should I take an SBLOC instead of a cash out?
Because you would pay tax on the gain and lose out on any future appreciation in the shares.
do i need an llc for this?
You don't need an LLC to do an SBLOC. However, many high net worth investors prefer to use the WY LLC for passive investments but that is not specific to the SBLOC strategy.
Interest on sbloc is paid to ourselves? How does that work?
Does this mean say 3k Interest is paid on the sbloc, does this 3k go into my account?
Interest on an SBLOC is paid to the brokerage firm you are borrowing from.
Ofcourse. Thats how they make money.
Thats what i thought but i kept seeing videos where ppl claimed that you essentially paying yourself. Which we are but not the interest.
Is it possible to get an SBLOC and purchase a rental property in Italy and then use the interest as a tax deduction?
From a U.S. tax perspective, you should be able to get a deduction for the interest for your Italian rental property on your U.S. tax return. If you are asking as an Italian resident, I'm not super familiar with Italian tax law so wouldn't want to comment on that.
@@sharonwinsmith This really is useful information, thank you so much!
Thanks for watching!
Where are you even seeing 4% interest rates on SBLOC?? Before you even say "at the time of this recording" no interest rates were even higher few months ago. 4% rates were 2021 era. You're talking 8% cuz it's based on SOFR. Also you're sayin you used conservative estimates on this... lol no these are just inaccurate estimates
Edit: didn’t realize Interactive brokers was beating the competition that much!! I was wrong
This is wrong. It is not always based on SOFR. I am not currently paying 8% on my SBLOC. I am paying less than 7% right now. Not sure where you are getting your rates from but this is inaccurate information. I was paying less than 4% at the time of recording that video.
@@sharonwinsmith I apologize if I was wrong on this. I was going off what I saw at Schwab and chase. I had no idea you’re able to get under 7% still rn. Is that thru interactive brokers? Apologies again for the misunderstanding I did not mean for it to come off aggressively! Hope you have a beautiful day thanks for the amazing content!
FYI I'm paying 4.5% on my IUL policy loan fo ar syndication investment.
How many years is this
SBLOCs can usually be used indefinitely
Where do you search and find high quality real estate funds that are paying 10%+?
I think this is one of the best questions to be asking. Finding a way to get in touch with quality real estate, private equity, VC, etc. fund sponsors was a gamechanger for me. I cover my personal approach to finding good deal flow in my Investment Tax Strategies course - taxplanninghq.com/investment-tax-strategies/
How about putting an SBLOC on a $2M ROTH? Is that possible?
Banks don't allow borrowing against qualified accounts
@@MR2trader can you think of any hacks that can get it done, that you can get to use the cash, but it can still stay in play?, and it’s still growing tax free in the Roth?
@@MR2trader how about this for a hack?
You have some other big asset. For simplicity sake, you have a primary home with a bunch of equity in it. Put a HELOC on it.
Then you use the mega Roth to earn the payments for the HELOC. The mega Roth should make enough tax free to service the debt . You’re leaving the mega Roth in the market to continue to work. You use the HELOC money to pursue whatever other investment that you’re interested in that makes a return also. Perhaps cash flow real estate.
Worst case, you could still liquidate the Roth to take care of the HELOC in a pinch.
Thoughts?
Don't be hateful about bonds. 10+ years of maturity treasuries are eligible for 300% margin 😉
Not a big fan of bonds
300% margin? Explain more?
How do you compare the risk of this strategy to simply investing the original $2MM in a higher return / higher risk fund, say with an expected return of also 11%
It would depend on a lot of factors. If someone knows what they are doing and are a savvy investor, I personally don't think the SBLOC strategy is risky. However, easy to see how one could get themselves into trouble if they engage in stock picking, short-term trades, small cap stocks, etc.
Do you pay back the principle you borrowed?
Yes, you are on the hook for the principal. However, usually you can defer principal payments indefinitely and only pay interest currently.
@@sharonwinsmith indefinitely!? thats actually crazy
It is crazy, but at the same time, these are floating interest rates. When rates are high like now, it's best to accelerate the payment period to avoid paying too much interest.