The Greatest Wealth Transfer in History Is Here, with Familiar (Rich) Winners
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Re: The Greatest Wealth Transfer in History Is Here, with Familiar (Rich) Winners
#2Re: The Greatest Wealth Transfer in History Is Here, with Familiar (Rich) Winners
#3> Mr. Pearl noted that people with only a couple of million can use “securities-based loans,” borrowing low-cost funds from banks using the value of a given investment portfolio as collateral. “You just loan yourself money,” he explained, and in many if not most cases, the portfolio’s rate of return exceeds the rate of interest on the loan.
It seems like a step is missing here. Wouldn’t the borrower have to sell part of the portfolio to pay the interest on the loan? And wouldn’t that trigger capital gains?
Re: The Greatest Wealth Transfer in History Is Here, with Familiar (Rich) Winners
#4> Mr. Pearl noted that people with only a couple of million can use “securities-based loans,” borrowing low-cost funds from banks using the value of a given investment portfolio as collateral. “You just loan yourself money,” he explained, and in many if not most cases, the portfolio’s rate of return exceeds the rate of interest on the loan. It seems like a step is missing here. Wouldn’t the borrower have to sell part…
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Re: The Greatest Wealth Transfer in History Is Here, with Familiar (Rich) Winners
#5> Mr. Pearl noted that people with only a couple of million can use “securities-based loans,” borrowing low-cost funds from banks using the value of a given investment portfolio as collateral. “You just loan yourself money,” he explained, and in many if not most cases, the portfolio’s rate of return exceeds the rate of interest on the loan. It seems like a step is missing here. Wouldn’t the borrower have to sell part…
Sure.
But if you liquidate the loan payment every month, but the portfolio grows greater than the loan interest you are “making money” (not really until you actually covert to $)
If you liquidated the full loan amount up front, you get all of the tax now, and you lose leverage
Edit:
Let’s make an example. You have a 10MM portfolio.
You wanna buy a thing for a million dollars.
You sell like 1.3MM to cover tax.
Or you get a 10 year loan for 1MM with your 10MM portfolio.
Interest on the loan is 7%.
If your portfolio averages greater return over the life of the loan, you “make money”.
Re: The Greatest Wealth Transfer in History Is Here, with Familiar (Rich) Winners
#6Meanwhile the estate tax in the US only applies to inheritances larger than $12.9 million. People with that kind of wealth also know how to start planning early to avoid the tax, so the tax is practically ineffectual.
A fairer inheritance tax could go a long way to fixing the worsening wealth gap in America.
Re: The Greatest Wealth Transfer in History Is Here, with Familiar (Rich) Winners
#7> Mr. Pearl noted that people with only a couple of million can use “securities-based loans,” borrowing low-cost funds from banks using the value of a given investment portfolio as collateral. “You just loan yourself money,” he explained, and in many if not most cases, the portfolio’s rate of return exceeds the rate of interest on the loan. It seems like a step is missing here. Wouldn’t the borrower have to sell part…
Sure. But if you liquidate the loan payment every month, but the portfolio grows greater than the loan interest you are “making money” (not really until you actually covert to $) If you liquidated the full loan amount up front, you get all of the tax now, and you lose leverage Edit: Let’s make an example. You have a 10MM portfolio. You wanna buy a thing for a million dollars. You sell like 1.3MM to cover tax. Or you…
https://www.wealthfront.com/portfolio-line-of-credit
Here is an example product.
As you get higher the rates can come down a liiiitle bit, but they are very much tied to the federal funds rate as much is I’ve seen them.
Re: The Greatest Wealth Transfer in History Is Here, with Familiar (Rich) Winners
#8> Mr. Pearl noted that people with only a couple of million can use “securities-based loans,” borrowing low-cost funds from banks using the value of a given investment portfolio as collateral. “You just loan yourself money,” he explained, and in many if not most cases, the portfolio’s rate of return exceeds the rate of interest on the loan. It seems like a step is missing here. Wouldn’t the borrower have to sell part…
Sure. But if you liquidate the loan payment every month, but the portfolio grows greater than the loan interest you are “making money” (not really until you actually covert to $) If you liquidated the full loan amount up front, you get all of the tax now, and you lose leverage Edit: Let’s make an example. You have a 10MM portfolio. You wanna buy a thing for a million dollars. You sell like 1.3MM to cover tax. Or you…
Right, that’s how I imagined it. But that’s not avoiding taxes so much as delaying taxes. Taxes are still paid but just slowly as you liquidate only enough to pay payment and pay taxes.
Gaining in value isn’t an issue with avoiding taxes and, I suppose, eventually will result in more taxes being paid.
Re: The Greatest Wealth Transfer in History Is Here, with Familiar (Rich) Winners
#9Earlier quoted context omitted.
Sure. But if you liquidate the loan payment every month, but the portfolio grows greater than the loan interest you are “making money” (not really until you actually covert to $) If you liquidated the full loan amount up front, you get all of the tax now, and you lose leverage Edit: Let’s make an example. You have a 10MM portfolio. You wanna buy a thing for a million dollars. You sell like 1.3MM to cover tax. Or you…
Right, that’s how I imagined it. But that’s not avoiding taxes so much as delaying taxes. Taxes are still paid but just slowly as you liquidate only enough to pay payment and pay taxes. Gaining in value isn’t an issue with avoiding taxes and, I suppose, eventually will result in more taxes being paid.
No. Once you die and transfer the assets to your children, the cost basis gets reset.
Re: The Greatest Wealth Transfer in History Is Here, with Familiar (Rich) Winners
#10It is sort of interesting how Gen X is screwed here.
Also the children of Gen X eg under 18s and younger Gen Z today.