- My Forums
- Tiger Rant
- LSU Recruiting
- SEC Rant
- Saints Talk
- Pelicans Talk
- More Sports Board
- Fantasy Sports
- Golf Board
- Soccer Board
- O-T Lounge
- Tech Board
- Home/Garden Board
- Outdoor Board
- Health/Fitness Board
- Movie/TV Board
- Book Board
- Music Board
- Political Talk
- Money Talk
- Fark Board
- Gaming Board
- Travel Board
- Food/Drink Board
- Ticket Exchange
- TD Help Board
Customize My Forums- View All Forums
- Show Left Links
- Topic Sort Options
- Trending Topics
- Recent Topics
- Active Topics
Started By
Message
Buy, Borrow, Die feasability?
Posted on 5/27/26 at 12:11 pm
Posted on 5/27/26 at 12:11 pm
At what portfolio size does buy, borrow, die become feasible strategy for everyday millionaires or is it just for the ultra wealthy?
I'm exploring idea of borrowing against taxable brokerage to augment fun spending and/or pay tax on Roth conversions. (Primary expenses and current comfortable lifestyle fully covered w pension and part time job I enjoy)
I can borrow against taxable portfolio ar 5.08% (variable.) The idea would be to borrow in lieu of selling shares and paying 15% LTCG and reducing my invested capital. Long term I expect market to out pace interest and eventually heirs can pay off the debt with the inherited assets with stepped up basis and zero LTCG tax. I'd borrow no more than 2% of taxable portfolio each year and stop if balance approaches 30%.
This would allow us to increase lifestyle in early retirement without locking into 72(t) or selling taxable assets and paying LTCG instead of allowing them to continue growth and passing more to heirs with tax free step up.
Other than a black swan event/massive market crash and interest rate risk, what am I missing?
Is 2% per year and 30% of portfolio max a reasonable guardrail?
I'm exploring idea of borrowing against taxable brokerage to augment fun spending and/or pay tax on Roth conversions. (Primary expenses and current comfortable lifestyle fully covered w pension and part time job I enjoy)
I can borrow against taxable portfolio ar 5.08% (variable.) The idea would be to borrow in lieu of selling shares and paying 15% LTCG and reducing my invested capital. Long term I expect market to out pace interest and eventually heirs can pay off the debt with the inherited assets with stepped up basis and zero LTCG tax. I'd borrow no more than 2% of taxable portfolio each year and stop if balance approaches 30%.
This would allow us to increase lifestyle in early retirement without locking into 72(t) or selling taxable assets and paying LTCG instead of allowing them to continue growth and passing more to heirs with tax free step up.
Other than a black swan event/massive market crash and interest rate risk, what am I missing?
Is 2% per year and 30% of portfolio max a reasonable guardrail?
6
Posted on 5/27/26 at 1:12 pm to TorchtheFlyingTiger
I just don't think it is worth the headache. There's a very plausible story that equities don't even perform above your interest rate and you would be fricked.
Unless you are above 10 million I would not bother
Unless you are above 10 million I would not bother
Posted on 5/27/26 at 1:19 pm to TorchtheFlyingTiger
I mean if we are talking margin loans, I don't see a lot of scenarios where it is wortht he risk just for funding cash flow. They are geared at purchasing more securities or assets, though that isn't required.
The buy, borrow, die scenario is really only feasible with SBLOC's and those generally require an initial loan of ~$70k minimum as the initial offering. They have much lower and stable interest rates than the margin loans do. However, for the scenario you are drawing out, 2% of that would need a taxable account of $3.5M in order to do. If you did the whole 30% max up front then you'd just need a $233k account size.
ETA: I may have read your hypothosis a bit wrong. Maybe you are talking about just the draw size not being more than 2% of the account each year, which obviously would be a lot different than the overall LOC size being 2%
The buy, borrow, die scenario is really only feasible with SBLOC's and those generally require an initial loan of ~$70k minimum as the initial offering. They have much lower and stable interest rates than the margin loans do. However, for the scenario you are drawing out, 2% of that would need a taxable account of $3.5M in order to do. If you did the whole 30% max up front then you'd just need a $233k account size.
ETA: I may have read your hypothosis a bit wrong. Maybe you are talking about just the draw size not being more than 2% of the account each year, which obviously would be a lot different than the overall LOC size being 2%
This post was edited on 5/27/26 at 2:05 pm
Posted on 5/27/26 at 1:20 pm to TorchtheFlyingTiger
Some people do this with smaller account through margin investing, i follow a few youtubers doing this
Once your account gets significant enough they start to offer SBLOC as well...which is more typical buy borrow die strategy that you might hear about
It's a risky strategy, flat out. The youtubers I follow are close to 40-50% margin range in their portfolios and a big downturn could destroy their accounts with margin calls frankly
It's an interesting very advanced strategy, but feel like unless you're very wealthy its not worth the high risk.
Robinhood makes this strategy very tempting because their margin rates beat pretty much SBLOC rates out there anyways. It starts at 5% for under $50k and goes downto 4.25% by $1M
You always hear about these strategies for the "common person" during huge bull market runs, but funny enough disappear once you see a downturn like we had in 2022 as well.
Once your account gets significant enough they start to offer SBLOC as well...which is more typical buy borrow die strategy that you might hear about
It's a risky strategy, flat out. The youtubers I follow are close to 40-50% margin range in their portfolios and a big downturn could destroy their accounts with margin calls frankly
It's an interesting very advanced strategy, but feel like unless you're very wealthy its not worth the high risk.
Robinhood makes this strategy very tempting because their margin rates beat pretty much SBLOC rates out there anyways. It starts at 5% for under $50k and goes downto 4.25% by $1M
You always hear about these strategies for the "common person" during huge bull market runs, but funny enough disappear once you see a downturn like we had in 2022 as well.
This post was edited on 5/27/26 at 1:24 pm
Posted on 5/27/26 at 1:26 pm to thunderbird1100
quote:
Robinhood makes this strategy very tempting because their margin rates beat pretty much SBLOC rates out there anyways. It starts at 5% for under $50k and goes downto 4.25% by $1M
Holy shite. That is less than half what is typical for a margin loan. Bonkers.
This post was edited on 5/27/26 at 1:27 pm
Posted on 5/27/26 at 1:34 pm to thunderbird1100
I already have the SBLOC in place at SOFR +1.55% (currently 5.08%). I opened it 4 years ago back when rate was below 3% so I could make down payment on our retirement house without selling assets and paying LTCG. I was still debt averse so as rates climbed I started paying it down but now I've shifted mentality and won't consider payments until rate exceeds 6%. They just let the interest active with no min payment due or extra fees. So far it's been a great move as I avoided LTCG and the assets I would have sold have grown substantially past 4 years.
This post was edited on 5/27/26 at 7:18 pm
Posted on 5/27/26 at 1:41 pm to TorchtheFlyingTiger
If you can’t pay cash you can’t afford it - Dave Ramsey
Posted on 5/27/26 at 1:58 pm to GoCrazyAuburn
quote:
They are geared at purchasing more securities or assets, though that isn't required.
Not sure if this is of value to OP, but could this be used to diversify a concentrated taxable portfolio, go long & short on new assets with some of margin loan and create / harvest tax losses?
May be solving something that’s not a problem for OP. Or might invite tax loss opportunity with same assets and margin loan that may have value (less taxes).
Posted on 5/27/26 at 2:02 pm to Everyday Is Saturday
Could you? Sure.
Going to speak in generalities here, but usually you aren't going to use a margin loan for something too incredibly speculative or risky as they will normally already have some pretty high interest rates. They are much more used for immediate liquidity needs to either large asset or business purchases or for immediate tax/estate bills and to avoid paying LTCG. Not to say you couldn't use it for whatever they heck you wanted to, but there are lots of scenarios it bites you in the arse hard.
Going to speak in generalities here, but usually you aren't going to use a margin loan for something too incredibly speculative or risky as they will normally already have some pretty high interest rates. They are much more used for immediate liquidity needs to either large asset or business purchases or for immediate tax/estate bills and to avoid paying LTCG. Not to say you couldn't use it for whatever they heck you wanted to, but there are lots of scenarios it bites you in the arse hard.
Posted on 5/27/26 at 2:33 pm to el Gaucho
I can pay cash. I just prefer to keep my assets fully invested and not realize LTCG tax when the plan is to pass most of those assets to heirs with stepped up basis tax free.
Dave is great for financial discipline (and helped us reinforce good habits) but I've progressed beyond the zero debt dogma. Besides, Dave would tell me with a straight face and utter conviction that I could confidently spend 8% of my retirement savings annually in perpetuity. (Zero awareness of sequence of returns risk)
Dave is great for financial discipline (and helped us reinforce good habits) but I've progressed beyond the zero debt dogma. Besides, Dave would tell me with a straight face and utter conviction that I could confidently spend 8% of my retirement savings annually in perpetuity. (Zero awareness of sequence of returns risk)
Posted on 5/27/26 at 3:05 pm to TorchtheFlyingTiger
I basically already do this on a smaller scale with my HELOC. I could pay off the HELOC with invested assets but would have to pay taxes on them and lose future gains. Eventually I will pay off the HELOC either with normal income cash flow or selling of house.
Posted on 5/27/26 at 3:47 pm to vistajay
Good to hear from someone using similar tactic. Any particular reason you went HELOC vs SBLOC? One HELOC advantage I can see is no risk of a collateral call/forced liquidation. SBLOC rates are cheaper though from what I've seen and no required monthly payments. In my case most my assets are tied up in brokerage with little home equity so far so HELOC is off the table.
Posted on 5/27/26 at 3:52 pm to TorchtheFlyingTiger
HELOC is just easier, as I've had one for a while.
Posted on 5/27/26 at 4:07 pm to TorchtheFlyingTiger
quote:
no required monthly payments
They still have required payments to my knowledge, just interest only payments. If you've found one that doesn't require that, that's pretty impressive.
quote:
Any particular reason you went HELOC vs SBLOC?
Won't speak to the other poster, but i'd wager most people don't have a truly significant taxable brokerage account balance substantial enough to really entertain SBLOC's, hell most out there barely have retirement accounts adequate for retirement, let alone a brokerage account on top of those
. So, HELOC is realistically their only feasible route. I'd say the SBLOC definitely has a benefit in that generally it won't have a maturity date. So, if trying to truly do the "die" part of the scenario, it more feasible for that.
This post was edited on 5/27/26 at 4:08 pm
Posted on 5/27/26 at 4:41 pm to GoCrazyAuburn
I don't know about other but my brokerage doesn't require payments.
I just triple checked. The statement shows a "total amount due this period" that equals the monthly finance charge and a due date. It also shows zero payment, zero past due amount and zero late charges. I remember calling them awhile back when there was an extra fee charged once and they said it was a glitch and was already being removed.
I even just double checked the finance charge corresponded with the interest rate and didn't mask extra fees.
Oddly, Google says my broker does require payments but some others do not. Apparently IBKR treats it like a margin loan you can draw on but requiring no monthly payment. I guess I negotiated a better arrangement than I realized.
I just triple checked. The statement shows a "total amount due this period" that equals the monthly finance charge and a due date. It also shows zero payment, zero past due amount and zero late charges. I remember calling them awhile back when there was an extra fee charged once and they said it was a glitch and was already being removed.
I even just double checked the finance charge corresponded with the interest rate and didn't mask extra fees.
Oddly, Google says my broker does require payments but some others do not. Apparently IBKR treats it like a margin loan you can draw on but requiring no monthly payment. I guess I negotiated a better arrangement than I realized.
Posted on 5/27/26 at 4:43 pm to TorchtheFlyingTiger
Huh, that is interesting. I've never seen a SBLOC that doesn't have required interest only payments.
Posted on 5/28/26 at 12:19 pm to TigahsOnTop
Running various scenarios through AI and Monte Carlo, it seems to have an extremely low failure rate especially as I add guardrails etc.
Defining success as ending portfolio value (minus debt) remains above $1m after 10 year horizon (until I can tap IRAs normally)
-Only taking $35k (plus inflation adjust)
- Add guardrail of no withdrawals any year market is 15% below all time high
There is almost zero chance of margin call and ending portfolio is higher in most scenarios than simply selling shares to reap $35k post tax.
Defining success as ending portfolio value (minus debt) remains above $1m after 10 year horizon (until I can tap IRAs normally)
-Only taking $35k (plus inflation adjust)
- Add guardrail of no withdrawals any year market is 15% below all time high
There is almost zero chance of margin call and ending portfolio is higher in most scenarios than simply selling shares to reap $35k post tax.
Posted on 5/28/26 at 12:19 pm to Everyday Is Saturday
Seems like this would be discussed more in FIRE/early retirement circles for those with large taxable portfolios used to bridge until 59.5. Maybe it's because it only works if you have most expenses covered from other sources otherwise too risky and need much higher balance? Or I'm just being foolish and/or missing something critical in my analysis.
Posted on 5/28/26 at 12:26 pm to TorchtheFlyingTiger
When you do a Roth conversion, you have to pay the income tax out of pocket. If you pull money out of the traditional IRA to pay the tax, you lose out on compounding growth and get hit with a penalty if you are under 59.5.
Moreover, for ex, you convert $50,000 from Traditional to Roth. You draw $12,000 from your SBLOC to pay the IRS. Your taxable investments remain untouched and continue to grow.
You shifted a high-friction tax event into a low-interest line of credit, allowing your newly converted Roth assets to grow entirely tax-free, in perpetuity.
Moreover, for ex, you convert $50,000 from Traditional to Roth. You draw $12,000 from your SBLOC to pay the IRS. Your taxable investments remain untouched and continue to grow.
You shifted a high-friction tax event into a low-interest line of credit, allowing your newly converted Roth assets to grow entirely tax-free, in perpetuity.
Posted on 5/28/26 at 12:29 pm to Breauxsif
quote:
You draw $12,000 from your SBLOC to pay the IRS. Your taxable investments remain untouched and continue to grow.
What do you use to pay back SBLOC?
I saw SBLOC as a from / to bridge tool, not necessarily ongoing (multi year Roth conversions).
For example, the sale & purchase of new home…to bridge mis-timing of a home (buy before selling).
But I must be missing something.
This post was edited on 5/28/26 at 12:33 pm
Page 1 of 2
Popular
Back to top
Follow TigerDroppings for LSU Football News