Are you thinking of launching a new business, but you need capital to move forward? Or perhaps you’ve found the perfect property to expand your real estate empire, but you lack the liquidity to secure it. For investors with substantial investment portfolios, selling their holdings often comes to mind as an obvious solution to raising cash – but is it the most strategic decision?

If selling would mean a sizable capital gains tax bill – or force you to exit positions you’d prefer to keep – then maybe not. You might want to instead consider a “buy-borrow-die” planning approach, which can help you potentially save on capital gains taxes and quickly access the liquidity you need through strategic investing and planning. At the same time, the strategy can help you establish a legacy for your children and other heirs without compromising your short-term financial goals.

This approach typically involves three steps:

1. Buy assets intended to grow over time, such as a diversified mix of stocks and bonds, in a taxable investment account.
2. Borrow against those assets to raise cash for spending or other goals. This avoids realizing capital gains, which could trigger capital gains tax. Borrowing also allows your investments to continue compounding. Investment proceeds are not considered taxable income until the assets are liquidated.
3. Pass down your assets at death to your inheritors as part of an overall estate plan and wealth transfer, which effectively reduces capital gains tax if the inheritor sells. Your debt and interest payments will also pass down as well.

By borrowing against your portfolio, you may be able to preserve more of your wealth. Read on to learn more about how this strategy works, as well as its potential benefits and risks.

The potential benefits of borrowing against your investment portfolio

Investors may have portfolios with large, unrealized gains, meaning their investments are worth more than what they paid. Selling those assets may trigger capital gains tax; in 2026, this can be as high as 20% for single filers with taxable incomes greater than $545,500 or married joint filers with taxable incomes greater than $613,700.¹ Some investors may also be subject to an additional 3.8% net investment income tax.²

Acquiring cash through borrowing against an investment portfolio can be used for a variety of financial goals, including:

• Real estate purchases
• Tax payments
• Lifestyle spending
• Business or investment opportunities
• Philanthropy
• Specialty assets, such as a yacht or luxury car

While reasons for borrowing may vary, the underlying appeal is often the same: creating liquidity in the short term without disrupting your long-term investment plan.

How to approach a buy-borrow-die strategy

Successfully executing a buy-borrow-die approach starts with getting the foundation right and making sure each step supports the next. That involves building a portfolio designed for long-term growth and flexibility, using borrowing selectively to meet liquidity needs, and coordinating repayment with your broader tax and estate plan. Here’s how the three steps fit together.

Step 1: Invest by building a liquid, diversified portfolio

The strategy starts long before you borrow. The goal is to build a liquid, diversified portfolio that can potentially increase in value over time. This can include both tangible and intangible assets, such as:

• Stocks and bonds
• Mutual funds or exchange-traded funds (ETFs)
• Money market funds and short-term Treasury funds

It is common practice to hold funds earmarked for a specific future use in more liquid investments, such as stocks and bonds.

Using investments that are easy to turn into cash is just one of several key principles you should keep in mind when building a flexible investment portfolio that can serve as reliable collateral if you ever need to borrow. You should also avoid putting all your eggs in one basket; if your portfolio is largely tied up in one stock or one industry, its value can suddenly drop, which would be a problem if you’re relying on it as a backup for a loan.

Ideally, you should invest in assets that can enjoy long-term growth while generating passive income. Once you’ve built your portfolio accordingly, you can then consider borrowing against a portion of it to meet your near-term cash needs without forcing a sale at an inopportune time.

Step 2: Borrow using a securities-based line of credit

There are several ways you can borrow against your assets, depending on the asset and your goals. A securities-based line of credit (SBLOC) is a common tool used to implement a buy-borrow-die strategy. Specifically, it’s a line of credit secured by eligible marketable securities – like stocks, bonds or mutual funds – held in a brokerage account. The investor does not have to sell the underlying securities but must pay back the cash they use, with interest.

Interest rates on SBLOCs can be variable but may be lower than those on traditional loans and lines of credit.³ Borrowers may be able to choose to make interest-only payments or principal payments, offering additional flexibility. Sometimes, there is no setup fee, credit check or financial disclosure required for an SBL.⁴ Borrowers can also decide what cadence their repayment schedule follows.

Of note, a borrower’s credit limit, known as the advance rate, can vary by institution as well as the overall value and type of holdings in the portfolio.

Step 3: Hold to preserve long-term wealth

A buy-borrow-die strategy can be used as a generational wealth transfer and estate planning tool for families. Rather than selling investments to satisfy liquidity needs, borrowing against a growing portfolio provides a lifelong stream of cash for the owner while preserving assets for their heirs.

Under current U.S. tax law, heirs may receive assets with a “stepped-up” cost basis equal to the fair market value on the date of the owner’s death.⁵ This effectively reduces – and, in some cases, eliminates – embedded capital gains tax if the inheritor sells, therefore minimizing a burdensome tax bill while maintaining the long-term value of the assets. Should heirs choose not to sell their assets, they may also choose to follow the buy-borrow-die strategy and continue to build wealth for the next generation of inheritors.

Compare this approach to gifting: If an investor were to gift securities to a would-be heir instead of holding them until death, the owner’s cost basis would carry over to the recipient at the time of the gift, potentially resulting in significant capital gains tax when the recipient later sells the asset.

By contrast, under a buy-borrow-die strategy, the loan doesn’t disappear at death; it typically becomes a debt of the estate and must be repaid, often using estate cash or by selling or transferring pledged assets, potentially reducing what heirs ultimately receive.

Where a buy-borrow-die strategy is implemented, families should take care to address SBLOC debt repayment and asset transfer in the estate plan. Speaking to a trusts and estates attorney can help you figure out the best way to manage this.

Case study: Buy-borrow-die in action

To see how the buy-borrow-die strategy works, let’s consider a hypothetical scenario: Jordan has a $1,000,000 taxable investment portfolio with an original cost basis of $250,000 and an unrealized gain of $750,000. Jordan needs $200,000 in cash today, expects the portfolio to earn 7% annually and is planning over a 10-year horizon assuming a 23.8% long-term capital gains rate. He can take one of two options:

• Option 1: Sell investments to raise cash. To net $200,000 in cash, Jordan sells $262,467 of assets, paying $62,467 in capital gains tax. The remaining $737,533 grows at 7% to $1,450,838 in 10 years. If liquidated then, $1,200,839 of gains would generate $285,800 of tax, leaving an after-tax value of $1,165,039.
• Option 2: Buy-borrow-die approach. Instead of selling, Jordan borrows $200,000 against the portfolio, keeping the full $1 million invested. At 7% over 10 years, it grows to $1,967,151. Assuming interest is paid annually so the loan balance stays at $200,000, Jordan can pass $1,767,151 to his heirs, who receive a step-up in basis and owe no capital gains tax on the embedded appreciation.

In other words, selling will reduce how much stays invested and can compound over time, while borrowing can keep the portfolio invested until it’s time to pass down the money through a coordinated estate plan.

Risks to borrowing against your investment portfolio

As with any financial product, there are potential risks to consider when you borrow against securities. If the value of your collateral drops, you could face a margin call, which means you’ll need to deposit additional funds or sell securities to reduce the size of the loan. If you’re unable to satisfy the requirements, the lender has the right to sell some or all of your securities. Selling those securities could trigger capital gains tax. That’s why this approach tends to work best when borrowing is modest relative to the size of the overall portfolio, leaving a cushion to help absorb market swings.

If your loan has a variable rate, the cost of borrowing may change over time as interest rates move. For longer-term needs, it can help to plan for a range of rate scenarios and confirm the repayment approach still works. If you prefer more predictable payments, a fixed-rate term loan (or another fixed-rate option) may be a better fit.

Used thoughtfully, a buy-borrow-die approach can help you meet liquidity needs while staying invested. But because borrowing has estate-planning nuances, you should speak to a tax and legal professional to understand how this approach fits into your wealth transfer strategy. Before moving forward, consider reviewing your approach with a J.P. Morgan advisor to make sure it fits your balance sheet and long-term plans.

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Securities-based lines of credit are extended at the discretion of JPMorgan Chase Bank, N.A. (“Chase”) and Chase Bank has no commitment to extend a line of credit or make loans available to you under a line of credit. Any loan extended under a securities-based line of credit is subject to credit approval by Chase Bank and, if approved, the terms and conditions contained in definitive loan documentation governing the line of credit. Proceeds from a securities-based line of credit cannot be used to purchase, carry or trade securities.

A Portfolio Line of Credit collateralized by the securities in your investment account(s) involves certain risks and may not be suitable for all borrowers. Chase assigns values to these securities and, at any time and without notice to you, may increase or decrease these values or change the eligibility of these securities as collateral. A decline in the value of these securities collateralizing your Portfolio Line of Credit (whether due to a market downturn, market volatility or otherwise) directly impacts the amount of credit available to you and may require you to provide additional collateral and/or pay down your Portfolio Line of Credit in order to avoid the forced sale of these securities by Chase. The securities in your account may be sold to meet a collateral shortfall, and Chase may sell your securities without contacting you. Some or all of the securities sold to meet a collateral shortfall may be sold at prices higher than their initial cost, which may result in adverse tax consequences. You should consult your tax advisor to fully understand the tax implications associated with pledging securities in connection with a loan.