When opportunity knocks, it’s important to be ready to act. Maybe your dream home in that low-inventory neighborhood has finally hit the market; or maybe a favorite artist just released an exciting limited series, or a hot startup opened a new funding round – and what if rather than expending the cash you have on hand, the assets you already own can help you seize the moment?

Rather than selling your public market investments to raise money, borrowing against your assets can allow you to stay the course on your investments, defer taxes and free up money for other opportunities. It's a way to tap into the value of what you own while keeping your financial plans intact. The name of the game is financing with intention – and finding new ways to do more with what you already own.

What can you borrow against?

Different types of assets unlock different borrowing options. Here's how the most common ones work.

Public market investments (stocks, bonds, mutual funds)

With a securities-based line of credit (SBLOC), you can borrow against the value of your investment portfolio without selling any of it. These are typically non-retirement accounts with liquid, publicly traded assets like stocks, bonds, exchange-traded funds (ETFs) and mutual funds. These loans are typically non-purpose, meaning they can't be used to buy more securities but can fund real estate, business interests or lifestyle purchases.

Because these loans are backed by marketable securities, they're relatively easy to structure but not risk-free. If the market dips and the portfolio's value falls below a certain threshold, the lender may ask you to add more investments or pay back some of the loan, sometimes on short notice (commonly known as a margin call). The loan-to-value (LTV) ratios for these kinds of loans vary. Still, portfolio lines of credit generally offer 50%–70% of the portfolio's value, depending on how liquid or volatile the assets are.

Let’s consider a hypothetical: You’ve just laid eyes on what you would like to be your next high-end vehicle purchase. The price is reflective of its status as a collectable. As such, a traditional auto loan might not be an option. When considering your funding options with your financial advisor, you note that liquidity is important to you to stay open to other investment opportunities, and you’d prefer not to potentially affect the long-term growth potential of your public market investment portfolio. Together, you decide to borrow against your investments through an SBLOC, which leaves your portfolio and cash holdings intact. You made sure to weigh some of the potential risks, like the value of your portfolio declining, but still found it the best option given the loan value would be a relatively low proportion of your public market investments. Another benefit that helped make the decision was that, unlike a traditional auto loan, you’re able to take immediate possession of your new luxury vehicle’s title.

Real estate

Primary homes, investment properties or commercial buildings can also be used to secure a loan. These types of loans can take longer to set up and usually require more paperwork, but they can provide access to larger amounts of money for longer periods.

Common structures include:

• Home equity lines of credit (HELOCs)
• Cash-out refinancing
• Asset-backed mortgages

Real estate loans can offer higher LTVs than market investments, especially if the property brings in rental income. However, real estate isn't as easy to sell quickly, and loan terms may be sensitive to interest rate changes.

Specialty assets: Art, aircraft, boats, collectibles

Some lenders offer loans against specialty items like fine art or yachts. These deals tend to be highly customized and may come with more limitations than loans against market investments, as well as higher rates and shorter terms. Because the market for these assets can be harder to predict, lenders usually offer lower loan amounts relative to their appraised value. Considerations like authentication of art, yacht maintenance costs or the effort required to resell the asset all come into play when lenders evaluate these types of custom loans.

In general, these types of assets may be best used as additional collateral to increase the total lending value against a group of assets rather than as the primary funding source of a loan.

Why borrow instead of paying with cash?

Even with plenty of money in the bank, borrowing can sometimes be the more practical choice.

Cash availability

Having access to cash is helpful for unexpected needs or time-sensitive opportunities. Borrowing lets you use the value of what you already own without compromising your liquidity.

Potential tax efficiency

While selling investments that have gained value might trigger capital gains taxes, borrowing, such as with a SBLOC, lets you leverage the value of those assets without selling them. In some cases, loan interest payments may be deductible against your taxable income when loans are used for investment purposes.¹ Consider consulting a tax professional to learn how borrowing against your assets could affect your tax liability.

Stay invested

If you're aiming for long-term growth, staying invested may be a priority. Using a loan backed by your portfolio lets you tap into its value without disrupting your asset allocation and long-term strategy. In an analysis of the performance of a $10,000 investment in an S&P 500 index fund between January 3, 2005, and December 31, 2024, J.P. Morgan found that missing just the 10 best days in that period reduced the final portfolio value from $71,750 to $32,871.²

That said, it's crucial to weigh the borrowing costs against the potential returns of the portfolio. This approach works best when the return on the funds outweighs the cost of borrowing. Predicting this can be challenging because future performance is never guaranteed.

While borrowing rather than utilizing cash may offer benefits, everyone’s circumstances are unique – and this approach may not be advantageous for all.

Potential risks when borrowing against your assets

Borrowing against your assets can offer flexibility, but it's not risk-free.

Here's what to keep in mind:

• Asset values can drop. If your collateral loses value, you may need to quickly add more funds or pay part of the loan back to stay in good standing. This can create a compounding strain on your available cash or potentially force untimely sales.
• Interest costs can rise. Loans tied to investments often come with variable interest rates, so your payments might increase over time. However, costs could move in your favor in a falling interest rate environment.
• Access to money isn't always immediate. Real estate and luxury assets might take longer to appraise and process. They also may be more difficult to sell quickly in a downturn.
• Loan restrictions apply. Some types of borrowing limit what you can use the money for. For example, SBLOCs can't be used to buy more investments.

Make sure any borrowing plan also includes an exit strategy in a worst-case scenario. Leverage can multiply the pain of a downturn without proper planning.

How this fits into your bigger financial picture

Borrowing against your assets can help you move money where you need it without changing your overall strategy. It often comes into play with:

• Tax and estate planning: Shifting assets while managing taxes
• Cash flow planning: Accessing funds for short-term use without selling investments
• Diversification: Funding new opportunities while keeping your portfolio intact
• Philanthropy: Supporting giving strategies without pulling cash from your portfolio

Even for experienced investors, these decisions benefit from a stress test. Careful coordination with advisors, tax professionals and estate planners can help. The right borrowing strategy depends not only on what an investor owns but also on what they need and want to accomplish and what level of risk they are open to.

The bottom line

For high-net-worth investors, borrowing isn't always about needing more. It's about using what you already have in a more strategic way. But like any financial decision, the benefits must be weighed against risks, associated costs and broader goals. Used thoughtfully and with a plan, borrowing against your wealth can help preserve it.

IMPORTANT INFORMATION

This material is for informational purposes only, and may inform you of certain products and services offered by J.P. Morgan’s wealth management businesses, part of JPMorgan Chase & Co. (“JPM”). Products and services described, as well as associated fees, charges and interest rates, are subject to change in accordance with the applicable account agreements and may differ among geographic locations. Not all products and services are offered at all locations. If you are a person with a disability and need additional support accessing this material, please contact your J.P. Morgan team or email us at accessibility.support@jpmorgan.com for assistance. Please read all Important Information.

Equities: The price of equity securities may rise or fall due to the changes in the broad market or changes in a company's financial condition, sometimes rapidly or unpredictably. Equity securities are subject to 'stock market risk' meaning that stock prices in general may decline over short or extended periods of time.

Securities purchased on margin are the firm's collateral for the loan to you. If the securities in your account decline in value, so does the value of the collateral supporting your loan, and, as a result, the firm can take action, such as issue a margin call and/or sell securities or other assets in any of your accounts held with the member, in order to maintain the required equity in the account. It is important that you fully understand the risks involved in trading securities on margin. These risks include the following:

• You can lose more funds than you deposit in the margin account.
• The firm can force the sale of securities or other assets in your account(s).
• The firm can sell your securities or other assets without contacting you.
• You are not entitled to choose which securities or other assets in your account(s) are liquidated or sold to meet a margin call.
• The firm can increase its "house" maintenance margin requirements at any time and is not required to provide you advance written notice.
• You are not entitled to an extension of time on a margin call.