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Securities-based lending at J.P. Morgan  Securities

 

A securities-based line of credit can be a flexible and cost-effective way to access liquidity strategically. Whether you are looking to fund a new purchase, renovate your home or take advantage of a timely investment opportunity. Using a line of credit allows you to remain invested and keep your investment portfolio intact.

 

Benefits that can make a securities-based line of credit a valuable complement to your investment portfolio:

  • Stay invested. Keep your investment plan and asset allocation in place without disrupting your long-term strategy
  • Financial flexibility. Quickly access liquidity for a range of uses—whether you’re meeting large financial obligations or seizing an opportunity
  • Cost-effective. There are no setup fees, and only the funds you use incur interest charges, which are often lower than other financing options.
  • Potentially tax-efficient. A securities-based line of credit can potentially be structured in a tax-efficient way, which may allow you to more effectively grow and preserve your wealth.

As with all investment decisions, it’s important to understand the risks of borrowing before moving forward. Events beyond your control, like market fluctuations that may reduce the value of your pledged securities, could lead to a margin call. We’re here to help you make the best decisions for your needs. Today and in the future.

 

Borrowing vs. Liquidating Portfolio Holdings: Which Strategy is Better?

Both examples posit a $10,000,000 portfolio and a $3,000,000 debt. In the first example, Client A sells $3,000,000 worth of securities. The remaining $7,000,000 portfolio earns $483,000 during the timeframe under consideration. In the second column, Client B uses a line of credit to pay the $3,000,000. His $10,000,000 portfolio remains untouched and returns $690,000 over the same timeframe. Though interest on the loan comes to $58,000, Client B still nets $631,500—which is $148,500 (31%) more than Client A received.

Both examples posit a $10,000,000 portfolio and a $3,000,000 debt. In the first example, Client A sells $3,000,000 worth of securities. The remaining $7,000,000 portfolio earns $483,000 during the timeframe under consideration. In the second column, Client B uses a line of credit to pay the $3,000,000. His $10,000,000 portfolio remains untouched and returns $690,000 over the same timeframe. Though interest on the loan comes to $58,000, Client B still nets $631,500—which is $148,500 (31%) more than Client A received. 

 

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To learn more about J. P. Morgan’s investment business, including our accounts, products and services, as well as our relationship with you, please review our  J.P. Morgan Securities LLC Form CRS and  Guide to Investment Services and Brokerage Products.

This website is for informational purposes only, and not an offer, recommendation or solicitation of any product, strategy service or transaction. Any views, strategies or products discussed on this site may not be appropriate or suitable for all individuals and are subject to risks. Prior to making any investment or financial decisions, an investor should seek individualized advice from a personal financial, legal, tax and other professional advisors that take into account all of the particular facts and circumstances of an investor's own situation. 

This website provides information about the brokerage and investment advisory services provided by J.P. Morgan Securities LLC (JPMS). When JPMS acts as a broker-dealer, a client's relationship with us and our duties to the client will be different in some important ways than a client's relationship with us and our duties to the client when we are acting as an investment advisor. A client should carefully read the agreements and disclosures received (including our Form ADV disclosure brochure, if and when applicable) in connection with our provision of services for important information about the capacity in which we will be acting.

INVESTMENT AND INSURANCE PRODUCTS ARE: • NOT FDIC INSURED • NOT INSURED BY ANY FEDERAL GOVERNMENT AGENCY • NOT A DEPOSIT OR OTHER OBLIGATION OF, OR GUARANTEED BY, JPMORGAN CHASE BANK, N.A. OR ANY OF ITS AFFILIATES • SUBJECT TO INVESTMENT RISKS, INCLUDING POSSIBLE LOSS OF THE PRINCIPAL AMOUNT INVESTED

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J.P. Morgan Chase Bank N.A., Member FDIC. Not a commitment to lend. All extensions of credit are subject to credit approval.

Investments in alternative investment strategies is speculative, often involves a greater degree of risk than traditional investments including limited liquidity and limited transparency, among other factors and should only be considered by sophisticated investors with the financial capability to accept the loss of all or part of the assets devoted to such strategies.

Borrowing with securities as collateral involves certain risks, including the possibility that you may need to deposit additional securities and/or cash in the account to meet a maintenance call, and that securities in the account may be sold to meet the maintenance call.  Proper management of your account and a thorough understanding of the conditions that may affect your investments will assist you in effectively using the margin lending program.​

J.P. Morgan Wealth Management is a business of JPMorgan Chase & Co., which offers investment products and services through J.P. Morgan Securities LLC (JPMS), a registered broker-dealer and investment advisor, member FINRA and SIPC. Annuities are made available through Chase Insurance Agency, Inc. (CIA), a licensed insurance agency, doing business as Chase Insurance Agency Services, Inc. in Florida. Certain custody and other services are provided by JPMorgan Chase Bank, N.A. (JPMCB). JPMS, CIA and JPMCB are affiliated companies under the common control of JPMorgan Chase & Co. Products not available in all states.

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