Investing in a portfolio of diversified assets has the potential to grow your wealth faster than inflation, which could protect - or even enhance – your spending power over the longer term. It’s something we think all of our clients should consider carefully when putting together their long-term financial plans, particularly if they have a large cash reserve on deposit.
Investing is a long-term enterprise – we suggest clients keep a five-year horizon in mind when committing their capital.
But life is full of surprises, and after you have invested your capital there may be times when you want quick access to it again.
This is where investment-backed lending could help.
Release the potential of your capital
One of the worst things that can happen to you as an investor is being a ‘forced seller’. As well as the possibility of having to sell at below the best price, you could also find yourself facing tax complications and other difficulties.
Investment-backed lending could help you to use your investments to fund an opportunity without the need to sell them. You can draw on a line of credit, backed by the value of your investment assets, to fund other purchases while leaving the investments in place. And while we don’t advise on the lending or give tax advice, there can be benefits to borrowing through investment-backed lending.
Coutts private banker, Teresa Norton explains why one of her clients decided to use investment-backed lending from the range of borrowing options available when they needed to move quickly on a property sale:
“My client had found a fantastic investment property in Chelsea and wanted to move quickly. They considered a buy-to-let mortgage, but because of the competitive market place felt it better to raise all of the funds for the property in advance so they could complete the purchase quickly.
“They had a substantial investment portfolio, but selling would have led to a significant tax bill. Raising the money through investment-backed lending meant the client was ready to complete the purchase quickly, while leaving their investments in place.
“They also really appreciated the ease of having their investments and borrowing managed through the same team. It made the whole process easier for them."