The smart use of credit can help you access cash when you need it to fund your goals and take advantage of investment opportunities in the market. The Margin Lending Program (Margin) from Merrill can help you tap into an on-demand credit line, based on eligible securities you hold with the Firm and that you use as collateral.
Margin offers a convenient source of liquidity with competitive rates to meet your personal or business financing needs. Margin can help you with funding for:
Margin can offer you immediate access to funds for virtually any short-term borrowing need. In addition, Margin offers you:
By borrowing against your assets rather than selling them, you can keep your investment strategy on track and defer any capital gains taxes that might result from selling securities to meet your short-term cash needs.1
You can continue to make investment decisions according to your strategy, even while you access margin, as long as you maintain the required level of equity in your account.
Interest expenses in your margin account may also be tax-deductible up to net investment income earned in the account and may also be exempt from the Alternative Minimum Tax (AMT).
You can borrow up to 50% or more of the market value of most listed stocks and many unit investment trusts, convertible bonds, mutual funds and closed-end funds. With other types of securities, your borrowing power may be higher.
You are required to maintain securities with a market value that exceeds the loan balance by a certain percentage, which varies based on the type and volatility of the securities used as collateral. Your Merrill advisor can help you review your holdings and help you understand how much you may be able to borrow given the assets you hold at Merrill.
Talk to your Merrill advisor to see if Margin can help you tap into the value of your investments and support your larger financial strategy.
Margin is not appropriate for all investors. Borrowing on margin and using securities as collateral involve certain risks. When considering a margin loan, you should take into account your individual requirements, portfolio composition and risk tolerance, as well as capital gains taxes, portfolio performance expectations and investment time horizon. Please be aware that:
Before opening a margin account, you should carefully review the terms governing margin loans. For Individual Investor Accounts, these terms are contained in the Margin Lending Program Client Agreement. For all other accounts, the terms are in your account agreement and disclosures. It is important that you fully understand the risks involved in using margin. These risks include the following:
Carefully choosing the quality of your investments you borrow against and the amount you borrow can help reduce the likelihood of a maintenance call. Risk management strategies to consider include:
Our financial advisors are committed to putting your investing needs and priorities first. Here’s how you can get started with an advisor:
Diversification does not ensure a profit or protect against loss in declining markets.
1 Merrill does not provide tax advice. Consult your tax advisor for tax advice about margin interest deductibility.
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