| What's the FreeSpirit Solution? |
It is the means to maintain the upside and get the most from your portfolio by leveraging the features of a Structured Securities Loan
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John's licensed financial
advisor has identified a high yield investment (HYI) with an
anticipated yield of 17%, and he'd like to invest in it. But he doesn't
want to call his stock broker and ask him to liquidate his portfolio
because it would be at a loss - way below what he paid for them - and
he'd planned on waiting until prices recovered. John wanted the HYI
now, and a conventional outright sale seemed to be the only way to get
there. Or so he thought.
Solution: John obtained a 70% loan-to-value Structured Securities Loan at 4% (85% and 2.35% are available for large portfolios with Premier).
, allowing him to put that 70% of today's holdings value, in cash, into
the HYI while maintaining an upside of 100% of your stock thanks to a structured stock loan with no limits on the portfolio's growth while held as
collateral for the loan. If the HYI he chose performs as expected, John
could have the best of all worlds.
(Assumptions:
$1MM portfolio; 70% LTV Structured Securities Loan ; 4% simple interest; HYI returns
both principal and accrued interest by end of loan term; 3 years
maturity for both loan and HYI.)
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| Behind the Numbers:
Example:
Because
John's HYI generates more return than the debt service of the loan, he
could realize a positive cash flow. Here are the estimated returns for
3 different scenarios. Securities including mutual funds, Treasury
bills, and municipal bonds can also be used.
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Example 1: Stocks go to Zero: -3% average annual yield
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Example 2: Stocks perform at 10% per year: 18% average annual yield
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Example 3: Stocks perform at 20% per year: 31.26% average annual yield
Here
you still have the growth potential of your stocks. If your portfolio
delivers even moderate returns (including appreciation and dividends),
you’re ahead of the game - all without having to take out your checkbook!
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