How Wealthy People Access Cash Without Selling Their Investments

One of the more common questions I get, usually from someone who just sold a business or has most of their net worth tied up in investments, is some version of: "What do I do if I need cash but don't want to sell anything?" Most people assume selling is the only option. The wealthy rarely do it. Here's what they do instead.

Selling is usually the most expensive option

The second you sell an appreciated investment, you trigger a tax bill. On top of that, you've stepped out of a position you probably bought for a reason, and if it's part of a long-term plan, you just interrupted years of compounding to solve a short-term problem. In my opinion, that's backwards. There's almost always a better way.

Borrow against the portfolio instead

The tool most wealthy people use is called a securities-based line of credit. In plain English, it's a loan that uses your investment portfolio as collateral. Your investments stay right where they are, still invested and still yours, and you borrow against them. Because the loan is backed by real assets, the rates are typically far lower than a personal loan or a credit card, and you can usually get the cash within a few days.

This is the quiet answer to a lot of "how did they afford that" moments. Someone buys a new house before the old one sells. A business owner needs a bridge until their sale closes. A big tax bill comes due. Instead of selling and eating the tax hit, they borrow against the portfolio, handle it, and pay it back, without ever touching the underlying investments.