Nationwide Smart CreditSM can unlock the power of their investment portfolio

Man and woman by the pool

Suppose a couple is in the market for a vacation property and looks to you to liquidate $1 million from their investment account — because they don't realize there is a way to achieve liquidity without liquidation. You recommend using a securities-backed line of credit (SBLOC) instead, citing these benefits:

Quick access to cash and flexible financing

The SBLOC process is faster than traditional loans and offers the flexibility to repay on the client’s own schedule.

Preservation of the investment strategy

Because assets are not being sold, they keep working for the client and have further growth potential.

Tax efficiency

Borrowing against their portfolio may enable the client to avoid triggering capital gains taxes that the sale of securities would incur.

Lower-cost borrowing

Securities-backed lending often features lower interest rates compared with other forms of credit, making it a cost-effective borrowing option.

The chart below compares the cost implications for liquidating assets and using an SBLOC such as Nationwide Smart Credit.
Cost of liquidating: $736,883 SBLOC cost of financing: $379,000
Liquidity need: $1,000,000 Liquidity need: $1,000,000
Interest expense: $0 Interest expense: $379,000
Capital gains: $617,545 Capital gains: $0
Capital gains tax: $116,098 Capital gains tax: $0
Return opportunity cost: $620,785 Return opportunity cost: $0
Funding efficiency: 26.3% Funding efficiency: 62.1%

SBLOC savings: $357,883

The conclusion here is obvious: Using an SBLOC to fund the vacation home purchase would be better than liquidating assets from the portfolio.
Learn more about Nationwide Smart Credit at nationwide.com/sbl.

For illustrative purposes only. The cost of liquidation includes any tax liability resulting from the liquidation plus the opportunity cost of lost potential future market returns. The cost of borrowing includes SBLOC loan interest.

Cost of liquidating: The cost of liquidating is the sum of the capital gains tax and the return opportunity cost.

Capital gains tax: An estimate of capital gains tax liability is based on adjusted gross income, tax filing status, and cost basis in investments. Cost basis was calculated by assuming the funds have been invested in the S&P 500® for the past 15 years. Taxes are based on the IRS income tax rates for the current tax year.

Return opportunity cost: Based on how much their investments would have appreciated in value over the 3-year holding period if they achieved the average yearly rate of return of the S&P 500 since 1969, which is 10.14%.

Nationwide Smart Credit is a securities-backed line of credit. All rates are subject to change without notice and may vary. The interest rate is based on the Secured Overnight Financing Rate (SOFR), an interest rate benchmark that’s a broad measure of the cost of borrowing cash overnight collateralized by U.S. Treasury securities, plus a margin. Both the interest rate and annual percentage rate for Nationwide Smart Credit are variable and may increase. The 1-Month Term SOFR rates can be found at bit.ly/SOFR-CME.

Representatives do not give legal or tax advice. An attorney or tax advisor should be consulted for answers to specific questions.

The purpose of a Nationwide Smart Credit line of credit must be for personal, family or household purposes and not for securities investments or to purchase or carry margin securities, which include: (1) stocks that are registered on a national securities exchange, or any over-the-counter security designated for trading in the national market system; (2) debt securities (bonds) that are convertible into margin stock; and (3) shares of most mutual funds.

California: Loans made or arranged pursuant to a California Lenders Law License. Delaware: Nationwide SBL is licensed by the Delaware State Bank CCL commissioner to engage in business in this State under license number 035414, expires 12/31/2024. Maryland: License Number 1804109. Missouri: Consumer Credit Loan Company registered by the Missouri Division of Finance, license number 367-23-8932. Oregon: License number 1804109. Rhode Island: Rhode Island Licensed Lender. Washington: License number CL-1804109. Click here for state license information and rate and fee disclosures.

Not available in Mississippi, Montana, Nevada, and Vermont.

Nationwide, the Nationwide N and Eagle, Nationwide Smart Credit and Nationwide is On Your Side are service marks of Nationwide Mutual Insurance Company.
Nationwide SBL, LLC dba Nationwide Smart Credit (NMLS): 1804109 NMLS Consumer Access: https://www.nmlsconsumeraccess.org/
NFW-11097AO.1