How Does Loan Against Securities and Mutual Funds Work?

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Many of us invest money in highly lucrative avenues like equities, mutual funds, etc., which can potentially make our money work even while we are sleeping. And all these investments are done to generate wealth for the future. However, many a times, emergency situations arise that require us to create cash liquidity and we are left with no option but to sell off equities or mutual funds, instead of going for a personal loan at a very high interest rate.

Isn’t this approach a big sacrifice of your future goals? It definitely is – after all, who would want to lose on all the significant rise in stock prices or NAVs. These are potentially high returns providing instruments, something which is not possible to earn from the deposits in banks.

And the solution to avoid it are opportunities like Loan Against Securities (LAS) or Loan Against Mutual Funds. With these loan options, you can ensure that your instant finance requirements are met without having to liquidate any of your equity or mutual fund investments. You continue to earn all the benefits with regards to stock splits, bonus issues, dividends, etc., in case of equity investments.

This financing method gives you the ability to raise money for your current needs against the securities (equities, mutual funds, bonds, etc.) that you hold, and also ensure that you keep your investments intact for any price upsurge in future. It serves as an ideal way to secure your today, without compromising your tomorrow. The process to raise money through LAS or loan against mutual funds, involves you having to pledge your mutual funds or shares as collateral and get a loan against them.

Whenever such a need arises, you can simply approach a non-banking financial company (NBFC) like JM Financial and apply for a loan or overdraft against your equity or mutual fund investments.

I am a MBA in finance, looking after the finances of my dad’s company. My long-term goal is to have my own start-up, for which I am devoting a lot of time in studying real-life case studies related to ESOP funding, IPO funding, real estate NBFC funding, and more. Writing is my passion through which I stay connected with the world.

 

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