In this article, we will explore some ways that investors can use to raise funds quickly in emergencies, which may not be available to non-investors.
1. Create a Temporary Line of Credit
If you have been diligent and disciplined, you are likely to have built a respectable brokerage account outside of your retirement accounts. If you have done this long enough and have a good job, you are probably within the six-figure range; for instance, if a 40-year-old person started investing $5,000 annually at age 22 after graduating and getting their first job, they would have around $228,000 if achieving an average rate of return.
If you need emergency funds, it is possible to borrow temporarily against your securities to create a margin loan and withdraw cash.
It is worth mentioning that raising money this way is not without risks. Your interest rate is variable and can change. Additionally, if your stocks and other investments drop below a certain level, your broker may sell your assets to pay off the loan without contacting you.
Many brokers might give you a polite call (known as a margin call) to deposit more funds to prevent that from happening, but they are not legally obligated to do so. This could either result in losses or trigger capital gains tax, depending on the success of the positions in your account. Worse yet, you have no control over which stocks will be sold; it depends entirely on your broker’s discretion.
People have funded startups by writing a check against an account that has assets like a brokerage account. This can provide the company with working capital until it generates funds to repay that amount.
2. Get a Side Job
Sometimes, the quickest and most effective way to generate instant money is to work in a side job. For example, working a night shift at a mid-sized restaurant can generate more than $30,000 a year in tips on top of the daytime job. It may take some time to network into a suitable part-time job that capitalizes on your talents.
Many argue that they have no time for that. The internet has changed all of that. You can freelance from Starbucks. Creativity often pays off more than simply increasing work hours, so as the phrase suggests: think outside the box.
3. Take a 401(k) Loan or Hardship Withdrawal
This should only be done in severe circumstances, but it is possible to borrow against the assets you have built in your retirement account. There are very specific rules to follow, or you might find yourself paying hefty tax penalties.
If things go south before they get better, you may have accidentally jeopardized your retirement, resulting in much larger financial problems in the future.
4. Cash in Your Rewards
Most of us have a rewards-based credit card, such as the popular American Express card. Over the past few years, you may have accumulated a significant rewards balance, especially if you pay for fuel and groceries with your card.
Check your program and benefit from your points by redeeming them for gift certificates or goods from retailers that can free up cash.
5. Sell Your Gold
This may sound cliché, but it works. Almost every household has excess gold in the form of jewelry. With gold prices rising over the past few years, many businesses are happy to take those pieces, melt them down, and give you a check for them.
In short,
There are several methods that investors can use to raise money quickly during emergencies. However, some of these options should be used as a last resort, as they carry certain risks. It is always best to be prepared for emergencies by creating an emergency fund and keeping liquid assets to take advantage of available opportunities.
Source: https://www.thebalancemoney.com/how-to-come-up-with-money-quickly-during-emergencies-358061
Leave a Reply