I’ve decided to share this idea since not many people seem to be aware of it and it has been raising a lot of interest lately, both from Golden Visa applicants and from investors in general.
If you hold a portfolio of securities (equities, bonds, etc.) and you need cash (whether to make a Golden Visa related investment or for any other reason), you don’t necessarily need to sell your securities. Depending on your country of residence (e.g. some banks might not accept US clients or require higher minimum amounts for US clients) and the investment grade of the securities you hold (e.g. Apple shares or German bonds differ from Venezuelan or Argentinian bonds), you might be able to obtain a securities-backed loan from an eligible Swiss bank (not all Swiss banks will engage in this type of transaction).
Depending on your personal circumstances and negotiation skills, you may expect loans to reach between 60% and 70% of the value of your securities’ portfolio with interest rates typically ranging between 0.70% and 1.% per year for loans denominated in EUR, and 1.5% and 2% per year for loans denominated in USD. Custody fees typically ranging between 0.30% and 0.55% may apply. Depending on your country of residence, banks might consider portfolios as low as EUR/CHF/USD 500k, but most banks require portfolios with a value of at least EUR/CHF/USD 1million.
These loans are deemed personal loans (i.e. you can do whatever you want with the cash) and are usually 1-year loans, renewable for similar periods of time (i.e. the loan will keep renewing for as long as the portfolio stays with the bank).
This idea may be used by anyone wanting to generate cash without having to sell his/her securities. In addition, if your portfolio performs well (i.e. above the loan’s interest rate and custody fee), this could well mean that you are investing using free money.