I just borrowed at sub‑4%, and the interest is tax‑deductible.
I write a lot about sophisticated tax-aware strategies, but one of the most powerful setups is also one of the simplest:
ETF + box spread financing
The ETF wrapper allows you to defer capital gains indefinitely.
Whether you prefer broad index exposure or factor tilts, you can compound without realizing much taxes along the way.
There are even no-distribution ETFs designed to track equity indices without throwing off taxable dividends.
Put together, you can:
- Let the ETF grow
- Borrow against the shares when you need cash
- Avoid triggering capital gains just to fund spending
We see people using this kind of cheap financing for:
- Bridge loans
- Tax payments
- Car purchases
- Real estate purchases
- Paying off high‑cost debt
- Capital calls into private investments
The basic idea:
- Own assets that appreciate over time
- Borrow against them when you need liquidity, at sensible loan‑to‑value ratios
- Let the eventual step‑up in basis at death wipe out the embedded gain
It’s not complicated, but it’s incredibly powerful when you have meaningful assets and a long time horizon.
You still have to respect the risks (leverage, collateral values, lender terms), but if you’re managing $5M+ and not at least evaluating this as part of your plan, you’re probably leaving a lot of tax efficiency on the table.