For those who. hate Elon Musk

Reading that link closer:

"... The maximum loan is typically capped between 50-70% of the investment account’s value, which can fluctuate. ... An SBLOC may allow you to stay invested during a bear market and wait for the stock market to rebound before closing out equity positions."

So during market crashes, or non-diversified holdings caught by corporate bankruptcy or other implosion, these loans could be subject to the same sorts of margin calls as those investing on margin loans, and short sellers caught in short squeezes. I've seen these margin calls wipe out the nest eggs and finances of some people around me during the post-Y2K crash, and again at the later Great Housing Recession. Seeing those cases made me glad to have never used margin loans or derivatives, and to be debt-free before those bear markets appeared.The pain of our battered nest egg did not reach over to the needs of ordinary daily life. While mass layoffs did interrupt paychecks, those were brief.

As mentioned earlier, relevant to this "Buy, Borrow, Die” investment plan, my preference is to repeal the tax benefit occurring at the "Die" part.

 

... says the guy who didn't spell out what FICA means earlier in this thread.

But based on other portions of that same post, I believe he won't be getting close enough to IRMAA to have need to know more about her.

When I put that term into my usual search engine, the entire first page of results point to a single topic. No disambiguation needed.

 

sorry

https://www.valuepenguin.com/irmaa-medicare-income-brackets#:~:text=People%20with%20Medicare%20who%20earn,up%20to%20%24206%2C000%20in%202024).

 

"Every security has a lendable value (e.g., the amount you can borrow using that security as collateral), which is an amount less than the market value of the security. So $100 in stock may have a lendable value of $65. A drop in the value of pledged collateral may trigger a “maintenance call” because the lendable value of the securities in the collateral account has fallen below the amount borrowed. This means the borrower may have to deposit more collateral, sell securities to raise cash or pay down some of the outstanding debt. If the borrower doesn’t meet the maintenance call in the allotted time frame (usually 3 business days), the lender may take action to sell some securities in the pledged account. A sale of pledged securities could trigger trading costs as well as a potential tax liability."
https://www.welcome.gsselect.com/content/gsSelect/us/en/insights/understanding-the-risks-of-SBLOCs.html

A risk for you and I, but for those with hundred of millions to billions in securities can easily follow the tips listed there to avoid a maintenance call. Musk got his $44.9 billion in stocks pay. Will he ever actually have the full amount of $20 billion line of credit withdrawn? Then if things did go south, There are the rest of his Tesla holdings, plus holdings elsewhere to cover things.

I'd support it, but I think it is less likely to happen than a wealth tax.

 

Not all employers listed it that way. Not all employees even looked at the details on their pay stubs.

And now my nieces don't even get pay stubs. It is all electronic and automatic and out of view, they have to go specially look for it. Failure to go look at the details is how one missed an HR error seriously overcharging her medical for over a year. Now in process of attempting to get it retroactively fixed and refunded.

Their mother indicates that HR errors seem a lot common today than when she was that age. Another error had state tax withholding for the wrong state, because she worked an internship there during one college summer break some years ago, under the same parent company. At least that was easily refunded at tax return time.

 

I've been around the stock markets long enough to see news of many individual stock slides or collapses big enough to trigger “maintenance calls," a.k.a. margin calls, on loans with LTVs of 65%, or 50%. Just after Y2K, even on 10%. And broad bear markets triggering them on diversified baskets of stock, not just individual stocks. And market crashes when this happens to many big boys, not just the little guys, driving brief but painful power dives.

And worked alongside formerly wealthy guys (compared to me, not to the company execs) wiped out by these calls. At least they were still on the payroll and drawing paychecks. (I was a contractor, having chosen a pewter parachute from my prior employer when its industry was running mass layoffs, and electing to not be an FTE anymore.)

Those bigger LTVs should also carry significant interest rates, high enough to exceed any tax savings if held more than a few years. Not good for the "until you die" plans for folks with decent remaining life expectancies. From that link:

"Tip: SBLOCs are best used for shorter term funding needs (generally anything from a few months to a few years in duration). Longer term financing needs (e.g., purchasing a home) are generally done differently, ..."

Even really big boys like him occasionally get out over their skis, when borrowing to fund other ventures. Unlike the little people, they generally don't have any worries about a roof over their heads or their next meals, but do spread around a lot of pain to their newly-ex employees.