Buy, Borrow and Die: Inside the $5.4 Trillion Market

The “buy, borrow and die” wealth strategy is gaining popularity among wealthy investors, allowing them to access cash without selling their investments. By borrowing against stocks, bonds and other financial assets, investors can finance major purchases while retaining ownership of their portfolios. The approach has also created a growing lending business for banks and wealth managers, with the global securities-based lending market estimated at $5.4 trillion.

According to a Deloitte survey of 57 major private banks and other lenders, reviewed by The Wall Street Journal, securities-backed lending has expanded significantly over the past decade. Once primarily associated with ultrawealthy clients, the practice is increasingly available to affluent investors and some retail customers.

The strategy can offer borrowers greater financial flexibility and help lenders generate substantial income. However, it also exposes borrowers to market volatility, forced asset sales and potentially significant tax consequences. As more investors gain access to these loans, understanding the risks behind the attractive financing model has become increasingly important.

What Is the ‘Buy, Borrow and Die’ Wealth Strategy?

The “buy, borrow and die” strategy describes an approach to Wealth Management in which investors accumulate valuable assets, borrow against them to access cash and avoid selling them during their lifetimes whenever possible. The approach is particularly associated with wealthy individuals who hold substantial portfolios of publicly traded shares or other appreciating assets.

Instead of selling shares to fund a property purchase, business investment or other major expense, an investor can pledge eligible securities to a lender and receive a loan. The investor retains ownership of the pledged assets, subject to the terms of the lending agreement, while using the borrowed money for other purposes.

For example, an investor who owns a large portfolio of company shares might borrow against those holdings to finance a property purchase. Selling the shares could trigger capital gains tax if the investments have increased in value. Borrowing may defer that taxable sale, although the loan itself creates repayment obligations and does not eliminate every possible tax liability.

The strategy’s final element, “die,” refers to the potential estate-planning advantages that can arise in jurisdictions where inherited assets receive favourable tax treatment. In the United States, for example, qualifying inherited assets may receive a basis adjustment under applicable tax rules. The precise treatment depends on the circumstances and legislation in force, and the outcome should not be assumed to apply universally.

Importantly, the strategy is not a guaranteed way to build wealth. Borrowing against investments creates financial obligations, and falling asset prices can make a previously manageable loan expensive or difficult to maintain.

The Global Securities-Based Lending Market Reaches $5.4 Trillion

Deloitte estimates that approximately $5.4 trillion in credit has been extended through securities-based lending. The lending is backed primarily by stock and bond portfolios, although some arrangements use investment funds and cryptocurrency as collateral.

The market has grown as wealth has accumulated in financial markets and asset prices have increased. Deloitte’s analysis indicates that the market’s average growth rate was approximately 12% annually over the past decade.

The estimated $5.4 trillion figure represents credit extended through the broader market, rather than the amount borrowers have necessarily withdrawn and spent. Customers frequently establish credit facilities without drawing the full available amount. Deloitte estimates that actual borrowing against these credit lines could be closer to $1.6 trillion.

The distinction matters because the total value of lending facilities can substantially exceed the amount of debt outstanding at a particular time. Nevertheless, the scale of the market highlights how securities-backed credit has become an important component of modern wealth management.

The United States Accounts for the Largest Share

The United States represents approximately 30% of the securities-based lending market covered by Deloitte’s report, making it the largest national market identified in the study.

Switzerland and Liechtenstein are also important centres for this type of lending. Together, the two countries account for approximately 12% of the market, reflecting their established private-Banking and wealth-management industries.

In Europe and Asia, securities-backed loans are often known as Lombard loans. These facilities allow eligible clients to borrow against securities held in an investment account. The precise terms vary by lender, collateral type, borrower profile and market conditions.

The growing availability of these products suggests that securities-backed lending is no longer restricted to a small group of billionaires. However, access to a loan does not necessarily mean that borrowing is suitable for every investor.

Why Banks and Wealth Managers Are Embracing Securities-Backed Loans

Securities-backed lending can be attractive to financial institutions because the loan is secured by assets that may be readily valued and sold. Instead of relying entirely on a borrower’s income and conventional credit history, lenders can assess the quality, liquidity and market value of the pledged portfolio.

This can simplify parts of the approval process. Where eligible securities are held with the lender or a connected institution, the value of the collateral may be easier to verify, allowing decisions to be made more quickly than under some traditional lending arrangements.

Pricing can also be relatively standardised. Lenders may calculate the amount available to a borrower using the market value of the assets, the type of securities involved and the lender’s assessment of their liquidity and risk.

However, collateral does not remove the risk of default. Securities can lose value rapidly, and lenders must manage the possibility that the collateral will be worth less than the outstanding loan when repayment or liquidation becomes necessary.

Loans Can Generate a Significant Share of Private-Bank Profits

Deloitte estimates that securities-backed loans can generate approximately 25% to 30% of annual profit for some traditional private banks. These institutions often combine lending with investment management, financial planning and other services for wealthy clients.

The loans can strengthen relationships with customers by allowing them to access liquidity without transferring their investments to another institution or selling assets. Lending may therefore complement a bank’s wider wealth-management business.

The economics are particularly appealing when collateral remains liquid and defaults are limited. Yet lenders still face operational, market and credit risks. A sharp fall in asset prices can reduce collateral coverage, while a disorderly market can make it harder to sell pledged securities at the expected price.

Deloitte began studying the market in 2022 after bank chief risk officers sought comparative information about lending practices and risk management. The latest survey of 57 major lenders offers a broader view of a market that remains difficult to measure because institutions do not always report these loans separately on their balance sheets.

How Much Do Securities-Backed Loans Cost?

According to Eric Gutzwiller, who leads Deloitte’s credit business in Switzerland, the average loan-to-value ratio in the market is approximately 50%. He also said the borrowing charge is around one percentage point above benchmark interest rates.

The loan-to-value ratio measures the amount borrowed against the value of the assets pledged as collateral. A 50% ratio means a borrower receives credit equal to half the collateral’s assessed value, although actual limits vary by lender and asset type.

For example, an investor pledging a portfolio valued at $1 million might initially qualify for a loan of approximately $500,000 under a 50% loan-to-value arrangement. The actual amount available would depend on the lender’s rules, the portfolio’s composition and the borrower’s circumstances.

The arrangement can appear straightforward while asset prices remain stable. But if the portfolio loses value, the loan-to-value ratio rises even if the borrower has not borrowed additional money. That can prompt the lender to demand more collateral, repayment or the sale of some pledged assets.

Interest rates are another consideration. If a loan carries a variable rate, borrowing costs may increase when benchmark rates rise. A borrower must therefore assess not only the value of the collateral but also whether cash flow will remain sufficient to service the debt.

Billionaires Have Helped Popularise the Strategy

High-profile entrepreneurs, including Larry Ellison and Elon Musk, have helped bring securities-backed borrowing into public discussion. Their substantial holdings in companies they founded can provide collateral for loans without requiring them to sell large blocks of shares.

Selling shares can have several consequences for a major shareholder. Depending on the investor’s tax position, a sale may trigger capital gains tax. It can also reduce the investor’s ownership stake and potentially affect voting power or influence over a company.

Borrowing against shares can provide liquidity while preserving ownership, but it does not make the financial exposure disappear. The borrower still owes the debt and may face additional collateral requirements if the value of the pledged shares falls.

Larry Ellison’s Borrowing and Corporate Investments

The Wall Street Journal reported that Larry Ellison increased his borrowing from banks and pledged shares he owns in other companies while looking to support his son’s hostile takeover effort involving Warner Bros. and the formation of Skydance.

The example illustrates how securities-backed loans can support large financial transactions without requiring an investor to sell existing holdings immediately. However, the use of borrowed funds in major acquisitions can also increase financial complexity and expose the borrower to changes in collateral values and financing conditions.

Ellison’s reported borrowing is part of a wider pattern among wealthy investors who use their portfolios as sources of liquidity. For borrowers with substantial assets, these loans can offer an alternative to conventional financing, but their suitability depends on the terms of the loan and the risks involved.

High-Value Credit Lines Continue to Drive Market Growth

Deloitte’s survey indicates that larger investors remain an important source of demand. Approximately 45% of customer credit lines in the market are valued at more than $2.5 million.

These large facilities reflect the substantial portfolios held by wealthy households and the amount of credit that can be made available against diversified securities. The value of such credit lines can rise as investment portfolios grow, although lenders may reduce borrowing limits when assets become more volatile or less liquid.

The concentration of lending among large credit facilities also highlights why the market has historically been closely associated with private banking. However, the expansion of digital financial services and new lending products is bringing securities-backed credit to a wider range of investors.

Securities-Backed Lending Expands Beyond Billionaires

One of the most significant changes identified in Deloitte’s research is the growing availability of securities-backed loans to people with less wealth than traditional ultra-high-net-worth clients.

Some financial institutions are adapting their lending processes to serve customers with smaller investment portfolios. Digital applications, automated valuations and streamlined approval procedures can make it easier for eligible borrowers to obtain credit without going through the extensive processes traditionally associated with private banking.

That expansion could increase the market’s reach, but it also raises questions about whether borrowers fully understand the risks of pledging investments. Customers who have less financial capacity to absorb losses may be particularly vulnerable if falling markets trigger collateral calls or forced sales.

Charles Schwab Reports Strong Growth in Bank Loans

In mid-October, Charles Schwab said its pledged asset line product helped drive a 35% increase in bank-loan balances, which reached $72.3 billion in the third quarter, according to the supplied report.

The product is available to customers with at least $100,000 in nonretirement assets. A company spokeswoman said usage increased after Schwab introduced a fully digital application process three years earlier, enabling some loans to be approved within minutes.

The example demonstrates how digital systems can reduce friction in the borrowing process. Customers may be able to apply for credit against eligible investments without selling their holdings or completing the same procedures required for some unsecured loans.

However, faster approval does not eliminate the need for careful financial planning. Borrowers still need to understand the interest rate, collateral requirements, repayment conditions and circumstances under which the lender can sell pledged assets.

Brokerages and Banks Offer Different Lending Models

Online pricing information suggests that brokerages may charge more for securities-backed lending than some banks. Brokerages may have a less extensive lending relationship with customers and may depend on banking partners to provide the funding.

Pricing can vary considerably according to the lender, the amount borrowed, the collateral offered and the customer’s wider financial relationship. Investors should therefore compare the total cost of borrowing rather than relying solely on advertised interest rates.

Fees, benchmark-rate adjustments, collateral haircuts and other contractual conditions can affect the overall cost. Borrowers should also check whether the lender can change the credit limit or demand repayment if market conditions deteriorate.

Monument Bank Plans to Reach More Investors

Xavier De Pauw, director of lending at Monument Bank in the United Kingdom, said the bank planned to begin lending against investment portfolios early the following year, making the product available to investors with portfolios worth a few hundred thousand dollars.

De Pauw said the aim was to make the product available to a broad range of customers, allowing more investors to use financing methods previously associated with billionaires.

The expansion reflects a wider shift in wealth management, where lending against investment assets is increasingly being presented as a liquidity option for affluent customers. Nevertheless, broadening access does not remove the importance of financial suitability, risk disclosure and the borrower’s ability to meet repayment obligations.

Crypto-Backed Lending Adds Another Dimension

Deloitte’s research also found that some lenders have developed specialist products for assets that are more difficult to value or manage, including cryptocurrencies. In some reported cases, lenders have offered loans of up to 90% of the value of cryptocurrency collateral.

Such high loan-to-value ratios can leave borrowers particularly exposed to sudden price movements. Cryptocurrency markets can be volatile, and the value of collateral may fall sharply over a short period. A loan that initially appears well secured can become undercollateralised if prices decline quickly.

According to Gutzwiller, lenders offering these products are not necessarily taking risks without safeguards. He emphasised that lenders may act quickly to liquidate collateral when required under their agreements.

That approach can protect lenders from accumulating losses, but it may create serious consequences for borrowers. If collateral is sold during a market decline, the borrower may lose the opportunity to benefit from a subsequent recovery and could still owe money if the proceeds are insufficient to cover the outstanding debt.

Investors considering loans backed by cryptocurrency or other volatile assets should pay close attention to liquidation thresholds, margin-call procedures, collateral valuation methods and the time available to respond to a demand for additional security.

The Major Risks Behind the ‘Buy, Borrow and Die’ Strategy

Although securities-backed lending can provide flexibility, the strategy carries risks that may be overlooked when attention focuses on the tax or investment advantages.

1. Forced Sales During a Market Downturn

The most immediate risk is a decline in the value of the pledged assets. If a portfolio falls below the lender’s required collateral threshold, the borrower may have to provide additional securities, repay part of the loan or allow the lender to sell assets.

Forced sales can be especially damaging during market downturns because prices may already be depressed. The borrower could be required to sell investments at an unfavourable time, undermining the original objective of avoiding asset sales.

2. Rising Interest Costs

Borrowing costs may increase when interest rates rise, particularly when loans are linked to variable benchmark rates. A borrower who relies on portfolio growth rather than regular income to support the strategy could face difficulties if interest expenses increase while asset values stagnate.

Investors should calculate whether they can afford repayments under different interest-rate scenarios rather than assuming that borrowing will remain inexpensive.

3. Concentrated Collateral

A portfolio concentrated in a single company or sector may be more vulnerable than a diversified collection of assets. If the pledged shares experience a sharp decline, both the borrower’s wealth and the collateral supporting the loan could deteriorate at the same time.

Lenders may apply lower borrowing limits to concentrated positions, volatile securities or assets that could be difficult to sell quickly. Borrowers should understand how their lender values each asset and whether those valuations can change.

4. Tax and Estate-Planning Uncertainty

The potential tax advantages of “buy, borrow and die” depend on local laws and individual circumstances. Borrowing may defer a taxable sale, but it does not automatically eliminate tax obligations. Interest deductibility, estate taxes, inheritance rules and the treatment of assets at death can differ across jurisdictions.

Rules may also change over time. Investors should obtain independent tax and legal advice before building a long-term borrowing strategy around assumptions about future tax treatment.

5. The Risk of Excessive Leverage

Borrowing against investments allows an investor to access cash while retaining market exposure, but it also adds debt to the financial picture. If investment returns weaken, interest costs rise or asset prices fall, the borrower may face losses on the portfolio while still being responsible for repaying the loan.

Repeated borrowing can compound this exposure. Investors who use loans to fund additional investments may increase both their potential returns and their potential losses, making leverage particularly dangerous during periods of market stress.

Why Regulators Are Warning Investors

Securities regulators have warned that customers need to understand the risks associated with margin lending and other forms of borrowing against investments. In particular, investors should be aware that market declines can lead to forced sales and that selling assets may have tax consequences.

These concerns become more important as lenders make securities-backed products available to customers who may have limited experience with leveraged borrowing. A streamlined digital application can improve convenience, but borrowers still need to understand the contractual terms before accepting credit.

Financial institutions also have an interest in ensuring that customers understand how collateral requirements work. Transparent disclosures about liquidation rights, loan-to-value limits, interest-rate changes and repayment obligations can help borrowers assess whether a loan fits their financial circumstances.

The wider growth of the market makes these issues increasingly relevant to both lenders and investors. Securities-backed lending can be useful when managed prudently, but it can also transmit market volatility directly into a household’s finances.

What the $5.4 Trillion Market Means for Wealth Management

The expansion of securities-based lending points to a change in how investors use financial assets. Investment portfolios are no longer simply holdings intended to generate returns or provide retirement income; for some investors, they also function as a source of credit.

For banks, these loans can strengthen customer relationships, support wealth-management services and generate a substantial share of profits. For borrowers, they can provide access to liquidity without requiring an immediate sale of investments.

However, the market’s estimated size should be interpreted carefully. Deloitte’s $5.4 trillion figure represents extended securities-based credit, while estimated actual borrowing is closer to $1.6 trillion. The figures measure different aspects of the market and should not be treated as interchangeable.

The market’s continued expansion will depend on investor demand, asset prices, lending conditions and the willingness of financial institutions to accept investment portfolios as collateral. Greater access may make these loans more common, but it will not make them appropriate for every household.

Conclusion

The “buy, borrow and die” strategy has evolved from a technique associated with billionaires and traditional private banking into a much broader financial market. Deloitte estimates that securities-based lending has reached approximately $5.4 trillion, supported by rising asset values, demand for liquidity and the expansion of digital lending products.

The approach offers wealthy investors a way to access cash without immediately selling assets, while banks can earn significant income from secured lending. Yet the same arrangement can create substantial risks when investments fall in value, borrowing costs increase or lenders demand additional collateral.

As securities-backed loans become available to a wider range of investors, their appeal will need to be weighed against the potential consequences of leverage. The central lesson is that borrowing against investments can provide flexibility, but it is not a substitute for sustainable cash flow, prudent risk management and a clear repayment plan.