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The 'Tax-Neutral Bridge': Using LAMF to Avoid Premature Capital Gains Tax
LAMF can help investors defer redemptions and avoid higher short-term capital gains taxes while maintaining market exposure.
Investors often need liquidity just before their mutual fund investments reach long-term capital gains eligibility.
A Loan Against Mutual Funds (LAMF) offers a short-term, tax-neutral bridge, allowing investors to access funds without triggering short-term capital gains tax. By comparing loan interest rates against potential tax savings, investors can determine whether borrowing is more cost-effective than selling.
This approach suits those nearing the one-year mark for equity funds or three years for debt funds.