Bankers aren't always right
I have held a fully-secured Line of Credit for several years.
As it was supported by certificates of stocks (cost about $50. per certificate to have issued) and mutual funds (issued at no cost), whose value is easily ascertained, there was no initiation fee.
I have used it on occasion, but most of the time it has sat there unused - but there has been no fee for inactivity.
As I think that stocks are on sale, these days, I wanted to ensure that my financial resources available were in good shape, and wanted to know what difference there might be in interest rate were I to borrow from a stockbroker using the resources in my margin account as collateral (no fee for issuance of certificates) or using my Line of Credit. I think that using the margin account usually runs about 1% higher.
The advisor at the bank told me that my Line of Credit was not secured - that I have an unsecured Line of Credit. He said that the only collateral that he can use is a GIC or a home.
I checked the situation with him in several ways: that usually when I use the L O C, that if the value of the security is $100., you will lend me $50., possibly $60., but not more ... but now you are telling me that you won't even lend me $10., considering the loan to be fully secured?
That the LOC has exactly the same situation regarding security whether I leave the certificates here or take them home with me?
After leaving, I felt that if the people near the top at the bank who set policy figure that my stocks and mutual funds are worth about the same as a pinch of coon dung ... then they aren't of much value to me, either.
I consulted a person who has attended an investment group with me for about 7 years and has become a friend. I sent a message regardng my experience to about 50 people on the email list (about 20 usually attend the monthly meeting).
As we were having a federal election here at the time, to choose who should run our country for the next few years, and our elections take about 6 weeks to decide, I was about to have a few words with our local Member of Parliament.
As there's a branch of that bank near his campaign office, I went in to confirm the status of my LOC ... and after evaluation of the account, was told that my LOC is fully secured, after all ... and the interest rate would be prime, 4.75%.
A few days later, I checked with a third branch ... to be told the same story as I'd heard at the second branch.
In the meantime, I'd sent an email to the members of the investment group, correcting my earlier information.
When I confronted the person at the first branch, he suggested that there had been a misunderstanding ... and I said that sounded improbable, as I'd checked the validity of his claim in several ways at our meeting earlier.
My friend from the investment group has business at that branch, called his contact there to check the information that I'd been given, to be given the assurance that I'd received at the other branches.
So I heard that the person who'd given me the original story was told that if he didn't know the facts about some situation ...
...that he was to check them first, before instructing a client.
So - if you get some information at a bank that sounds somewhat out of line ... better check it out before you put too much trust in it.
Good wishes for increasingly shrewd management of not only your cash flow, but your assets, as well.
Will the sale that's currently going on with many stocks ...
... become something of a fire sale, later?
Maybe a good idea to take advantage of some sale prices, now ...
... but to avoid blowing (nearly) all of one's wad, at present.
Buy at intervals, going through the bottom of the market.
That usually leads to the greatest satisfaction, as one contemplates what path was chosen, viewed with hindsight,a year or so (or four or five) later.
Knowledge is (or can be developed into) power.