Athletes, there may be a smarter alternative to high-cost contract advances.
Some of you may have turned to contract advances to access cash by borrowing against the value of
your future earnings.
But, there is an alternative strategy you may be able to use to access cash without sacrificing your future
earnings.
A box spread financing strategy can help create the economic equivalent of a low-interest loan,
potentially helping you:
- Borrow at low rates
- Have access to cash faster
- Keep your investments invested
- Not having to possibly realize capital gains
- Have potential tax advantages
- Help preserve your future career earnings and monthly cash flow
This approach can help you manage liquidity strategically while keeping your long-term financial plan
intact. This is a tool in the toolbox.
Potential risks:
- Market risk: If the portfolio used to support the box spread declines significantly, additional
capital may be required to maintain the structure
- Liquidity risk: Box spreads rely on options markets. Early exits or adjustments can be less
straightforward than a bank loan
- Interest rate considerations: Changes could affect the effective rate if adjustments are needed
- Margin risk: if the value of your collateral falls, you may need to add cash or liquidate securities
- This strategy involves derivatives and requires precise execution, monitoring, and experienced
oversight. Not suitable for all investors.
If this raises questions about your current plan, we can talk through mechanics and whether something
like this fits into your financial plan.
Noah Ellison, CFP®, MBA
Helping you build, protect, and create a legacy.
Retirement Planning Solutions, LLC is an SEC registered investment adviser. SEC registration does not
constitute an endorsement of Retirement Planning Solutions, LCC, by the SEC nor does it indicate that
Retirement Planning Solutions, LLC has attained a particular level of skill or ability. This material
prepared by Retirement Planning Solutions, LLC is for informational purposes only. It is not intended to
serve as a substitute for personalized investment advice or as a recommendation or solicitation of any
particular security, strategy or investment product. Options involve risk and are not suitable for all
investors. Trading options can result in the loss of the entire investment and, for certain strategies,
losses may be unlimited. Investors should understand the characteristics, risks, and obligations of
options before trading. Prior to trading, investors must review the Options Clearing Corporation’s
Characteristics and Risks of Standardized Options (ODD), available from your broker or the OCC. Past
performance does not guarantee future results.
Advisory services are only offered to clients or prospective clients where Retirement Planning Solutions,
LLC and its representatives are properly licensed or exempt from licensure. No advice may be rendered
by Retirement Planning Solutions, LLC, unless a client service agreement is in place. This material is not
intended to serve as personalized tax, legal and/or investment advice since the availability and
effectiveness of any strategy is dependent upon your individual facts and circumstances. Retirement
Planning Solutions, LLC, is not a legal or accounting firm. Please consult with your legal or tax
professional regarding your specific tax situation when determining if any of the strategies mentioned
are right for you.