Buy, borrow, die strategy: what is it, and how does it work?

1 min readLast updated March 14, 2024by Unbiased team

We reveal how this uniquely-named strategy works and how it can be used as a tool for expanding intergenerational wealth and alleviating your tax burden.


  • The buy, borrow, die strategy is a legitimate and effective way to grow intergenerational wealth. 

  • Buying, borrowing, and “dying” acquired assets is a simple, step-by-step process.  

  • The strategy works because the people using it borrow more slowly than their wealth grows.  

  • There are multiple ways to reduce the tax burden using this strategy. 

  • A financial advisor can help you develop solid financial planning strategies and create a plan that works for you. 

What is the buy, borrow, die strategy? 

Baby Boomers hold more than $140 trillion worth of the US’ wealth – and the buy, borrow, die strategy is one of the reasons why.  

Despite its somewhat dramatic name, the buy, borrow, die strategy is a legitimate and common strategy for exponentially and sustainably growing wealth over time.  

The strategy involves buying assets, using them to borrow money against, and then keeping them in order to pass them down to the next generation by reducing tax burdens and holding onto valuable assets.  

The buy, borrow, die strategy was first coined by a man called Prof. Ed McCaffery in the late 1990s.

The professor invented this term to explain how the wealthy stay wealthy and retain their wealth throughout multiple generations.  

The strategy’s memorable name has regained popularity in the 2020s as more attention is being brought to financial inequalities and a notable push for lowering tax burdens worldwide.  

How does the buy, borrow, die strategy work?  

To gain a better understanding of this unique strategy, let’s break down each of its three core elements: buying, borrowing, and “dying.”  

Together, they comprise the strategy that many investors use to reduce their tax burden and reap the benefits of lower yearly tax rates. 

1. Buy 

The first step in this strategy is to buy valuable, appreciating assets such as property, shares, stocks, bonds, or collectibles.

The aim here is to obtain as many assets as possible that increase in value over time in order to ensure that your heirs are set up for financial growth in the future.  

2. Borrow 

Once you have obtained enough appreciating assets to live off of and secure the financial future of your family, you would then borrow money against your assets to get taxed at a lower capital gains rate.  

Bankers favor wealthy loan applicants because they trust that they will repay their debts in full.

As long as you keep borrowing against your assets, the wealth will continue to grow exponentially.  

3. Die 

Here, the asset is preserved as an heirloom asset for the purpose of growing generational wealth.  

When assets get passed on, their value increases.  

This is a crucial part of the strategy because it is where an asset transforms into a more valuable version of itself, thus growing the family's net worth. 

Why does the buy, borrow, die strategy work? 

There are many reasons why the buy, borrow, die strategy works.  

Firstly, money is being borrowed slower, at the same rate as the wealth grows to make payments back.

Secondly, investing in assets that appreciate with age means that their value increases exponentially over time.  

However, there are also drawbacks to using this approach.  

For instance, if you make a poor investment choice or obtain assets that do not increase in value over time, your heirs may be left with assets that are worth just as much, if not less, than they cost to purchase originally.  

What are other ways I can reduce my tax burden? 

Using the buy, borrow, die strategy may be an effective way to reduce the tax burden, but it isn’t the only way.  

There are a few other alternatives to using this strategy that can give a similar result for people in different financial situations. 

  • Retirement accounts Traditional IRAs and retirement accounts often come with tax breaks if you are over the age of 73 and can be a good place to grow life savings.  

  • Health savings account – Some health savings accounts offer substantial tax benefits that make them worthwhile long-term investments for yourself and your heirs.  

  • Real estate investment – Real estate investment is one of the most steadfast and lucrative investment types to make, and it almost always appreciates over time.  

Find a financial advisor 

The buy, borrow, die strategy is a popular method for bolstering generational wealth and reducing tax burdens.  

Find out more about reduced tax burdens, asset management, and growing wealth across multiple generations by getting matched with a financial advisor by Unbiased.

Match with a financial advisor now.


Unbiased team

Our team of writers, who have decades of experience writing about personal finance, including investing and retirement, are here to help you find out what you must know about life’s biggest financial decisions.