Pay off ACC tracker or put money on Deposit?

S

Scruffy Man

Registered User
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16
Hi
I took out an ACC tracker Bond (Solid World 5) back in 2004 which was to last 5 years & 11 mths. ACC bank loaned me 200k which they reinvested for me with 100% capital guarantee and I pay the interest on the 200k each month. This wasn't so bad when the ECB base rate was at 2%.....now at 4.25% it means I am paying over €900/m.


I have recently sold my house and am considering paying off the 200k ACC loan rather than putting it in a high interest account (approx 5.1% interest) as the loan is costing me about 6% from ACC (Euribor + 1% margin) plus I would pay DIRT on any interest earned from a deposit account bringing my real earnings down to about 4%. So it would appear that I am 2% better off by paying off the ACC loan. This would mean that when the Tracked term is complete I would get my 200k back plus any earnings.......which will be minimal as it is a crap product which I knew feck all about before investing!!
Anyway, my question is does this seem reasonable? Is there any danger with what I'm considering?
 
Scruffy Man said:
Hi
I took out an ACC tracker Bond (Solid World 5) back in 2004 which was to last 5 years & 11 mths. ACC bank loaned me 200k which they reinvested for me with 100% capital guarantee and I pay the interest on the 200k each month. This wasn't so bad when the ECB base rate was at 2%.....now at 4.25% it means I am paying over €900/m.
Click to expand...

You borrowed to invest? Why!?! :confused:

It certainly sounds like you might be better off clearing the ACC investment loan rather than putting the money on deposit but you'd need to crunch the numbers carefully, take account of the tax issues and check for any gotchas in the terms & conditions with clearing the loan "early".
 
You borrowed to invest? Why!?!
Click to expand...

I ask myself the same question now... answer is that this investment was made before I discovered AAM and on the advice of a family memeber.

Anyway, now that I know it was stupid "investment" I just want to make sure I don't do another stupid thing like pay off the loan and then ACC would hold a 200k bond belonging to me (which can be cashed in on maturity) and the bank goes bust.

Thanks for the help Clubman.
 
Have you read the T&Cs of the policy to see if there are any gotchas with clearing the loan?
 
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