Should I cash in investment policy or get a loan

I currently have Quinn Life Investment policy, with a premium value of €3600, into which I make regular monthly payments.

In recent months the value has dropped to €3000, with my China, US and Celtic Freeway investments all taking hits of 20-25 percent. (I had been up 10-15%)

Now I am not too worried over this as the investment is a long term plan, which I figure if I keep paying money into it, over a few years, it will eventually turn around and I will have built up a sizeable investment policy.

However, I need a €1500 asap and am thinking of
a) Selling €1500 of my policy and take the hit
or
b) Opting for a Tesco fixed loan over 24 months at 6.9% APR, and holding on for the ride with the policy

Any advice?

(Please move this mods if it belongs in another forum)

I wouldn't hold on to your investments for the sake of it in the current climate, could be many years before they realise any value. I'd sell 1500
of your policy. Interest you'd pay on loan would cancel out any profit on your investments, but are more likely to continue to slide downwards. Id sell celtic freeway...for what its worth...I hope the 1500 is for something nice...

ignore the above.....get a 6 month interest free credit card and stay invested.....markets will recover well as they always do after downturn. Good to hear you are euro cost averaging in each month in current climate which is laudable.
Mutual fund outflows in the states were at an all time high in jan. Previous all time low was just prior to dotcom crash 2000 and previous high was mid 2003 prior to stock market recovery! Mutual fund outflows is frequently cited as a good contrarian indicator, Be very careful as the popular view detailed by elphaba above and all the media could just be exactly the wrong advice.

The contrarians often have their fingers burnt. Witness Carlyle Capital's decision to invest in mortgage bonds late last year believing the worst of the US housing slump was over.

Borrowing for two years on a credit card is insanity. The typical APR after the six month period ends is in the high teens.

What is your ability to repay the loan like? Are you sure that you will not end up in a position within the two years where you have to cash in your investments anyway? If so, you might as well do it now. Then use the money you save on paying for the loan to increase your investments.

Cheers for the replies. The money is not for anything nice. I need to pay an unexpected bill and I have an overdraft I would like to get rid off.

I'm not sure if a new credit card is the answer. I know I would find it hard to keep it clear. I use credit cards a lot and have set my credit limit on my BOI card low so I don't end up owing a fortune on it. It seems a little risky to be increasing debt for the sake of an investment policy..

the advice given was NOT to borrow on credit card but rather take advantage of 6-9 months of interest free credit in contrast with cashing out an investment at the wrong time!
What is the bill?

My view is based on logic

Click to expand...

thankfully I do not listen to this logic as it would cost me a lot of $! Buy when thereis fear on the streets and stay invested. Strategic use of puts and calls to hedge positions. Asset allocated over geographic and different sectors. Same old, same old.......but will the amateur investor do this still when fear hits the street and the business news moves from business page to front page?
No! Investor psychology prevails and the rich get richer and the poor get poorer.

Don't cash in or any part of the Policy. How long has it taken you of savings to reach the previous high valuation. Easiest thing is to get a loan, and stop paying anything else into the Policy, although you will miss buying in at the low point. Use the money that you would have invested to pay off the loan and the Credit Card. With only half the investment left you will kick yourself in later years.

I think I'll go with a loan, I'm reluctant to cash in the policy even it is is losing money at the moment. Cheers for the advice folks.

bryann99. Good thinking. The best of luck to you

Good call. Your savings policy is a capital type asset and it should not be used to pay for revenue type as expenditure.