Cashing in SSIA?

eth0_

I have a few grand saved in my SSIA now, but I need a grand for investment purposes. Am I right in thinking if I withdrew €1230, I would get €1000 in cash?
Has anyone here withdrawn part of their SSIA? Do you need to go into the bank in person to do it?

Victor

No, you would need €1,298.70 to get €1,000 (you need to invest / earn €1,038.96 to get this) as the 23% early withdrawal tax applies to the full amount.

€1,298.70 - (€1,298.70*23%) = €1,000.

€1,000 sound like an investment that would be eaten up in charges and the like.

eth0_

Originally posted by Victor

€1,000 sound like an investment that would be eaten up in charges and the like.

I'm not investing just €1000...thanks for the advice

l3rian

i think you'd be better off getting a overdraft or loan than cashing in the ssia

sceptre

Originally posted by l3rian
i think you'd be better off getting a overdraft or loan than cashing in the ssia

I tend to agree. Assuming your SSIA is fixed (you do have a fixed rate SSIA yeah?), you're probably getting around 9%pa including the government free money. A term loan over two-three years until your SSIA matures is going to cost you around the same amount. Psychologically for most people (and I fully accept that you're not "most people"), all things being equal, the money accumulating in the bank at the same rate works out better. All things being equal, it'd probably work out the same if you can manage to pay both. If your SSIA is an investment one, you might as well cash out the grand at your own discretion, depending on how you think the market will go.

Worth remembering that rolling over an investment-based SSIA to ten, rather than five, years was always the desired course of action and you might want to keep this in mind with regard to your cash placement if you do have an investment SSIA (of course if you're /really/ pessimistic about the market and think the seven-year cycle we've had for forty years is going to disappear, you might be as well off putting your money in lollipop futures).

spongebob

Good Advice Sceptre.

From now on the law of marginal returns kicks in. I will assume that we all have a 2 year old cash (not investment) SSIA and that the balance of the term is therefore 3 years. I left out the interest rate on the whole of it as it is now about 1-2% - Dirt for Variable Rate Cash SSIA's, the largest category ISTR. Fixed ones generally get c.4% - Dirt on top of the % below.

25% bonus today is worth 8.33% a year for each of the last 3 years.
25% bonus in a years time is worth 12.5% a year for each of the last 2 years.
25% bonus in the final year is worth 25% a year for the last year.

A Car Loan is about 8% nowadays so the cost of paying it back over 3 years is about the same as the cost of reducing your SSIA to the minimum €12 a month or so while in a years time the cost of the car loan may be 9% (with rising rates) but your SSIA contribution is worth 12.5% .....more in other words.

Personal loans are about 12%(ish) so you are better off reducing your SSIA contribution and paying back a personal loan over the next year or so. Overdrafts are more while it will only be a good idea to borrow off your credit card to pay into the SSIA once the SSIA is in its final year . In other words, once an SSIA is 2 years old or more it is actually worthwhile to borrow elsewhere to pay the full whack into the SSIA if you can get the money fairly cheap .

Bt teh same logic it is also VERY WORTHWHILE to cut a deal with someone sho is not maxing their own one out. I have come across cases where people are stickinga €100 a month into someone elses , leaving them the Interest-Dirt and taking the 25% . That was because the other person was not using theirs up fully. The deal is one year reviewable of course as the person will probably start to max it themselves towards the end.

Personally I think a good win win deal is where you take 20% on top of your contribution leaving the person whose account it is with 5%+the interest (Variable-Dirt) component. Most fixed SSIA's required you to max it from day one.

M

RainyDay

Originally posted by Muck
Bt teh same logic it is also VERY WORTHWHILE to cut a deal with someone sho is not maxing their own one out. I have come across cases where people are stickinga €100 a month into someone elses , leaving them the Interest-Dirt and taking the 25% . That was because the other person was not using theirs up fully. The deal is one year reviewable of course as the person will probably start to max it themselves towards the end.

This means that the other person who owns the SSIA account would be breaching the terms of their SSIA agreement (which states that the funds are coming from their own resources) and are putting their entire 25% Govt contribution at risk. Whether Revenue would ever get round to auditing this is anyone's guess. Before you assume that it will all be OK, just think about how many thousands of bogus off-shore account holders were absolutely convinced that Revenue would never get round to finding them either. They are now facing large bills with heavy interest & penalties.

Of course, it also means that the account holder could just keep your money and you would have no legal recourse to get it back.

spongebob

Of course RainyDay is right, you should trust nobody..at all...anywhere.....for any reason.....ever....especially with cash. Trust your bank even less beacuse they will charge management fees to fritter your cash away for ya in a tracker:D

Your guaranteed return will then be 0% -(depreciation on the mattress).

M