Killing an SSIA

Rock Climber

Hi,
I've just set up my own business and got an unsecured bank loan of 10K.
I have about 5k in an ssia which has exactly two more years to run.
I need about 3K more to buy some equipment, so I'm thinking of stopping the SSIA.

I know I lose 23% of the total by doing that, but I reckon I will make a lot more money, than what I lose on the SSIA and than what the SSIA would make between now and then, if I buy that equipment and it is needed.
The SSIA monthly amount would also go a long way on the loan payment!!

The SSIA is with ACC at a variable ECB rate which is now only 2%

So how do i request them to encash this?
Since it's a deposit account but because its an ssia will they charge me a fee to cancel it?
Do they deduct the 23% them selves or is it up to me to send it on?
Will they send me a cheque or is it likely that they will want to send it to a bank account?

cheers if anyone knows the answers

alleepally

I was with the ACC and had to close off an account. Just ring them up and they'll tell you everything. They asked what way I wanted the money and I said cheque. They can transfer direct to an account though. I didn't get charged a fee. All deductions are done for you. If you ring them they can tell you there and then what exact amount you will get.

alleepally

PS - good luck with the business!

silverside

It might be worthwhile to keep the SSIA open, even if you have to borrow to fund it.

The SSIA is getting 25% bonus plus interest. So this year's contributions (with 18months to run, on average). earn an bounus equilvvalent to 15% p.a.+interest Next years contributions (with 6 months to lock away for) earn equivalent to 50% p.a.+interest (all very roughly speaking)

Your borrowing would probably cost you 12% p.a. approximately.

So if you can manage to keep the SSIA open, it would be worthwhile financially.

I know there is peace of mind in paying for things with cash and not having any borrowings, but the bonus in this case should make it worthwhile to borrow.

If you are running the business as a company, you may be able to write the borrowing interest off against tax also.

Maybe talk to your accountant or do out the sums yourself, but consider it carefully.

and good luck also.

Victor

Originally posted by silverside
It might be worthwhile to keep the SSIA open, even if you have to borrow to fund it.

One has to be carful here, you cannot borrow against a SSIA - it must come from earned money.

spongebob

Originally posted by silverside
It might be worthwhile to keep the SSIA open, even if you have to borrow to fund it.

Your borrowing would probably cost you 12% p.a. approximately.

So if you can manage to keep the SSIA open, it would be worthwhile financially.

and good luck also.

Good point, tell your bank you will give them a lien on it (first shout) to clear your other loan in 2 years when it is available in full .

Not worth closing IMO

good luck

M

silverside

Victor I know the rule is there but is is impossible to enforce, as long as you dont say to the bank "give me a loan to fund my ssia".

Who is to say what is extra borrowing and what is normal borrowing - going strictly by the book, nobody could have a car loan and an overdraft while also paying into an SSIA.

I dont think you can explicitly put a lien on an SSIA either.


I think the SSIA was a flawed idea anyway - taking from the poor to give to the rich - but if free money is being given away, why not take advantage of it.

leonotron

Why not change the amount you pay into the SSIA to the minimum then just earn the interest on what you have saved to date.

leonotron

Originally posted by silverside
Victor I know the rule is there but is is impossible to enforce, as long as you dont say to the bank "give me a loan to fund my ssia".

Who is to say what is extra borrowing and what is normal borrowing - going strictly by the book, nobody could have a car loan and an overdraft while also paying into an SSIA.

I dont think you can explicitly put a lien on an SSIA either.


I think the SSIA was a flawed idea anyway - taking from the poor to give to the rich - but if free money is being given away, why not take advantage of it.

How does it take from the poor and give to the rich? I pay the maximum into it every month, I'm far from rich and I do without so I can save that money. Flawed like many people on the dole said at the start of it because they could not afford to save, but a lot of them can afford to spend all day Sunday in the pub, kids and all. I'm sick of the government in this state rewarding those who sit on their ass all their life and raping people like me trying to make a better life for myself.

Victor

OK, drug dealers can max out their SSIA and get government money.

Someone with a minimum wage job and two kids can't.

leonotron

Originally posted by Victor
OK, drug dealers can max out their SSIA and get government money.

Someone with a minimum wage job and two kids can't.

Drug dealers, maxing it out at €260 a month, they will be cruising in their M3's and SL500's in no time.
Surely they choose to have two kids? Same as my sister chooses to drink in the pub instead of putting it into an SSIA.

Your argument is a joke.

Genghis

leonotron, I can see both sides of the argument, and it is not quite that simple. The scheme favours the rich because:

1. They can divert 'free cash' / other investments into SSIAs and then make a very high, and guaranteed return. As they would probably be investing their 'spare cash' in something, they are not really saving, but investing, and being paid free money.

2. Although there is a limit, you will find that most rich people can max out their contribution, whereas poorer people may not be able to afford to. Therefore they stand to gain more.

3. There is also anecdotal evidence of families / households taking out an SSIA for everyone in the house - substantially increasing the effective contributions, and the effective returns. A rich family with two college-going children can earn €254 free per month. A poor family is less likely to be able to max out in this way.

4. The return is not means tested.


Of course, it is not as simple as 'taking from the poor to give to the rich' either.

leonotron

Yeah, I see your point.