#AskaFinancialPlanner: Why you should have an access bond
Hi, I’m about to buy my first home and my parents are going on and on about ensuring I have an access bond. I’d like to know what you think of this. What makes paying extra money monthly into my access bond better than investing that money into a unit trust or 30 day deposit for example? – Jonathan
Hi Jonathan, most people will tell you that you should settle your debt quickly by paying amounts over and above the agreed monthly instalment into you bond account. By doing so, you could save yourself a rather large portion of interest over time with the end result of settling your debt faster. An access bond allows you to withdraw the funds that you have paid over and above your monthly instalments to the bank. You could therefore make use of the access bond facility to withdraw funds in the event of an emergency.
Remember that by paying extra sums into your bond account, you are effectively settling a debt that is costing you around 11% per annum at this stage. An Investment into a 30-day deposit will most likely not yield such a return.
From my own experience, I believe that a combination of an access bond as well as a unit trust or longer term investment works best. As much as settling my debt is important to me, I also have my own personal goal to build my assets and therefore my wealth.
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Donovan is a financial advisor at Money Wise Associated Financial Services who believes in challenging the status quo on how financial advice is currently delivered to clients. He takes pride in showing his clients that financial and other goals are attainable through appropriate planning and affordable solutions. Donovan has completed his Masters in the field of Financial Economics, Honours in Investment Management with distinction and Bachelors of Economics with distinction.