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#AskaFinancialPlanner: Why you should have an access bond

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Q

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

A

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.


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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.


Got a burning question? Email mariette@hometimes.co.za and we’ll be sure to assist


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Donovan KB Money Wise

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.

 

 

 

 


Disclaimer: The information above is not intended to be and does not constitute financial advice, investment advice, trading advice or any other advice or recommendation of any sort offered or endorsed by HomeTimes and Money Wise Associated Financial Services CC. Any expression of opinion is personal to the author and the author makes no guarantee of any sort regarding accuracy or completeness of any information or analysis supplied.

ungerermariette@gmail.com

Mariette Steynberg is a qualified economist with a post-graduate diploma in financial planning. She has enjoyed working on holistic financial plans for clients in various stages of life, as well as a development economist assessing the socioeconomic impacts of new developments. When she is not working, Mariette enjoys parenting her quirky, delightful toddler girl. Cloth diapering, Eskimo kisses and the importance of reading to your child are all causes close to her heart. Mariette is passionate about financial education and hopes to use the experience she has gained to share knowledge with HomeTimes’ readership. Her goal is to provide information that is implementable by everyone.

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