Reinvest dividends?

In my margin loan I have an AMP fund returning 12% paid monthly back into my loan account reducing my overall loan.

Today I have a letter from them saying there will be a capital gains return in June and I have the option of staying as is and have the extra paid into the loan, pick a $ amount to recive each month with the rest reinvested or reinvest everything.

I am unlikely to ever draw an income from the fund or bother too much about how much debt I am capitalising.

Doing some rough numbers over 10 years based on 12% returns a loan rate of 8.85% and a starting capital of 30k all borrowed. Used 3 year average for c/g.

Capital $93,175.00 after 10 years compound.
Capitalised interest $70,050.00
Net gain $23,125.00

As above with 2% c/g $111,217.00
Interest $70,050.00
Net Gain $41,167.00

Retired debt over 10 years $9,360.00 by paying returns into the loan.
$15,149.00 with savings on interest paid.

As above with 2% c/g $15,120.00
$24,174.00 with savings on interest paid. (will be a bit less due to capital payment being once a year not monthly)

Does my maths add up? Anything I have missed? Any reason not to reinvest the lot? Holding cost is $213 a month.

 

It's the only managed fund in there not the only investment though. It is rapidly shrinking as a % of my investments and at the moment the cash is dropping down into the loan and used else where.

I have found it is a good defence against falling markets given that it only moves 1/2 of what the market does and has a lag before the lower price flows through to the margin loan giving the market a chance to recover. Was great for that in February when it was a decent % of the portfolio, now it is headed into single figure % of the portfolio it's not going to smooth out many bumps. Listed Hybrid Bonds have started to be my new defensive position as they rarely move when the music stops.