high interest saving accounts

Drexl Spivey

Hi,

I just opened a Personal Saving Account with aib (it was easy, i did it online with a few clicks)

I was looking at the interest rates and I thought they were really low. Around 1% gross...

Is there nothing that can pay more ?

Anyone heard of a bank that offers 5 or 6 why not 8 % ? Even if it is not in EIRE?

Victor

Internationally interest rates are low, even in a historical view. I imagine there are places where you can get higher rates, but that is with real currency and capital risks.

The highest interest rates you can expect are in the order of 3%, the rate at which banks can borrow from other banks..

Meh

Northern Rock have an online account that gives 3% interest, that's about the best you'll get within the eurozone I'm afraid. This is the flip side of low mortgage rates.

You could get a few percent more on a sterling deposit account, but then you'd be exposed to currency risks, which kind of defeats the purpose of putting your money in a deposit account in the first place.

FX Meister

Don't the Credit Union pay a relatively high dividend compared to the banks? I could be wrong on this though. I was going to put some savings bonds that had matured back into new bonds but it meant the money was tied up for five years. The rate that was offered was only marginally higher than the credit union without the obligation to have it in the account for five years.

Drexl Spivey

bank of Ireland offers 1.5 % (Gross!!) in a smart save account whereas AIB offers only 1% in the personal saving account, so I imagine BOI is better ...

What kind of account would you guys open if you had 5000-6000 euro as a lump of money and if you were willing to save 250euro monthly for short or long term ?

The goal is just to accumulate the maximum amount of money

I prefer to ask you because I know that financial advisors will tell me what s better for THEM.


Honestly, 1.5 % is not even covering the inflation, and you have to pay 20% DIRT.


Is there a way to make money beside buying properties ?

eth0_

If you can use an address in the UK, practially all banks offer savings accounts that pay 5%. I have one with Cahoot.com that calculates interest daily and pays it monthly. Brill!

antoinolachtnai

But that's a sterling interest rate. To do that, you have to convert to sterling. If you like speculating on sterling, fair enough, but try to understand what you're getting in for. (There are much more economic ways to do this kind of transaction than changing your money into sterling and back again, if it's the sort of thing that rocks your boat).

Interest rates are basically controlled by central banks. The decide the interest rate in accordance with the view they take on economic strength, strenght of the currency and inflation. For example, in the current international context, they use the rate to attract investors into the currency, or to scare them out of it. Euro rates are being kept low at the moment, because the ECB wants to discourage purchasing of euros, so that the price will fall.

That's why no bank will ever offer you more than a certain rate for a particular currency, and it is also why there is a 'floor' under which a lending rate can't fall.

You have to be very careful with any transaction involving currency exchange. Unless you fully understand the risks and potential rewards, do not exchange currencies in order to access favorable interest rates.

daveirl

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Victor

daveirl wrote:

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But you then pay a fee for that betting exchange.

Do any of you really think you will beat the banks at their own game?

daveirl

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l3rian

thats a form of arbitage betting/investing daveirl, and yes that could work, just do your sums to make sure its worth your while

Drexl Spivey

I have found a French account type that offers 2.25% with no tax (called Livret A)

It is still not what I wanted but I can t find better so far. The prb with the above may be the transfer from Fr to irl when I need the money (delay, price, ..) , i ll check it out.

nlgbbbblth

Jeff Bond wrote:

Hi,

I just opened a Personal Saving Account with aib (it was easy, i did it online with a few clicks)

I was looking at the interest rates and I thought they were really low. Around 1% gross...

Is there nothing that can pay more ?

Anyone heard of a bank that offers 5 or 6 why not 8 % ? Even if it is not in EIRE?

Low lending rates = low deposit rates

you can't have it both ways

Reyman

Try putting your cash into Prize Bonds! Nett return 2.4% p.a.. This equates to Northern Rock's annual rate of 3% because you pay dirt at 20% on the 3%.
Also zero risk involved - Don't forget most of these banks are in hock to the overpriced property market and are heavily exposed to a downturn!


Never know you might get really lucky ! And anyway you can withdraw your cash anytime you like unlike with some of our bank friends!

RainyDay

Jeff Bond wrote:

I have found a French account type that offers 2.25% with no tax (called Livret A)

It is still not what I wanted but I can t find better so far. The prb with the above may be the transfer from Fr to irl when I need the money (delay, price, ..) , i ll check it out.

Why would you consider opening a French account when there are several Irish institutions which will beat that rate? Check out the Askaboutmoney.com listing of high yield savings accounts.

The 'no tax' point is misleading. Just because the French bank doesn't withhold tax does not mean that you don't have a tax liability. You will still owe tax on the interest (depending on your personal tax credits). If the amounts are significant, the boys in Revenue will track you down eventually (after some nice heavy interest/penalties have built up over a few years).

Don't forget that money on deposit is getting eaten away by inflation anyway. If you can afford to tie up your money for 5 years or more, you should consider other forms of investment.

Victor

Anyone know and cheap hookers, I want to be screwed over.

RainyDay

Reyman wrote:

Try putting your cash into Prize Bonds! Nett return 2.4% p.a.. This equates to Northern Rock's annual rate of 3% because you pay dirt at 20% on the 3%.

This is VERY misleading. There is no Nett return of 2.4%. It is true that the overall prize fund is calculated at 2.4% per annum of the total fund. But this is not an average earned by each purchaser - a tiny number of people (e.g. one person a week) wins a very large amount (€20k top weekly prize, €150k top monthly prize). This means the 'average' return is heavily baised by these small number of top prizes - take these out of the equation and your 'average return' becomes tiny.

Reyman wrote:

Also zero risk involved - Don't forget most of these banks are in hock to the overpriced property market and are heavily exposed to a downturn!

Not true. Inflation is eating away at the value of your money every day. The €5 you put into the bonds will be worth a lot less in real terms at the end of 5 years or 20 years.

Prize bonds are not an investment - they are a little game or gamble. Do it for fun - but not as an investment.

Reyman

All true what you say ! You do run the risk of winning a large prize or nothing - nevertheless the return over a period is mathematically 2.4% without tax.

If you invest €100k over a period say 10 years you will earn €24k in prizes. And zero risk !

RainyDay

Reyman wrote:

All true what you say ! You do run the risk of winning a large prize or nothing - nevertheless the return over a period is mathematically 2.4% without tax.

Can I spend your mathemetical return in the pub? Or in the shops? The mathematical return is a meaningless figure. No-one earns the mathematical return. A tiny number of people earn a much larger return. The vast majority of people earn a tiny return or no return at all.

Reyman wrote:

If you invest €100k over a period say 10 years you will earn €24k in prizes.

Please stop saying this. It is not true. You cannot predict what the return will be. You may earn €150k per week. You may earn nothing. You will probably earn a tiny amount. You will almost certainly not earn 2.4%

Reyman wrote:

And zero risk !

Please stop saying this. It is not true. Over the ten years from 1993 to 2003, inflation would have eaten away 26% of the value of your money. And that was in a period of relatively low inflation. Go back to the 70's and you'd have lost more than 50% of the value of your money to inflation.

Prize bonds are not an investment.

antoinolachtnai

*** WARNING ***

There is a lot of kooky advice going around here. If you are sufficiently naive about financial matters to be depending on boards.ie for guidance, well, I'd leave granny's money in the matress for now if I were you. There are exceptions, but a lot of the advice on this thread is absolute rubbish.

But you won't be beating the bank. You'd be using the interest on your account (which is guarenteed) to bet against other people. So basically you bet on sterling falling on the exchange. Then your money in your account accrues interest in sterling. Should sterling rise then fantastic your account is worth more, and you lose on the bet. Should sterling fall, you win on the exchange cancelling out the loss.

Sure you won't get 5% on the total like one of the posters said, but I'm sure you can do the calculations so that you could get 3% or so.

Have you made much money doing this yourself? You must be good mates with the boys on the AIB treasury desk and/or doing regular (weekly) transactions in the 5 million-euro range as otherwise you would be unlikely to get an exchange rate that would make this remotely viable. You must have the luck of the Irish too, because even a small swing in the value of sterling (0.005 cents in a day, which is pretty commonplace in currency trading)) would turn your interest rate gain into a loss. You must have a generous and understanding banker, because any transaction fee would cut into it pretty badly too.

It's amazing that the institutions haven't priced these factors into the currency already, and are happy to stand by and allow you to benefit from an interest rate some 50 percent higher than the rate they have to overnight their spare euro billions at. The institutions have a lot of really brainy people working for them staring at screens and writing on whiteboards all day working this stuff out. They would be better off lending you some of their dosh in return for a split of the profits from your foolproof moneymaking scheme!

Reyman says:

Don't forget most of these banks are in hock to the overpriced property market and are heavily exposed to a downturn!

Are you suggesting that Irish banks are in danger of not being able to pay their account holders back their money if property prices drop?

Can you explain your justification for this statement? Can you provide us with a single indicator to back it up? What degree of correction in property values would be required to bring this about, according to your research?

When you wrote to IFSRA to bring this important information to their attention, what did they say in responce? Did they quote a file or reference number? I hope the public has not been the victim of a cover-up.

The return, even the 'mathematical' return on prize bonds is a good bit less than 2.4 percent, because the punters do not benefit from the compounding of the return on their investment.

daveirl

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Zaph0d

If you buy prize bonds with €5K, your probable winnings are as follows:

€75 prize every 10 months
€250 every 189 years
€1,000 every 379 years
€20,000 every 1893 years
€150,000 every 8201 years

So the most likely thing is that you won't win any prize above €75 for the length of your investment. This would give you 1.74% return. You would have to buy more prize bonds with your winnings to get a compound return.

A better way to invest may be to pay for education aimed at improving your earning potential.

Reyman

antoinolachtnai wrote:

*** WARNING ***


Anto says:



Are you suggesting that Irish banks are in danger of not being able to pay their account holders back their money if property prices drop?

Can you explain your justification for this statement? Can you provide us with a single indicator to back it up? What degree of correction in property values would be required to bring this about, according to your research?

When you wrote to IFSRA to bring this important information to their attention, what did they say in responce? Did they quote a file or reference number? I hope the public has not been the victim of a cover-up.

The return, even the 'mathematical' return on prize bonds is a good bit less than 2.4 percent, because the punters do not benefit from the compounding of the return on their investment.

I believe round 50 % of Bank of Ireland's loan book is now in property. Have a look at the current issue of Business and Finance if you think property is a good investment. The stock market was also regulated when it did its nice about turn 3-4 years ago
Why go for a low interest and risk when you can get equivalent 2.4 % tax free and risk free?

As with normal interest the return is compound if you reinvest the prize money (interest) you've received

antoinolachtnai

I believe round 50 % of Bank of Ireland's loan book is now in property.

what does that have to do with it? What shift would it take to bring Bank of Ireland's mortgage book into negative equity? The book is quite mature, so I'd say would need a 50 percent or so drop to get into negative equity.

If they did get into negative equity, what difference would it make? Most people would still make their payments.

Why are you worried about the 50 percent that is in property? Why aren't you worried about the 50 percent that's secured against old PCs,unsaleable office furniture and other basically valueless assets?

Have a look at the current issue of Business and Finance if you think property is a good investment.

We weren't talking about property being a good investment. We were talking about a bank, the Bank of Ireland, which you believe is at risk of collapse.

The stock market was also regulated when it did its nice about turn 3-4 years ago

What exactly does that have to do with anything we were discussing?

As with normal interest the return is compound if you reinvest the prize money (interest) you've received

Have you calculated it? I think you'll find it's less, a lot less, for 99 percent of bondholders.

Reyman

I think we're digressing a little from the main point of the thread which is "Interest Rates" and not the property market, which has been addressed by many other threads here.

But anyway I stand by my original point that you won't get a higher equivalent rate than 2.4% with prize bonds with no Dirt and no risk. You also have a bit of fun "gambling" too


Incidentally you can get higher rates with Savings Bonds and Saving Certs, which offer 2.6% and 2.74% respectively, again Government guaranteed and no Dirt. The snag here is that your money is locked in for 3/5 years

eth0_

Zaph0d wrote:

If you buy prize bonds with €5K, your probable winnings are as follows:

.

Thanks for that, Zaph0d. I have a grand in prizebonds and have had them for nearly 3 years and haven't won a single prize! I'd been considering cashing them in, now I definitely will.

RainyDay

Reyman wrote:

But anyway I stand by my original point that you won't get a higher equivalent rate than 2.4% with prize bonds with no Dirt and no risk. You also have a bit of fun "gambling" too

You can stand by it, stand on it, stand under it or stand over it - it doesn't make any difference. It is factually incorrect. It is wrong.

The chances of you making 2.4% return on prize bonds are tiny. You have a very small chance of a very big win, or a reasonable chance of a very small win. You will not make 2.4%. That is the AVERAGE return, and the average is heavily biassed by the small number of very large prizes.

There is a very clear risk of inflation (which also applies to deposit accounts). You risk losing 3%-5% of the real value of your money each year.

You can get 2.8% return directly from Northern Rock today.

You may like prize bonds. You may have 'fun' gambling. That is up to you. But it is not an 'investment strategy'. It is a gamble.

Drexl Spivey

RainyDay wrote:

Why would you consider opening a French account when there are several Irish institutions which will beat that rate? Check out the Askaboutmoney.com listing of high yield savings accounts.

Because I don't know a lot about saving accounts Hence this post.

After checking the French account thingie, it's no good :
The interest is 2.25 annual but calculated twice per month, so every month is 1/12 of 2.25 % . I was hopping it was 2.25 at a particular point in time what ever I ve been saving during the year.

Do you think The AIB Online Saving accounts is the same ? Apparently interest rate is 0.8 % (1% - DIRT) calculated in March 2005

Let's say I put 1000 euro per month (the limit allowed for this type of account) up to 5000 in march. How much would I get in interest (Total amount - 5000) net ?

Is it 5040-5000=40 ? (5000 + (5000*.8/100)) ??

Sorry to ask such basic questions but I don t find it clear on the banks' websites.

RainyDay

Don't get hung up on the exact method of calculations. They will all pretty much be similar. The interest rates quoted are the annual rates. If you have the funds on deposit for shorter periods, you will get a proportion of the average rate.

Drexl Spivey

RainyDay wrote:

Don't get hung up on the exact method of calculations. They will all pretty much be similar. The interest rates quoted are the annual rates. If you have the funds on deposit for shorter periods, you will get a proportion of the average rate.

Anyone has the formula to calculate Net benefits after n years saving x euro per month ?