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Sorry - another savings account question

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  • 07-11-2012 1:32pm
    #1
    Gmail
    Registered Users Posts: 79 ✭✭


    Firstly I apologise for another 'which savings account' thread. Have spent a bit of time looking through this forum for a suitable answer but I failed to find it (doesnt mean it isnt there, I couldnt find it!).

    My story is I have €40-€45k to put into a saving account for approx 3 years. I wont need access to it in that time (hopefully).
    I'm not interested in any 'risk associated' accounts.

    I'm thinking about the state savings accounts as opposed to a bank.

    Basically just sick of the treatment from my bank, friends and family saying the same about their respective banks so I accept it is not specifically one bank.
    Will still use my bank for current account and regular savings.

    Looking at the options the state savings accounts offer the three year savings bond would probaly suit me best. AER is 3.29% which is subject to dirt.

    I suppose the question I'm asking is if you had the same amount of money where would you put it for 3 years?
    Is there any benefit going with the state savings vs bank for the term I am interested in?

    Thanks in advance, this stuff makes my brain hurt :D


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    #2
    BrianD3
    Registered Users Posts: 8,387 ✭✭✭BrianD3


    Gmail wrote: »
    Looking at the options the state savings accounts offer the three year savings bond would probaly suit me best. AER is 3.29% which is subject to dirt.
    The 3 year bond is 3.23% AER and is not subject to DIRT. 3.23% not subject to DIRT would be the equivalent of a "gross" rate of 4.61%.

    On the other hand the rates from the banks for 3 year term deposits are around 2.5-3.0% gross. So buying the bond would seem to be a no brainer.


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    #3
    billyhead
    Registered Users Posts: 9,845 ✭✭✭billyhead


    BrianD3 wrote: »
    The 3 year bond is 3.23% AER and is not subject to DIRT. 3.23% not subject to DIRT would be the equivalent of a "gross" rate of 4.61%.

    On the other hand the rates from the banks for 3 year term deposits are around 2.5-3.0% gross. So buying the bond would seem to be a no brainer.

    If you can stretch to not needing the funds for 5 years their is a greater potential return with the other scheme they have- i.e a 5 year NTMA account. I decided with my 60k investment to open a 10 year account. The returns are greater overall then the shorter ones


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    #4
    Gmail
    Registered Users Posts: 79 ✭✭Gmail


    Thanks for the replies.
    billyhead wrote: »
    If you can stretch to not needing the funds for 5 years their is a greater potential return with the other scheme they have- i.e a 5 year NTMA account. I decided with my 60k investment to open a 10 year account. The returns are greater overall then the shorter ones

    Am giving serious thought to this....not sure if I could stretch to 5 years but it is enticing.


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    #5
    billyhead
    Registered Users Posts: 9,845 ✭✭✭billyhead


    Gmail wrote: »
    Thanks for the replies.



    Am giving serious thought to this....not sure if I could stretch to 5 years but it is enticing.
    Actuall the shorter one is 4 years and not 5 which I suppose makes it a bit more enticing for you.
    National Solidarity Bond (4 Year)

    15% Gross return over 4 years, AER 3.56%, made up of an annual interest payment of 1% p.a., subject to DIRT, and a final tax free lump sum bonus payment of 11%.


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    #6
    Gmail
    Registered Users Posts: 79 ✭✭Gmail


    billyhead wrote: »
    Actuall the shorter one is 4 years and not 5 which I suppose makes it a bit more enticing for you.
    National Solidarity Bond (4 Year)

    15% Gross return over 4 years, AER 3.56%, made up of an annual interest payment of 1% p.a., subject to DIRT, and a final tax free lump sum bonus payment of 11%.

    It's very enticing alright. I'll give it some serious thought but I reckon I could stretch to 4 years.
    Thanks for all your feedback folks.


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    #7
    StillWaters
    Closed Accounts Posts: 1,799 ✭✭✭StillWaters


    Gmail wrote: »

    I suppose the question I'm asking is if you had the same amount of money where would you put it for 3 years?

    1. Pay off all debts (except mortgage)
    2. Put €40k in solidarity bond
    3. Buy €1k prize bonds, I know lots of people win nothing, but I love getting the odd €75 cheque and the dream of the big prize.
    4. Put €4k in credit union or best interest access account (if I didn't already
    have accessible rainy day fund)


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    #8
    A New earth
    Registered Users Posts: 551 ✭✭✭A New earth


    Make sure you don't need funds before the 4 years are up as you will earn only 0.7% net pa if you withdraw early compared to the 3 year bond which pays over 2% net per annum for early withdrawals (increasing as you get nearer to the end of the 3 years). Five and a half year savings certs are also quite good for early withdrawal & just over 3.5% pa if you go the full term (equal to c. 5% gross)


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