€1m Savings

Tidyweb

I was looking for some information.

If you wanted to save €1m in a capital guaranteed account.

What interest would you expect to get and how much tax would you pay on that interest.

Any advice would be great as its part of a study I am doing, comparing returns of investments.

Browney7

Tidyweb wrote: »

I was looking for some information.

If you wanted to save €1m in a capital guaranteed account.

What interest would you expect to get and how much tax would you pay on that interest.

Any advice would be great as its part of a study I am doing, comparing returns of investments.

The five year euro swap rate is around 0.96% so that could be a good place to start for the "risk free rate". You'd need to look at deposit rates for banks or even government bond yields

Tidyweb

would 1% risk free -tax free be considered a good return?

Russ T Banger

Tidyweb wrote: »

would 1% risk free -tax free be considered a good return?

Nope, inflation will gnaw away at it, invest in govt bonds, blue chips etc

Aim for 40% Equity investments, 50% Bonds and fixed income, 10% in cash. Tailor those percentages to your risk appetite

Tidyweb

Yes - I know what you mean.

But if you wanted a totally risk free investment for - lets say €200K.

Would 1% be considered a good return after tax?

Russ T Banger

Tidyweb wrote: »

Yes - I know what you mean.

But if you wanted a totally risk free investment for - lets say €200K.

Would 1% be considered a good return after tax?

No, again inflation. divide it up into the portfolio allocation i suggested tailored to your risk appetite youd do better son

JTMan

Inflation is 0.50% in Europe and about 0.20% in Ireland, so 1.00% beats inflation. Inflation obviously could go higher or lower.

Tidyweb wrote: »

Would 1% be considered a good return after tax?

1.00% is a poor return considering that you could get 2.50% gross AER fixed less 24 EUR in fees per year with a term deposit with KBC.

srsly78

OP start by reading and understanding this: http://en.wikipedia.org/wiki/Nominal_interest_rate

Nominal interest rate vs Real interest rate

Tidyweb

http://www.statesavings.ie/Pages/NoLimitonSavings.aspx

If you look at other state savings the return seems to be alot less

Henry Ford III

Tidyweb wrote: »

would 1% risk free -tax free be considered a good return?

Inflation is higher so it's a negative real return. DIRT needs to be deducted too.

p.s. There no such thing as risk free. Banks can and do fail, and so do countries.

Tidyweb

would 1% risk free -tax free be considered a good return?

I mean is this a good return versus other risk free investments - not relative to inflation

The J Stands for Jay

Someone who has managed to accumulate €1m would not consider 1% net to be a good return.

Jim2007

Tidyweb wrote: »

I mean is this a good return versus other risk free investments - not relative to inflation

Do you understand that risk free rate of return is a theory that exists only in the minds of finance profs....