Best Return on Savings ?

TiGeR KiNgS · 24-12-2014 7:13pm #1

Hi,

I have €8,000 lumpsum to lodge.
I have €500 available to lodge each month thereafter.
I am young and do not require the funds until 1 year later.

I would like to know which product to invest in to maximize my return over the next year.

Something with an expected return between 2-10% I would be happy with.
I am not very investment literate (please consider this point).

Regards,
TK

JTMan · 24-12-2014 8:02pm

TiGeR KiNgS wrote: »

Hi,

I have €8,000 lumpsum to lodge.

Nationwide UK (Ireland) will pay you 1.75% AER variable for a 30 day notice account for this lump sum. This is the highest lump sum variable rate available currently.

TiGeR KiNgS wrote: »

I have €500 available to lodge each month thereafter.
I am young and do not require the funds until 1 year later.

Nationwide UK (Ireland) will pay you 4.00% AER variable with a Nationwide UK (Ireland) Regular Saver account. However, this is a 15 month account so it might be too long for you.

KBC will pay you 3.50% AER variable with their KBC Regular Saver account. There is no time limit with this product.

TiGeR KiNgS · 24-12-2014 10:49pm

How does this product work ?
http://personal.aib.ie/our-products/savings-and-deposits/online-saver

Is this the correct calculation

€500 x 12 lodgements

€6,000

135.00 Gross Interest @2.25%

(55) Less DIRT @41%
80 Net Interest due

JTMan · 25-12-2014 12:03pm

TiGeR KiNgS wrote: »

How does this product work ?
http://personal.aib.ie/our-products/savings-and-deposits/online-saver

Is this the correct calculation

€500 x 12 lodgements

€6,000

135.00 Gross Interest @2.25%

(55) Less DIRT @41%
80 Net Interest due

Correct.

The product has a variable rate. You can bet that the rate will drop inside the next 12 months.

Also, as the rate drops after you have the product for 12 months, it is effectively a 12 month product.

You are far better off with the KBC Regular Saver product or the Nationwide UK (Ireland) Regular Saver product.

TiGeR KiNgS · 26-12-2014 12:00am

So the return (assuming inflation is NIL) would be 80/6,000 = 1.33%.
Pretty awful.

Where is the government trying to focus savings these days ? (i.e banks, shares, property etc )

dellas1979 · 28-12-2014 4:18pm

TiGeR KiNgS wrote: »

Something with an expected return between 2-10% I would be happy with.
I am not very investment literate (please consider this point).

I know you said you didnt know very much about interest/return, but this is the reality. If you find a bank that will give you near 10%, youve found a golden goose there and we'd all be with them.

Your only other option is more risky (investment/buying shares) but e8000 wont gain a return of what I think you are looking for).

Im with Rabo, and its 1.75% variable Gross/AER on your first €20,000, 1% variable Gross/AER on amounts above €20,000 up to €5 million. In Feb 2015, its going to change to 1.50% variable Gross/AER on your first €20,000, 0.75% variable Gross/AER. And of course, yes youve to pay DIRT on any interest earned.

At this stage myself, I might consider moving. Even 0.5% more means it will earn that bit more to even contribute to the DIRT.

sunshine and showers · 28-12-2014 4:25pm

I just signed up to the KBC Regular Saver Account myself. It was definitely the best interest rate I could find! I am moving my savings from Rabo to my new KBC one by transferring it out month by month. The interest rates with them are terrible and are set to be cut next year.

You could siphon off a bit of the €8,000 every month and add it to your €500 per month to put it into one the savings accounts with better rates that have cut offs (usually of €1,000 per month).

I liked the KBC one because there was no minimum period of saving, no penalties to remove all the money and shut the account, and they let you take two months off per year if you just can't afford it at the time.

I sound like I'm advertising them... :rolleyes:

dellas1979 · 28-12-2014 4:36pm

Sunshine what is the interest you signed up for with KBC? edit: i see its 3.5%.

But, I see you have to move (per month) your savings (from Rabo to KBC)?

This might be ok with smaller sums, but 20/30k+, would take years.

Spanish Eyes · 28-12-2014 4:49pm

Are State Savings not good anymore? They're tax free aren't they?

sunshine and showers · 28-12-2014 5:05pm

dellas1979 wrote: »

Sunshine what is the interest you signed up for with KBC? edit: i see its 3.5%.

But, I see you have to move (per month) your savings (from Rabo to KBC)?

This might be ok with smaller sums, but 20/30k+, would take years.

Oh I know it would. I was suggesting for part or all of the OP's €8,000 depending on what they want. All of it would take 16 months if they also had €500 a month to lodge.

JTMan · 28-12-2014 5:05pm

dellas1979 wrote: »

This might be ok with smaller sums, but 20/30k+, would take years.

It won't take years if you open 2 regular saver accounts with 2 different banks and drip feed into both. Alternately, open join accounts which allow you double your monthly deposit maximum.

JTMan · 28-12-2014 5:06pm

Spanish Eyes wrote: »

Are State Savings not good anymore? They're tax free aren't they?

Most State Savings products are tax free.

They are all offer rubbish returns at the moment. Rates were cut several times in 2014.

Spanish Eyes · 28-12-2014 5:09pm

JTMan wrote: »

Most State Savings products are tax free.

They are all offer rubbish returns at the moment. Rates were cut several times in 2014.

Apologies, I haven't researched myself.... but is that true even with DIRT at 41% on say "bank" savings interest?

dellas1979 · 28-12-2014 7:26pm

JTMan wrote: »

It won't take years if you open 2 regular saver accounts with 2 different banks and drip feed into both. Alternately, open join accounts which allow you double your monthly deposit maximum.

If you'd 30K+, it would. And then there is the dilemma of what do you do with savings you accumulate over that period of time (like a back log of savings) if there is a maximum monthly lodge (like most have). I know its a very "first world" problem, but it seems they want smaller amounts for higher interest.

I suppose the ideal would be to drop 1 lump sum into 1 account (that offers over 1.5/1.75%). But for lump sums, most (if not all) are offering a similar interest rate. Caught by the proverbial gilhooleys.

Drip feed into another bank saving to avail of interest rate, or put up with the ever decreasing Rabo interest rate.

JTMan · 29-12-2014 12:35pm

Or alternatively lock for 3 years in a Nationwide UK (Ireland) account at 2.20% with instant access subject to an interest penalty.

The Cuban · 30-12-2014 5:41pm

Looking into saving myself but I know the first €2500 will sit in my AIB current account. This is to avoid paying fees which can add up to nearly €200 per year!!! what interest rate would you need on €2500 to make that much :eek:

JTMan · 30-12-2014 10:39pm

The Cuban wrote: »

Looking into saving myself but I know the first €2500 will sit in my AIB current account. This is to avoid paying fees which can add up to nearly €200 per year!!! what interest rate would you need on €2500 to make that much :eek:

Have you considered switching to PTSB?

DMcL1971 · 31-12-2014 4:49pm

The Cuban wrote: »

Looking into saving myself but I know the first €2500 will sit in my AIB current account. This is to avoid paying fees which can add up to nearly €200 per year!!! what interest rate would you need on €2500 to make that much :eek:

2500 sitting in a bank account untouched for one year at 10% would earn you 250 before DIRT, so you are talking about needing to earn around 20% to make 250 after DIRT. Seeing as how 20% is impossible to achieve, you are better off leaving the 2500 in your account doing nothing as it will save you far more on fees.

Or better still do what JTMan says and move your banking to PTSB where it is free (subject to 1500 lodgement per month) or EBS where it is free (with a minimum balance of 500) or KBC where it costs €6 per quarter (30c per ATM withdrawal). Or any one of the banks offering a better rate.

Oh and by the way PTSB will even pay you 1% interest on the first 1500 in your current account.

The Cuban · 31-12-2014 5:58pm

I don't want to change as I have my online savings account with Aib and I'm hoping to get a mortgage later on in the year.
Also is the ptsb really fully free? is their not quarterly fees of some sort?

JTMan · 31-12-2014 6:14pm

The Cuban wrote: »

I don't want to change as I have my online savings account with Aib and I'm hoping to get a mortgage later on in the year.
Also is the ptsb really fully free? is their not quarterly fees of some sort?

Which bank you have your current account with will not effect your ability to get a mortgage.

PTSB have free day-to-day banking provided you deposit at least 1,500 EUR per month into your account.

DMcL1971 · 31-12-2014 6:36pm

JTMan wrote: »

Which bank you have your current account with will not effect your ability to get a mortgage.

PTSB have free day-to-day banking provided you deposit at least 1,500 EUR per month into your account.

If you don't deposit 1500 each month of the quartet then the fees are €12 for that quarter.

Seeing as how you already have savings, you can open a savings account with PTSB and then once a month log into the savings account, move the 1500 to the current account and then the next day move it back to the savings account. That satisfies the T&C's. The same would work if you moved the amount of 500 back and forward three times. The savings account pays 1.25% interest and the current account pays 1% on balances up to 1500. So you are earning interest on the 500 the whole time.

Best Return on Savings ?

Comments