How To Be Good With Money - last night episode, question

NIMAN

Watched the show last night, and the couple were doing what I am with the child allowance, simply putting it into a post office savings account.

I now realise this is not a great idea as inflation will eat at its value in years to come.

The show didn't say what Eoin McGee did with this, except that he invested it somewhere to get a return.

What is a medium risk option that would allow you to put in a lump sum now (the child allowance already saved to now) plus the monthly amounts going forward?

homer911

You should at least be putting it into savings certs or bonds - at least no DIRT is deducted..

dos30

We opened a Bank of Ireland investment fund account a few years ago, the children's allowance gets transferred into it every month. It probably not the best in terms of fees, but its hassle free and you can pick which fund to invest in based on the risk.

Henry Ford III

To get a real return you need to invest in real assets. Risk and reward as always.

pwurple

Ugh, this post office state savings are brutal at the moment. that’s such poor advice, is that what they were told to do?

It’s very difficult to access the money. It’s held in a zero interest account for 1 year, and it’s year 6 before the first block of money earns more than what any bank will give you. I almost think this is a notional way of reducing child benefit liability for the govt. by the time you get it, inflation has eaten away the value.

AlmightyCushion

pwurple wrote: »

Ugh, this post office state savings are brutal at the moment. that’s such poor advice, is that what they were told to do?

It’s very difficult to access the money. It’s held in a zero interest account for 1 year, and it’s year 6 before the first block of money earns more than what any bank will give you. I almost think this is a notional way of reducing child benefit liability for the govt. by the time you get it, inflation has eaten away the value.

No, they were saving it in the post office (I don't even think it was a state savings account, do it was probably 0%) but Eoin told them it was a bad idea and encouraged them to invest it.

adox

pwurple wrote: »

Ugh, this post office state savings are brutal at the moment. that’s such poor advice, is that what they were told to do?

It’s very difficult to access the money. It’s held in a zero interest account for 1 year, and it’s year 6 before the first block of money earns more than what any bank will give you. I almost think this is a notional way of reducing child benefit liability for the govt. by the time you get it, inflation has eaten away the value.

If left for 5 years it will return more than any savings account offered by the banks.

I wouldn’t dismiss it as quickly as an option.

NIMAN

I see the State Savings 10 yr plan returns 16% tax free.

Not really a lot is it? 1.6% per year.
Better than all the banks, but still just about keeping up with inflation.

pwurple

adox wrote: »

If left for 5 years it will return more than any savings account offered by the banks.

I wouldn’t dismiss it as quickly as an option.

It's 6 years, not 5. First year is a holding period. Now check the interest rate....

screamer

AlmightyCushion wrote: »

No, they were saving it in the post office (I don't even think it was a state savings account, do it was probably 0%) but Eoin told them it was a bad idea and encouraged them to invest it.

But you can only invest it if you can either say you’ll never need. No one can predict the future I’d rather have access to it than locked away. Besides lots of people invested in the last boom....and lost. Investing for me is like gambling.

adox

pwurple wrote: »

It's 6 years, not 5. First year is a holding period. Now check the interest rate....

https://www.statesavings.ie/media/pdf/ss-brochure-3_5yrs

Where are you getting the extra year from?

It says 5% over 5 years. AER .98%

Can you point me to an equivalent fixed term rate over the same period that gives a better return at the moment?

macnug

adox wrote: »

https://www.statesavings.ie/media/pdf/ss-brochure-3_5yrs

Where are you getting the extra year from?

It says 5% over 5 years. AER .98%

Can you point me to an equivalent fixed term rate over the same period that gives a better return at the moment?

The installments one is 6. Has it in the brochure you just linked.

The J Stands for Jay

screamer wrote: »

But you can only invest it if you can either say you’ll never need. No one can predict the future I’d rather have access to it than locked away. Besides lots of people invested in the last boom....and lost. Investing for me is like gambling.

It's nothing like gambling. Putting money on State Savings is also investing, but in a different asset class. Is state savings gambling? It's definitely locking it away.

MarkR

I'm also interested in this. We have been saving the childrens allowance for each of or children in a BOI account, but I doubt it's the best place for it.

Would like something where we can deposit money in monthly.