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Northern Rock vs An Post Savings

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  • 30-04-2005 2:27am
    #1
    GoneShootin
    Closed Accounts Posts: 8,478 ✭✭✭


    Guys I've about 5k+ to invest, and would be looking to leave it sit there for 2+ years or so. I wouldnt be adding to it on a regular basis, so it would be a once off lump sum (possibility of adding to it every few months).

    From my reading from this, my best bet is either Northern Rock or An Post. Any feedback as to which way would be the best way to go? An Post is very unsteady at the moment, whereas Northern Rock is online. Neither are 100% safe (then again what is).

    Comments?


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    #2
    nesf
    Registered Users Posts: 27,645 ✭✭✭✭nesf


    I've found that An Post Certs and Bonds to be good medium term investments over the years. They are nice interest, DIRT free and backed by a state body, so to be honest, very very stable.

    I'd plumb for them to be honest. But thats just my opinion.


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    #3
    RainyDay
    Closed Accounts Posts: 6,925 ✭✭✭RainyDay


    Northern Rock deposits are covered by the UK FSA's deposit protection scheme, so in the extremely unlikely event of the bank going bust, you'll be covered by 90% of your deposit. It's safe as any Irish bank.


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    #4
    lomb
    Registered Users Posts: 6,031 ✭✭✭lomb


    deposit accounts at current rates are 'loosing' u about 2.5-3% in real terms, after tax, so every year you have a compound loss of nearly 3%. ur money if its a large sum wont be worth alot in the long run, but better something than nothing.


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    #5
    GoneShootin
    Closed Accounts Posts: 8,478 ✭✭✭GoneShootin


    lomb wrote:
    but better something than nothing.

    exactly - its in the credit union at the moment (same account ive had since my first communion) and its not gaining much interested. I rarely touch it, so it may as well be doing something than just sitting there, tempting me...


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    #6
    nesf
    Registered Users Posts: 27,645 ✭✭✭✭nesf


    GoneShootin wrote:
    exactly - its in the credit union at the moment (same account ive had since my first communion) and its not gaining much interested. I rarely touch it, so it may as well be doing something than just sitting there, tempting me...


    Well, in my eyes the big choice between Northern Rock and the An Post Schemes is that with Northern Rock you only need to gve 60 days notice to withdraw. With An Post you basically commit the money for 3 or 5 years (depending on the choice of scheme). You can get money early out of An Post schemes iirc, but you lose alot of interest by doing so.

    Personally I prefer An Post schemes because they stop me from spending said money for a few years, I've gotten used to saving up lump sums and putting them aside in medium term investment schemes like the An Post ones. I only put money in there though that I don't need now, I generally keep a "float" of a couple of grand in the CU for emergencies or a bad patch.

    The Northern Rock schemes would appeal to me as a happy medium between a regular savings account and the An Post schemes. You get good interest, but you can access the money if you need to and the 60 day period pretty much stops you from frivolously spending the money on a whim.

    You will get a better return from the An Post scheme but it does tie up the money for a few years. So if you know you won't have any major expenditures for a few years (or at least can not forsee any) then they would be the best option. On the otherhand with Northern Rock you are getting the comfort factor of having access to the money if you need it without losing out on interest gains.

    Personally I split my savings between a regular savings account and medium term investments (but, I really don't have big bills land in at my feet, I've health insurance to cover any medical bills, and I don't own a car so I don't have to worry about having money to cover insurance costs or repairs on it), but I can definitely see why someone would use the Northern Rock style account.

    Matter of personal choice really, it's a matter of interest gains versus access to the money in a crisis.


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    #7
    De Rebel
    Registered Users Posts: 1,109 ✭✭✭De Rebel


    nesf wrote:
    Well, in my eyes the big choice between Northern Rock and the An Post Schemes is that with Northern Rock you only need to gve 60 days notice to withdraw.

    Currently, Northern Rock's highest yielding account is "Demand Online", which pays 2.6% (3% for the first 6 months) and being a demand account, NO notice of withdrawal is required. This return is liable for Income Tax/DIRT.

    An Post's products offer the following annual returns: 2.6% (Savings Bonds - 3 years) and 2.74% (Savings Certs - 5.5 years). Notice period for early encashment is 6 months and there are significant interest rate penalties for early encashment.

    The advantages that the An Post products have are (1) Your money is 100% state guaranteed - you apparently cannot loose it. (2) The returns are tax (DIRT) free.

    Time was when Savings Certs and Savings Bonds paid a significant premium because you were committing your money for a long period. This premium is now a lot less significant than it was in the past.

    To summarise, with the An Post products, you commit your money for a long period, but get a somewhat higher return because the interest is paid tax free. With the Northern Rock products your money is available on demand, but you get a lower rate of return because of having to pay Dirt/income tax.

    The final decision comes down to your personal circumstances and preferences and whether or not you would like to have the money available on demand..


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    #8
    GoneShootin
    Closed Accounts Posts: 8,478 ✭✭✭GoneShootin


    Thats great stuff guys - thanks alot. Looks like An Post is what I'm looking for!


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    #9
    nesf
    Registered Users Posts: 27,645 ✭✭✭✭nesf


    De Rebel wrote:
    Currently, Northern Rock's highest yielding account is "Demand Online", which pays 2.6% (3% for the first 6 months) and being a demand account, NO notice of withdrawal is required. This return is liable for Income Tax/DIRT.

    An Post's products offer the following annual returns: 2.6% (Savings Bonds - 3 years) and 2.74% (Savings Certs - 5.5 years). Notice period for early encashment is 6 months and there are significant interest rate penalties for early encashment.

    The advantages that the An Post products have are (1) Your money is 100% state guaranteed - you apparently cannot loose it. (2) The returns are tax (DIRT) free.

    Time was when Savings Certs and Savings Bonds paid a significant premium because you were committing your money for a long period. This premium is now a lot less significant than it was in the past.

    To summarise, with the An Post products, you commit your money for a long period, but get a somewhat higher return because the interest is paid tax free. With the Northern Rock products your money is available on demand, but you get a lower rate of return because of having to pay Dirt/income tax.

    The final decision comes down to your personal circumstances and preferences and whether or not you would like to have the money available on demand..


    Yeah, I remember when the returns on the An Post Savings Bonds and Certs were fantastic! Then the banks demanded that the interest returned be dropped because it was causing them to lose business. Well thats what I remember anyways, it was a long while back.


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