# NTMA Cut State Savings Prize Bond Rate Significantly



## Lightning (28 Jul 2017)

The NTMA have announced a rate change on their State Savings Prize Bond product.

The new 'rate' (total prize payouts as a percentage) is 0.50% variable (Previously 0.85%) effective 1 August 2017. The prizes haven been cut as a consequence.

No change to other State Savings products.

Unusual to see the NTMA make rate changes mid week, the NTMA normally make changes on the Sunday of a bank holiday weekend. Granted, they are not changing fixed rates this time.


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## Cervelo (28 Jul 2017)

Do you think the rate change will slow down the growth in the prize bond fund ??


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## Odea (28 Jul 2017)

I have noticed a fall off in the number of "wins" in the past year. I guess this will get worse now. It may be time to cash in and place the funds in one of the other State Savings Products.


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## theresa1 (28 Jul 2017)

Interesting -watch out for cuts on August bank holiday with Savings rates I would hazard a guess.


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## Cervelo (28 Jul 2017)

One thing to remember while the interest rate obviously has an effect on the prize fund and the win rate for bond holders, the amount of bonds in each draw also affects the number of wins you could expect
At the end of Oct 2011 there were aprox 213 million bonds chasing 7688 weekly prizes, Now if the interest cut was applied to this weeks draw it would be 491 million bonds chasing 3892 prizes


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## Palerider (28 Jul 2017)

I am an advocate for pb's but after this the game is up, it just might be time to look at that villa somewhere sunny.


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## Cervelo (28 Jul 2017)

Palerider said:


> I am an advocate for pb's but after this the game is up, it just might be time to look at that villa somewhere sunny.



 Thinking the same thing, want to go 50:50 on the villa


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## Palerider (28 Jul 2017)

12 couples came together some years back and bought a mansion in South Africa in a super area, they effectively timeshared it for years amongst themselves sharing costs so Cervelo my friend count yourself in, lets club together, we now have two, anyone else for a carribbean island...


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## Odea (28 Jul 2017)

Palerider said:


> I am an advocate for pb's but after this the game is up, it just might be time to look at that villa somewhere sunny.



It's funny but the exact same thought has been playing on my mind for some time now. I even went  looking on line at some prices in locations that I like. Also looking at "A place in the sun" type programmes has really got me thinking. Yesterday they did Tavira in Portugal. A place that I visited last April and loved.  Count me in.


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## Cervelo (28 Jul 2017)

This could get interesting


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## Duke of Marmalade (28 Jul 2017)

I have done the calcs. The annual prize fund is now approx €15.5m.  After deducting the larger prizes there is about €10m distributed in €50 amounts.  That's about .30% tax free.  For a joint max holding of €500k that's €1,500 or 30 prizes per year.  I think you can be reasonably sure of between 20 and 40 prizes per year.

Hardly worth the effort of getting into them but also hardly worth the effort of getting out if you are already in.

And I suppose there is always the slight chance of getting some of the .20% paid in large prizes.


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## Lightning (28 Jul 2017)

theresa1 said:


> watch out for cuts on August bank holiday with Savings rates I would hazard a guess.



Yeah, possibly. Normally the NTMA change all State Savings rates at the same time. Maybe the NTMA wanted the prize bond rate changed before August and the others will wait till the bank holiday. Either that or the NTMA have chosen to only change the prize bond rate.


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## IsleOfMan (30 Jul 2017)

Palerider said:


> I am an advocate for pb's but after this the game is up, it just might be time to look at that villa somewhere sunny.



I have opened a new thread on this subject here. https://www.askaboutmoney.com/threads/is-now-the-time-to-purchase-a-holiday-home-abroad.204517/


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## Cervelo (31 Jul 2017)

If you where to look at the Prize bond fund as an Interest only loan to the state, what rate should they be paying ??


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## Duke of Marmalade (31 Jul 2017)

Cervelo said:


> If you where to look at the Prize bond fund as an Interest only loan to the state, what rate should they be paying ??


The nearest term Irish government Bond matures in October and is yielding -50bp.  Yes that's right.  You would need to pay the Irish government .5% p.a. to keep your money safe, or at least as safe as the Irish government.  So in a sense NTMA are paying about 1% over the odds for Prize Bonds.


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## Cervelo (31 Jul 2017)

So in a sense the 7 million+ bond holders should be paying the goverment €15.5 million a year for the privilege of holding Prize bonds while all other NTMA state saving products pay interest + capital


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## Lightning (31 Jul 2017)

Duke of Marmalade said:


> So in a sense NTMA are paying about 1% over the odds for Prize Bonds.



Plus the admin costs are much higher on State Savings products than sovereign debt. It all begs the question as to why the NTMA are overpaying. The motivation is probably to ensure a larger base of domestic holders of sovereign debt and lessen reliance on foreign holders.


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## paper-folder (3 Aug 2017)

CiaranT said:


> Yeah, possibly. Normally the NTMA change all State Savings rates at the same time. Maybe the NTMA wanted the prize bond rate changed before August and the others will wait till the bank holiday. Either that or the NTMA have chosen to only change the prize bond rate.



I was in the post office today and note that new application forms/ brochures have been issued for Saving Bonds/ Certs and Solidarity Bonds, dated 1 August 2017.  The ultimate rates are unchanged (1%, 5%, 2% and 16% respectively).  The intermediate rates match those on their website, which says that the terms and conditions document has only been updated for the prize bond changes.  It does look like the 2 year rate for Saving Certs which I checked this morning at 0.55% has been reduced to 0.5%. I don't know of others were also changed.

Would the NTMA go to the trouble of printing new paperwork and issuing it this week if they were going to change the rates at the weekend?


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## Logo (3 Aug 2017)

Thanks for the info paper-folder. Did you check if the issue number is changed e.g. saving certs were on issue # 22.


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## paper-folder (3 Aug 2017)

Not sure what they were before, but today's leaflets have the following:
Savings Bonds are Issue 17
Savings Certs are Issue 22
National Solidarity Bonds are Issue 6 (both 4 and 10 year)


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## Logo (4 Aug 2017)

Thanks for the update paper-folder. I invested in state saving certs last week and  the savings cert issue was 22. It is a poor return for a five year investment but I suppose that in the current investment climate it's better than a kick from a donkey
From Nov 2016: 


Logo said:


> I was lucky enough lately to have 15K in a current account and invested in saving certificates. Now I'm wondering if the time & effort was worth the hassle - given the paltry sum of €917 after five years.


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## ardmacha (4 Aug 2017)

The pdfs on the website are dated August also.
Changing the issues seems odd, if the rates are not changed. This would allow us invest more in the new issue, would it not?


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## Logo (4 Aug 2017)

Apologies  if I posted incorrect info earlier. I purchased saving certs last week and the application form said issue 22.


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## IsleOfMan (4 Aug 2017)

Well I purchased some of the 10 year Solidarity Bonds this week at a rate of 16% over 10 years. I was hesitant to do this but I do not need the money just now. 
What are the views on tying up money for 10 years?


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## galway_blow_in (4 Aug 2017)

IsleOfMan said:


> Well I purchased some of the 10 year Solidarity Bonds this week at a rate of 16% over 10 years. I was hesitant to do this but I do not need the money just now.
> What are the views on tying up money for 10 years?




for that kind of measly return , id rather just have it in a current account in case i needed it to buy something


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## Cervelo (4 Aug 2017)

10 years is a long time for 16% but what else is there out there ??


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## noproblem (4 Aug 2017)

galway_blow_in said:


> for that kind of measly return , id rather just have it in a current account in case i needed it to buy something




Maybe you would, but the other person has the option of taking the 16% and also getting the cash back any time he/she wants to.


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## Lightning (4 Aug 2017)

paper-folder said:


> Would the NTMA go to the trouble of printing new paperwork and issuing it this week if they were going to change the rates at the weekend?



The NTMA had not choice. The last page of all the leaflets gives the rates on all NTMA products including Prize Bonds. Given that Prize Bond rates fell on 1 August 2017, all leaflets had to be updated. The update can not wait until other rates change, the update must occur on the effective date of the change or they would have been giving out incorrect rates which is serious.


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## IsleOfMan (4 Aug 2017)

galway_blow_in said:


> for that kind of measly return , id rather just have it in a current account in case i needed it to buy something


Well as I said I don't need the money just now and I have other products maturing over the next 5 years at intervals.


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## Cervelo (4 Aug 2017)

Can anybody confirm if my figure for the Prize bond fund is correct ???
I estimate the fund is now at €3,160,440,000 which if my figure is correct is a growth of 91.3 million for the month of July.


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## Mossey (6 Aug 2017)

I believe your figures are correct!
Invested 165k€ 6yrs ago in PBs which returned 17k up to last year..however, in the past 12 months very poor..make my mind up time!


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## Mossey (7 Aug 2017)

Odea said:


> I have noticed a fall off in the number of "wins" in the past year. I guess this will get worse now. It may be time to cash in and place the funds in one of the other State Savings Products.


.........................
Agreed, but what other State guatanteed product is the most advisable?


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## evanio (8 Aug 2017)

The 10 year return equates to slightly less than 10% but one  has to bear in mind that other state products were also paying higher rates during this time. With the reduced prizes and likelihood of decreases in the rates applicable on other state and bank products it is hard to beat the current rate on saving certificates.The rates are miniscule but the best available on guaranteed products.


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