# German Bunds v German Deposit Account



## taytoman (4 Nov 2011)

I note various posters are saying that german government bonds ("bunds") are about the safest asset you can hold, notwithstanding that no asset is 100% safe. I just wonder about this: You can deposit 10K in a german deposit account in euros, get 2% + interest guaranteed, so where is the advantage in buying bunds which have transaction costs with buying / selling and rate of interest fluctuates and is not any better (?) than 2%?
CAn anyone explain this?


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## Chris (4 Nov 2011)

The question is which you would think is more risky, giving credit to the German government or to a German bank.
Personally I do not own any sovereign bonds. Even Germany has a huge debt pile which is growing, not shrinking. Essentially Germany is heading down the same road as the PIIGS, it just is a fair bit behind. I don't think that German politicians have the willingness to cut spending and reverse course.
But I do have cash in German accounts as a security against the Euro failing.


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## the-madman (5 Nov 2011)

German Bank savings deposits are guaranteed up to 50k by law. 
Bunds are guaranteed by the state budget. now make your decision.  

In the end if Germany and its Banks go south like the rest of Europe (and since Germany has the majority of the debt Guarantees for whole Europe they will fail if Europe fails) its a question of, if anyone at all will be able to payoff any guarantees. They are probably not much saver that Irish bonds but for Irish ones you get a better speculation risk compensation (interest rate).

Personal Notes:
I cant stress it enough, pulling the money away from Ireland now is not making it more save somewhere else since the whole world is in debts and struggling, but it surely adds towards the trouble we are anyway in. 

Don't forget that if you bring money out of the country you have to declare it in the tax return which cost you more than DIRT on savings in Ireland. And if think about bringing money out of the country without declaring it you are no better than any Greek who participated into the demolition of Greece by hiding tax money.


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## Chris (8 Nov 2011)

You do not have to declare money that you move abroad. What you are required to do is declare any interest you earn abroad, but as long as the interest is earned within the € zone you are "only" liable for DIRT and not income tax. The whole thing changes when you move money outside the € zone.


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## kennyb3 (9 Nov 2011)

Has anyone managed to get into German bunds directly without a) visiting Germany or b) going through a costly broker?

I'd personally favour a flight to Frankfurt for €100 return over something like the 1% fee on the Zurich german 2013 bond


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## taytoman (9 Nov 2011)

Thank you very much for your replies. I thought that the german gov guarantee fo depositors was 100K Euro- Am I wrong?


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## Gervan (9 Nov 2011)

Chris, you say "you do not have to declare money that you move abroad" but anyone who opens a foreign bank account becomes a chargeable person who will have to complete a Form 11 and fill out #316 _Give the following details for each foreign bank account opened in 20XX of which you or your spouse were the beneficial owner of the deposits held......_
to provide the name and address of the bank, date account was opened and amount of deposit.
See http://www.revenue.ie/en/personal/b...sues-foreign-property-ownership.html#section3


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## Jim2007 (9 Nov 2011)

kennyb3 said:


> Has anyone managed to get into German bunds directly without a) visiting Germany or b) going through a costly broker?
> 
> I'd personally favour a flight to Frankfurt for €100 return over something like the 1% fee on the Zurich german 2013 bond



[broken link removed]


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## Chris (10 Nov 2011)

Gervan said:


> Chris, you say "you do not have to declare money that you move abroad" but anyone who opens a foreign bank account becomes a chargeable person who will have to complete a Form 11 and fill out #316 _Give the following details for each foreign bank account opened in 20XX of which you or your spouse were the beneficial owner of the deposits held......_
> to provide the name and address of the bank, date account was opened and amount of deposit.
> See http://www.revenue.ie/en/personal/b...sues-foreign-property-ownership.html#section3



Very interesting, I based my statement on a phone conversation with the Revenue where I asked if I only needed to enter my foreign interst income in the PAYE online system. If I am not mistaken it even specifically mentions interst earned outside the state.
The link you provided is specifically to accounts in relation to foreign property, but it does raise questions. Anyone else question this with Revenue?


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## the-madman (10 Nov 2011)

Jim2007 said:


> ]Have a look at this link



be very careful with an organisation 
"The Federal Republic of Germany - Finance Agency is an ‘incorporated’ form of capital stock corporation with limited liability and is registered under Register Number HRB 51411 in the Commercial Register of Business Names at the ‘Amtsgericht Frankfurt/Main’ (District Court of Frankfurt/Main)."

using the official german state logo to look like an official budy.    be very careful !!!!!


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## the-madman (10 Nov 2011)

taytoman said:


> Thank you very much for your replies. I thought that the german gov guarantee fo depositors was 100K Euro- Am I wrong?



State guaranteed are only 50k. Then the Bank have to add additional 50k through an solidarity bond fund whatever construct. Not every product is entitled to this guarantee. 

But this is a again a bank organised structure which is not even obligatory to every German banking facility. However most of the big players (Deutsche Bank, Commerzbank, etc, are part of this. 

There are also Volksbanken (similar tot eh Credit unions in ireland) which are not in this solidarity organisation but have again an own security systems.

The catch is, if the banks go down (and it will be then more than just one) how likely will it be that this construct will be able to payout all the savings.


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## Gringo (14 Nov 2011)

the-madman said:


> be very careful with an organisation
> "The Federal Republic of Germany - Finance Agency is an ‘incorporated’ form of capital stock corporation with limited liability and is registered under Register Number HRB 51411 in the Commercial Register of Business Names at the ‘Amtsgericht Frankfurt/Main’ (District Court of Frankfurt/Main)."
> 
> using the official german state logo to look like an official budy.    be very careful !!!!!




It is an official state body.


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## Savvy Row (22 Jan 2012)

Okay, so we've had the budget and we know that if you buy a property and keep it for 5 years, you don't have to pay the savage 30% capital on what you get for it. So why buy German Bonds? Why not buy a rentable apartment in a good Dublin area?


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