# Which savings accounts pay Compound Interest?



## Right Here (1 Dec 2017)

Is there any savings accounts that offer compound interest rates. I am looking to put an initial lump sum and then make regular deposits, long term over 30 years.


----------



## dub_nerd (1 Dec 2017)

All savings accounts offer compound interest rates. It sounds like you need to rephrase the question.


----------



## Brendan Burgess (1 Dec 2017)

It's irrelevant at these rates whether interest is compounded or not.

Brendan


----------



## Right Here (1 Dec 2017)

KBC are doing 2.5% at the moment is that not worth it?


----------



## Slim (1 Dec 2017)

That's only for regular savings up to a max of €40k. It drops to .5% after that.


----------



## Sarenco (1 Dec 2017)

Slim said:


> That's only for regular savings up to a max of €40k. It drops to .5% after that.


True but it's still a pretty tasty rate when you consider that inflation (CPI) in Ireland is currently running @0.6% and Irish government 5-year bond yields are still in negative territory.

Fill yer boots!


----------



## Slim (1 Dec 2017)

Sarenco said:


> True but it's still a pretty tasty rate when you consider that inflation (CPI) in Ireland is currently running @0.6% and Irish government 5-year bond yields are still in negative territory.
> 
> Fill yer boots!


OP is looking for a 30 yr plan. What to do when the regular saving exceeds 40k? Regular saving % rate doesn't equate to much AER. Better than nothing I guess.


----------



## Sarenco (1 Dec 2017)

I was simply replying to your post. 

A real return of nearly 2%, before tax, is definitely better than nothing. A lot better!

If the OP is looking to achieve a really meaningful real return on his money over a 30-year period then he needs to start looking beyond bank deposits.

That inevitably means taking investment risk - there is no free lunch in investing.


----------



## Right Here (2 Dec 2017)

According to an online compound interest calculator i can get 50k in 17 years 40k investment 10k interest at 0 initial investment and with 200 euro monthly payments. That seems better than nothing to me


----------



## rob oyle (2 Dec 2017)

Right Here said:


> According to an online compound interest calculator i can get 50k in 17 years 40k investment 10k interest at 0 initial investment and with 200 euro monthly payments. That seems better than nothing to me


A couple of points:
- 17 years is an INCREDIBLY long period of time to have funds on deposit. How much would inflation be over the same period? I would say all that money being saved could have found a better home over the intervening 17 years.
- I assume the interest rate you're using is 2.5% net (or are assuming no DIRT)?
- Even if you were able to achieve this return now, there's no guarantee it would be available into the future. It's been said for years now that interest rates are artificially low and yet, there's very little momentum for them to rise. The ECB rate has been below 1% for 6 years now and practically zero for the last 3 years.
- 80% of your final fund is just money you've put in yourself. That's not a great return for 204 months of saving.


----------



## Sarenco (2 Dec 2017)

Really the best you can expect with bank deposits is to maintain the purchasing power of your savings.

Bear in mind that inflation also has a compounding effect.  A million bucks ain't what it used to be!


----------



## Duke of Marmalade (2 Dec 2017)

My understanding is that to get the 2% bonus  on 1k p.m. regular savings you need to invest 2.5k p.m. into their current account, so all is not as it seems.


----------



## dub_nerd (2 Dec 2017)

Right Here said:


> According to an online compound interest calculator i can get 50k in 17 years 40k investment 10k interest at 0 initial investment and with 200 euro monthly payments. That seems better than nothing to me


First, you are ignoring DIRT. If it stays at 37% you will lose about 40% of your calculated amount to it over 17 years. In other words you will get about €6k instead of €10k return on top of your investment.
Second, you have to open a current account to get the bonus rates. I presume there are fees associated with this and KBC are not doing it out of the goodness of their hearts.
Third, regardless of the second point you only get 0.5% plus 1% bonus (before tax) if you open a regular current account. You have to open an "extra" current account to get the 2% bonus and lodge at least €2.5k to your current account every month. I presume that requirement would reduce the amount of money you have available to save.

EDIT: Duke on the ball before me, above, as ever.


----------



## Right Here (2 Dec 2017)

You have to lodge 2.5k per month in to the current account, but it does not have to stay there your free to do with it whatever you want. I was thinking of putting my monthly salary into the current account and using the free standing order/direct debit to transfer 200 euro into the extra regular saver account which is allowed. A current account is the same whatever the lender.
I am aware of DIRT and the concept of tax in general but thanks for pointing it out. 
My money is just sitting in a current account doing nothing anyway and i know 6k after 17 years is a fart in the wind however as Sarenco on the ball as ever pointed out 2.5% before tax is better than nothing.


----------



## corsair (20 Dec 2017)

Current ECB deposit is -0.4%. If I was getting positive...no risk...And I know where my 3 year money would be. My 5-10yr + money - somewhere else.


----------

