# Fix Term Deposits - Worth It?



## BadDebt (30 Jul 2013)

Hi,

So I am looking to investment into a low maintance, low risk account with the maximum possible yield, but having looked at some of the fixed term deposit account interest rates around at the moment and I always feel that the growth from these accounts is absolutely miniscule, broadly speaking, sometimes less than the rate of inflation.

Are these every really worth it considering you are forfeiting access to a large lump sum of cash with which the bank can use to gain decent returns.

What alternative investments might one suggest to achieve growth rates around 5 - 6% that are low risk and preferably bank managed, do these exist?


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## noproblem (30 Jul 2013)

You'll get aprox 7% for your deposits in Turkey at the moment.


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## dub_nerd (31 Jul 2013)

noproblem said:


> You'll get aprox 7% for your deposits in Turkey at the moment.


 
Any idea how to open a Turkish bank account from Ireland then? Or indeed any non EU bank account? Serious question, I'm quite interested as I have no PAYE income so an income-taxed foreign bank account would be considerably less tax than DIRT, and a decent return could make it worth the currency and institutional risk compared to Ireland, which has currency, institutional, and "bail in" risk as _well_ as really bad rates.


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## noproblem (31 Jul 2013)

dub nerd,
what sort of figure are you talking about to invest?


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## dub_nerd (31 Jul 2013)

A five or six figure sum, depending on the investment risks/rewards etc.


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## Lightning (31 Jul 2013)

Don't forget you take on TRY EUR FX risk. TRY FX movements can be significant.


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## roland (31 Jul 2013)

dub_nerd said:


> Any idea how to open a Turkish bank account from Ireland then? Or indeed any non EU bank account? Serious question, I'm quite interested as I have no PAYE income so an income-taxed foreign bank account would be considerably less tax than DIRT, and a decent return could make it worth the currency and institutional risk compared to Ireland, which has currency, institutional, and "bail in" risk as _well_ as really bad rates.



You know a lot about Ireland's risks and are running a mile, but you don't seem to know a lot about Turkey's but are seemingly ready to accept them.  I suggest that's not a fair comparison.  Ignorance of problems doesn't mean they don't exist.  Max possible yield means max possible risk.  In time-honoured tradition when you get a very high yield on your cash that generally means you will lose some of your cash.  Talk to people in Cyprus, Argentina, Russia.... Taking on unknown risks and then piling on top day-to-day currency risk for a currency you know nothing about.  Think about that.  If you can't access your account one day online, who are you going to ring and talk to in Istanbul....?  Do you think they will speak English?  Do you think they will go out of their way to help some guy in Ireland at the end of a line?  Do you think the Turkish government will think about keeping your money safe if a political situation develops..... Also, putting money in a non-EU country doesn't mean you pay no tax.  You are liable for tax.  Believe me, the revenue will find you.  If you are willing to take on that sort of risk I would suggest you are far far better off investing in some high-yielding equities.


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## dub_nerd (31 Jul 2013)

roland said:


> You know a lot about Ireland's risks and are running a mile, but you don't seem to know a lot about Turkey's but are seemingly ready to accept them. I suggest that's not a fair comparison. Ignorance of problems doesn't mean they don't exist. Max possible yield means max possible risk. In time-honoured tradition when you get a very high yield on your cash that generally means you will lose some of your cash. Talk to people in Cyprus, Argentina, Russia.... Taking on unknown risks and then piling on top day-to-day currency risk for a currency you know nothing about. Think about that. If you can't access your account one day online, who are you going to ring and talk to in Istanbul....? Do you think they will speak English? Do you think they will go out of their way to help some guy in Ireland at the end of a line? Do you think the Turkish government will think about keeping your money safe if a political situation develops..... Also, putting money in a non-EU country doesn't mean you pay no tax. You are liable for tax. Believe me, the revenue will find you. If you are willing to take on that sort of risk I would suggest you are far far better off investing in some high-yielding equities.


 
You're reading far too much into my one line post. Yes, I know nothing about the risks in Turkish banks. No,  I am not "seemingly ready to accept them". I'm making a simple inquiry. Look at is this way. I have a very large exposure to Irish banks, not because I want to, but because once the traditionally almost-risk-free investment option is gone, there are very few other options. In my opinion, the current deposit rates on offer by Irish banks are not close to being appropriate for the level of risk involved. For now, I am getting substantially better rates than those, but this will run out soon enough. I am prepared to look at other options where the risk/reward equation is different. I would not touch equities with a barge pole right now -- their performance seems ridiculously out of kilter with the global economy and I expect a reset once Bernanke says the QE party is over. So I am looking (not jumping) at other options.

You've also misread me about tax. My point is I currently pay no PAYE. Up to a substantial level of interest, I will pay 20% plus PRSI, less a few allowances. DIRT is 33% plus PRSI, with no allowances. For me, DIRT is costing me nearly 100% more than income tax would. Don't worry, the Revenue will not have to "find me" ... I make a very clear tax return every year. 

All that said, thanks for the advice ... it's all welcome.


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## noproblem (31 Jul 2013)

In almost all cases you will need to furnish your Irish name, address, parent name, passport no. For the higher yield you usually need a Turkish address and utility bill in your own name. Your money will usually have to be in Turkish Lira, which can be volatile (at times). Almost all banks I know of will have English speaking personnel, online banking facilities and are as safe as any country that we know of. The biggest possible concern, in my opinion, is the currency volatility, but of late. it's been ok. You would be amazed the amount of Irish and other Europeans that have Turkish bank ac's. Hope that's of some assistance. BTW, the more you have the more negotiable the interest rate you receive


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## dub_nerd (1 Aug 2013)

Thanks np.


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## Jim2007 (1 Aug 2013)

dub_nerd said:


> In my opinion, the current deposit rates on offer by Irish banks are not close to being appropriate for the level of risk involved.



But this is not the case.  If you run the usual risk matrix you will reach the exact opposite conclusion!

Some people are happily moving their money into a politically unstable country, who's bank's risk matrix position is only about half as good as Irish banks and who as recently as 2009 refused to bail out what might be called a pillar bank.

More are opening accounts in a country who's banks are on about the same position in the risk matrix as Irish banks, but whose government has traditionally let banks go to the wall.

And yet more are trying to put money into banks where the 100K guarantee is capped in such a way that they could in fact end up with as little as 5K, if things go wrong.

Have people really learned anything form the past few years?


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## dub_nerd (1 Aug 2013)

Thanks Jim2007. I have no idea what the usual risk matrix is (or means). Would appreciate some more information on what it is and how to apply it.

Also, regarding your last question, I would say the average person is in completely uncharted territory, having never considered before now that it is possible to lose money on deposit in a bank.


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## knockshe (2 Sep 2013)

Hi dub nerd. Well, did you come to any conclusions on how to invest? Like you, I have some funds maturing now and am not impressed with the interest rates on offer and the increasing Government take. Also, like you i think equities are over-priced although some say there is value in some Euro equities.


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## dub_nerd (2 Sep 2013)

No, knockshe, I have not come to any conclusions. There's no pressure on me for a while yet. I'm still keeping all options open.


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## DK123 (21 Feb 2015)

Hi there,I have a chance to sell my turkish apartment and put 100k in a term deposit with Garanti Bank at 9 percent P.A..I am 100 percent tax compliant.I have one question only.How much tax would i pay on the interest of 9k per annum.I am retired,gross income 34k,single.Many Thanks.DK.


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## Lightning (21 Feb 2015)

You need to be over 65 and earning less than 18,000 EUR per year for a DIRT exemption. 

Non-EU deposit interest is taxed at 41%. You obviously need to take a TRY EUR FX rate into account with the conversion when calculating your EUR tax liability.


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## creditworthy (21 Feb 2015)

Just referring to post 11, is that the irish bank guarantee scheme you refer to  when you mentioned we could be left with 5k ! Am becoming concerned in general as ALL my savings are with the banks , AIB , PTSB , just under 90k with each institution . Would be devastated if my life's savings could be wiped out in a flash . Not well up at all on financial issues and wouldn't know how to be clever about guaranteeing safety of my long term security  ? Would welcome any advice .... even if it is to go and get some professional advice .  Thanks .


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## Lightning (22 Feb 2015)

The Irish Deposit Guarantee Scheme insures the first 100,000 EUR per financial institution per person.


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