# I'm getting nervous about my deposits !!



## TomPetty (8 Jul 2010)

Hi Folks, Quick question, I would appreciate your views on this. 
I have saved all my life for my childrens education etc .. I'm 40 years  old and have 600K in saving deposits with many Irish Banking  Instututions, including Irish Nationwide / EBS / PTSB and also 200K with  Investec. 
Listening to David Mc Williams etc and rumours of our Country going  insolvent, am I foolish to have all my eggs in one basket ( ie Irish  Banking instutions, except for Investec ). 
If so - what are your recommendations ? I cannot lodge it, out of the  country, so without putting it under the matress or in Biscuit tins, how  can I ensure its safe, while sill earning some decent interest ? 

Many thanks for you time.


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## z107 (8 Jul 2010)

Why can't you lodge it outside the country?


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## RIAD_BSC (8 Jul 2010)

If you're that worried, spread your cash around savings accounts in foreign-owned institutions who take deposits in Ireland - NIB, Rabobank, Leeds Building Society, Nationwide UK, Ulster Bank etc.....

But don't let McWilliams frighten you either.........


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## Lightning (8 Jul 2010)

TomPetty said:


> Listening to David Mc Williams etc and rumours of our Country going  insolvent, am I foolish to have all my eggs in one basket ( ie Irish  Banking instutions, except for Investec ).



I saw David Mc Williams recent comment that we are heading towards a terminal bank run. The guy has displayed foresight in the past but such an eventuality with ECB/IMF/Irish governement guarantees, is hard to see. 

There is nothing stopping moving your money offshore. 

The perception is that the non-Irish banks are safer. If you are concerned, perhaps, reduce your INBS exposure and consider on-Irish banks such as Nationwide UK.


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## Marietta (8 Jul 2010)

TomPetty said:


> I'm 40 years old and have 600K in saving deposits with many Irish Banking Instututions, including Irish Nationwide / EBS / PTSB and also 200K with Investec.


 

€800,000 in savings, that is some feat for a 40 year old, well done!


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## brendanyumo (8 Jul 2010)

Southern Ireland is a very volatile badly managed debt ridden place.Be very weary of having such a large amount invested in such a country.Do your research on this.


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## Marietta (8 Jul 2010)

brendanyumo said:


> Southern Ireland is a very volatile badly managed debt ridden place.Be very weary of having such a large amount invested in such a country.Do your research on this.


 

Are we any worse than Britain, Greece or Spain??  As long as the OP spreads his savings around numerous banks he will be covered by the government guarantee, although I would have reservations of keeping  such a large amount of cash in banks, it would be very much advisable if the OP sought professional financial advise.


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## brendanyumo (8 Jul 2010)

Marietta said:


> Are we any worse than Britain, Greece or Spain??  As long as the OP spreads his savings around numerous banks he will be covered by the government guarantee, although I would have reservations of keeping  such a large amount of cash in banks, it would be very much advisable if the OP sought professional financial advise.


Ireland is very much worse than Great Britain or Spain.Greece is bankrupt in all but name as is Ireland.The mismanagement and lies of the Irish government beggars belief.The disasterous Bank bailouts and NAMA have bankrupted Ireland.That is a fact!


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## whitegrass (8 Jul 2010)

what is to prevent you from lodging money in an off shore account?


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## mercman (8 Jul 2010)

brendanyumo said:


> Ireland is very much worse than Great Britain or Spain.Greece is bankrupt in all but name as is Ireland.The mismanagement and lies of the Irish government beggars belief.The disasterous Bank bailouts and NAMA have bankrupted Ireland.That is a fact!



I really would like to know as to how the many Professors on this forum would have dealt with the misgivings that they were presented with ??


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## Bobby1 (9 Jul 2010)

brendanyumo said:


> Ireland is very much worse than Great Britain or Spain.Greece is bankrupt in all but name as is Ireland.The mismanagement and lies of the Irish government beggars belief.The disasterous Bank bailouts and NAMA have bankrupted Ireland.That is a fact!


 
How is it a fact? What was the alternative? Im not sticking up for anyone here but you cant just come out with a statement like that. If they didnt do NAMA, what was the other solution, nationalise all the banks and saddle with state with more hassle? Completly ruin our international image with all domestic banks under state ownership or allowing them to go to the wall and defaulting on international investors who then would not touch Ireland with a ten foot barge poll?

By all means enlighten us with a better altenrative to NAMA, Bank bailouts etc... otherwise stop talking the country and people down, its almost like some people are happier when they have something to moan and milk it for all its worth!


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## mercman (9 Jul 2010)

+1. Sure no body likes what has gone on. But travel around Europe amd their Economies are in Rag order but they are making every effort to unfold the situation. However in this country all we have is Political Opposition without a Policy or a clue. 

As for the OPs original question the money is safe until Xmas. Then you will have toi make decisions using your head and not be confused by a Forum or in fact withoiut Financial Salespeople.


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## TomPetty (9 Jul 2010)

Thanks all for your advice - When you mention putting some of my savings offshore, do I :
Need an address in other country ? 
Still pay DIRT to Irish Revenue ? 

Many thanks.


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## mercman (9 Jul 2010)

AFAIK, no you do not need a foreign address but you will have to go through strict account opening procedures. You will not be able to avail of the DIRT regime, but will be taxed at the marginal rate for the interest earned. 

Best to check with an accountant.


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## Chris (9 Jul 2010)

Bobby1 said:


> How is it a fact? What was the alternative? Im not sticking up for anyone here but you cant just come out with a statement like that. If they didnt do NAMA, what was the other solution, nationalise all the banks and saddle with state with more hassle? Completly ruin our international image with all domestic banks under state ownership or allowing them to go to the wall and defaulting on international investors who then would not touch Ireland with a ten foot barge poll?
> 
> By all means enlighten us with a better altenrative to NAMA, Bank bailouts etc... otherwise stop talking the country and people down, its almost like some people are happier when they have something to moan and milk it for all its worth!



It is a fact because within a couple of months predictions for NAMA have gone from €4-5 billion profit to €800 million loss. And these predictions are from people who have a proven track record of getting things completely wrong. Bankruptcy/debt restructuring is only a matter of time now.

The right thing to have done would have been to let bad businesses (banks) go bankrupt; no NAMA, no nationalisation. It is complete and utter nonsense to say that Ireland would be shunned by investors. Argentina and Russia defaulted and soon after investors returned. At the time that these countries defaulted the talk was that this would be the end for them and they would never recover, which was simply a wrong prediction. Germany effectively defaulted after WWI and WWII, but this didn't stop investors returning.

Bankrupt businesses cease to exist in their present form, but after restructuring, take-over of assets or viable parts of the business, they re-emerge in some way or another. Ideally you have a situation where new banks are created to take the place. These new banks would not have been shunned, quite the opposite. Investors would see a market where businesses have to be prudent in their practices or else fail. This would make them more attractive to investors, not less. You are merely regurgitating the same rubish that is being thrown out by the PR machine of government.

Would the short term effects have been dire? Absolutely, but it would be the price to pay for long-term stability, not short-sighted quick fixes of the simptoms of the problem. Bailouts and NAMA and nationalisation have only kicked the can down the road.


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## Bobby1 (9 Jul 2010)

I thought in the revised projections for NAMA, they advised a profit of €1billion is more likely, with a loss of €800m in a worst case scenario?


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## UFC (9 Jul 2010)

Couple of issues spring to mind:

1. Can the Government actually afford to pay the bank guarantee if it is insolvent? i.e. is it a bluff?

2. If we become insolvent and have to leave the euro, will our deposits be converted to worthless punts? Even if we are in a foreign bank like rabodirect.ie?


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## NHG (9 Jul 2010)

How about Index Linked European Government Bonds, heard Eddie Hobbs speaking about these last week - hope I have the correct name for them


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## TomPetty (9 Jul 2010)

Hi UFC - They are two very good questions - That is what worries me !!


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## Chris (9 Jul 2010)

TomPetty said:


> Hi UFC - They are two very good questions - That is what worries me !!



They worry me too, which is why I have very few cash funds in Ireland. Considering the amount of cash you have, you could consider short term German bonds, as a safe haven. 

You should also look into diversifying out of the euro a bit, maybe Swiss or Australian bonds/cash. In order to buy bonds you would need to go to a broker, with the ultimate protection being a broker outside Ireland, just in case the government decided to confiscate assets (which I believe is very unlikely, but you never know how desparate they get).

Considering the amount of money you have (fair play to you, this country needs more people like you!) I would be surprised if you didn't find banks outside Ireland that would be willing to set up an offshore account for you. Swiss banks would be one port of call, and they should be able to set up a euro account as well. I'd say ring a couple of banks and see what they say.

Please do not take any of the above as specific recommendations, they are just ideas for you to look into.


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## callybags (9 Jul 2010)

Chris said:


> Considering the amount of money you have (fair play to you, this country needs more people like you!) .


 
This does not make sense when you advise the OP to move all their money out of the country.


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## Marc (9 Jul 2010)

There are several issues to consider in this question:

*Taxation*

If you open a bank account offshore you fall outside of DIRT and therefore have to pay marginal rate tax on your savings. If you are a higher rate tax payer then this is a clear disadvantage.

A similar tax problem applies to direct purchase of Bonds. Again, marginal rate tax applies to the income payments.

So, opening a bank account offshore or buying German Government Bonds (or any directly held bonds for that matter) would not make sense for many people.

*Investment considerations*

Euro Inflation Linked Bonds are regularly tipped as a safe haven investment.

Whilst we like the concept of Inflation-linked bonds, these are not the same as short-dated government bonds. Although these bonds give a hedge against inflation  because the maturity tends to be very long they are therefore much more affected by changes in the real interest rate – meaning there are still lots of uncertainties around these bonds such that if the real interest rate rises, they go down in value.
*
The best option *

The best course of action here is to diversify. Diversification is the only free lunch in investing.

That is not to say open tons of bank accounts all paying low interest rates.

As the base of any portfolio I would recommend a Short-Term, High Credit, Global Fixed Interest Fund with a Euro currency hedge.

Let's break each of those elements down:.

Firstly, a fund would be taxed under the Gross roll up rules so tax at 25% on distributions of income and 28% on gains every 8 years. Nice and simple, no marginal rate tax to worry about. This is better than an offshore bank account or a directly held bond.

Short-term

Bonds with terms to maturity of less than 5 years are less volatile and less sensitive to interest rates. Meaning if interest rates go up, these suffer less than longer term bonds.

Equally, short holding periods gives you the opportunity to constantly roll over your investment. Unlike the National Sol. Bond or Savings Certificates.

So, if interest rates or inflation increase, you get to benefit each time you reinvest from the new higher returns in the bond market. Technically, this is a variable maturity strategy using the current yield curve as the best estimation of future inflation and interest rates. The bond market is extremely efficient and running a fund like this is extremely low cost.

High Credit

Since we are all concerned with the risk of default, it is important to hold high credit issues. Meaning mostly AAA rated Sovereign Debt, Supra-national Bonds (like the world bank) or very high credit Corporate Debt.

Remember that some companies are now considered less risky than the Irish State.

Global 
Diversification on a global scale offers access to bonds from many countries and spreads risk.

Euro Currency Hedged
Avoid taking unnecessary risks. By substantially hedging the global currency exposure back to Euros avoids additional volatility.

As part of a balanced portfolio, we offer our clients an investment fund which is managed by a major institutional US manager with assets under management of over €150 Billion.

The annual management charge is 0.25%pa

Average annual return since launch on 25th Jan 2007 is 4.58%pa.

Please note that the minimum investment in a portfolio is €100,000
[broken link removed]


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## Chris (12 Jul 2010)

callybags said:


> This does not make sense when you advise the OP to move all their money out of the country.



This country would be a much better place if the general public had savings to fall back on in bad times. I'm not talking about having savings in order to prop up banks' balance sheets.


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## TomPetty (2 Sep 2010)

Thanks a million all - I have taken your advice and gone down the diversification route, with various institutions ( Irish and foreign ) like Investec / INBS / EBS / Nationwide UK etc .. No longer have all eggs in one basket. Hopefully I can weather the storm and have some money for my kids College education, when the dust settles. 
Once again thanks all for your individual contributions. 
Kind Regards ...


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## tester1 (2 Sep 2010)

reading this thread and see someone mentioned Ulster Bank and a few others as safer places to deposit.... 


is the credit union safe or should I move a large deposit from the credit union to our ulster bank account


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## pudds (2 Sep 2010)

Savings in the CU are also covered by the  deposit guarantee scheme. Max 100k I think.


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## gInvestor (2 Sep 2010)

marietta said:


> €800,000 in savings, that is some feat for a 40 year old, well done!



+1.


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## Noilheart (2 Sep 2010)

gInvestor said:


> +1.



600K savings for a forty-year old is certainly amazing - that would be an average of at least €25,000 a year  from start of working life - well done.  You have obviously taken great care of your money so far and could possibly give better advice here than any you might get.  However, I swear by Rabobank.


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## Godfather (6 Sep 2010)

TomPetty said:


> Listening to David Mc Williams etc and rumours of our Country going insolvent, am I foolish to have all my eggs in one basket ( ie Irish Banking instutions, except for Investec ).


 
Hi Tom, first of all compliments for saving so much in such a few years of working life. But out of curiosity how did you deal with your panic attacks 2 years ago when the fears were much worse before our Irish Government was forced to put a guarantee on the main irish banks?

I'm curious, if I compare my fears now with the ones I had 2 years ago I feel much more comfortable by the EU actively helping Greece since then.


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## tester1 (8 Sep 2010)

Would the Ulster Bank or another institution(is so which) be safer for a deposit once the bank guarantee is over.....


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## johnny2shoes (8 Sep 2010)

tester1 said:


> Would the Ulster Bank or another institution(is so which) be safer for a deposit once the bank guarantee is over.....



Or to put it another way, "Would Ulster Bank be a safer place than Irish Nationwide"?


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## Lightning (8 Sep 2010)

Ulster Bank are largely owned by the AAA rated UK Government. 

INBS are owned by the AA- Irish Government. 

On that basis, Ulster are safer.


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## Godfather (8 Sep 2010)

CiaranT said:


> Ulster Bank are largely owned by the AAA rated UK Government.



Hi Ciaran, which source can you read this from? As far as I know Ulster Bank is part of the very weakened RBS and they are relying on the Irish Deposit Protection Scheme at the moment... Nothing more...


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## Happy Girl (9 Sep 2010)

UFC said:


> Couple of issues spring to mind:
> 
> 1. Can the Government actually afford to pay the bank guarantee if it is insolvent? i.e. is it a bluff?
> 
> 2. If we become insolvent and have to leave the euro, will our deposits be converted to worthless punts? Even if we are in a foreign bank like rabodirect.ie?


 
If funds were lodged directly to an account in "Coöperatieve Centrale Raiffeisen-Boerenleenbank B.A." (Rabodirect Headoffice in Netherlands) would this protect investors from having savings "converted to worthless punts" if we were to leave the Euro?


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## WhizzKid (9 Sep 2010)

Hi Godfather, going by his previous posts on this thread it looks like CiaranT has something against INBS in particular. Why so CiaranT?


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## Lightning (10 Sep 2010)

Godfather said:


> Hi Ciaran, which source can you read this from? As far as I know Ulster Bank is part of the very weakened RBS and they are relying on the Irish Deposit Protection Scheme at the moment... Nothing more...



Ulster Bank are owned by RBS who are 84% owned by the UK government.


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## Lightning (10 Sep 2010)

WhizzKid said:


> Hi Godfather, going by his previous posts on this thread it looks like CiaranT has something against INBS in particular. Why so CiaranT?



From a return on investment perspective, you will not go wrong with a 3.5% 3 month term deposit with INBS. 

From a safety perspective, INBS are in serious  trouble at the moment. They are far from the safest option.


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## Godfather (12 Sep 2010)

CiaranT said:


> Ulster Bank are owned by RBS who are 84% owned by the UK government.


 
Thank you very much CiaranT


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## cork (14 Sep 2010)

I think putting your savings in differant banks is good.

I have a fixed and demand Anglo account.

I am closing the demand.

Then again Anglo is a state bank - If it goes - the gaurentee is probably useless


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## TomPetty (2 Oct 2010)

Godfather said:


> Hi Tom, first of all compliments for saving so much in such a few years of working life. But out of curiosity how did you deal with your panic attacks 2 years ago when the fears were much worse before our Irish Government was forced to put a guarantee on the main irish banks?
> 
> I'm curious, if I compare my fears now with the ones I had 2 years ago I feel much more comfortable by the EU actively helping Greece since then.




Good question Godfather - To be honest, I was a little out of touch with what was going on & did not realise how precarious the situation was  at the time.  I'm more worried than ever now, with all this talk of Deposit haircuts etc ... Thanks again for all the info.


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