# New four-year National Solidarity Bond launched



## Pauliwalnuts (1 Feb 2011)

The National Treasury Management Agency (NTMA) has today announced that the new four-year National Solidarity Bond is now available for purchase in all Post Offices. 

The bond, designed with individual savers in mind, will pay a gross return over four years of 15% (AER* 3.56%). The net return after DIRT is 13.92% (AER 3.31%). 

Like its 10-year counterpart, which was launched last year, there are no fees, charges or sales commissions and savers can have their money back at any time. 

All money invested in the National Solidarity Bond is placed directly with the State under the management of the NTMA.

The new bond complements the 10-year National Solidarity Bond which has proven a success with savers since its launch in May 2010. 

To date, some €375m has been invested in the 10-year bond by 18,000 customers - an average daily investment of approximately €2m. 



Read more: http://www.breakingnews.ie/ireland/...arity-bond-launched-491749.html#ixzz1CjqPZ1Ci​


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## jpd (1 Feb 2011)

That's not enough information to make any kind of comment on the bond.

There is no information about early withdrawals, etc


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## Lightning (1 Feb 2011)

Thanks for the posting Paul. 

I am in the process of going through the T&C's.


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## Lightning (1 Feb 2011)

jpd said:


> That's not enough information to make any kind of comment on the bond.
> 
> There is no information about early withdrawals, etc



What further information to you want about early withdrawals?

The T&C's state:



> You can access your money at any time by giving 7 days notice



http://www.statesavings.ie/products/Pages/NationalSolidarityBond4.aspx


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## jpd (1 Feb 2011)

yes, but no mention of interest penalties, etc


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## oldtimer (1 Feb 2011)

Having glanced over this 4 year bond my initial opinion is this is an excellent product if left for the full 4 year term. However, it is important to stress, if withdrawn within the 4 years the interest paid is only 1% per annum which is liable to DIRT. So if not leaving the money for 4 years don't touch. It is very favourable over 4 years when compared to Saving Certificates over the same period. €1,000 over 4 years in this bond puts €1392 in your pocket while €1,000 over 4 years in Saving Certificates puts €1122 in your pocket. It is another attractive An Post product and gives more variety to the saver. Rule of thumb would be (1) if investing for a 3 year period use Saving Bonds (2) if investing for a 4 year period use this Solidarity Bond (3) if investing for a 5.5 period use Saving Certificates.


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## z107 (1 Feb 2011)

Is your money at risk if (when) the state defaults?
I would say there is huge risk associated with this.


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## coin (1 Feb 2011)

4 years is still very long to invest savings. Interest rates could well increase in another year or two which is why keeping money in 1 year fixed accounts are more favourable.


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## Chris (2 Feb 2011)

umop3p!sdn said:


> Is your money at risk if (when) the state defaults?
> I would say there is huge risk associated with this.



I agree, and so does the international bond market which is asking for over 9% on 10 year bonds. Lending to a bankrupt country, just like a bankrupt company is a terrible idea, and I think it is scandalous that such a high risk product is being focused on the average person on the street.


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## jpd (2 Feb 2011)

Ditto - the interest rate is low, in my opinion, especially after DIRT. Why not offer the same rate as we're paying the EU and IMF ie 5% + ?


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## Lightning (2 Feb 2011)

Chris said:


> I agree, and so does the international bond market which is asking for over 9% on 10 year bonds. Lending to a bankrupt country, just like a bankrupt company is a terrible idea, and I think it is scandalous that such a high risk product is being focused on the average person on the street.


 
+1. Well said. 

The Economist and other publications are sreaming from the rooftops that Ireland is going to default. The credit default swap market implies a 45% chance of an Irish default. 

Investing your savings in NTMA savings products with that level of very high default risk at such a low return is, in my opinion, just not worth it.


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## Carramore (2 Feb 2011)

This is a fascinating question.  In the event of default by the State at some future date, one could envisage the creation of a heirarchy of claimants, with holders of post office savings accounts etc. getting priority over holders of government bonds.  Another possibility is that the first 200k (or whatever) is repaid at par, with haircuts on excesses over that.  I cannot envisage that little old ladies would have to take a haircut on their savings with the post office.  As an aside, in comparing the Solidarity Bond with conventional government bonds, one has to allow for the fact that coupons on government bonds are subject to the highest rate of tax, thereby reducing significantly the net return to a higher rate tax payer.  On the other hand, the capital gain (assuming the bond is redeemed at a price higher than applies at present) will be tax-free.


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## farmerette (2 Feb 2011)

CiaranT said:


> +1. Well said.
> 
> The Economist and other publications are sreaming from the rooftops that Ireland is going to default. The credit default swap market implies a 45% chance of an Irish default.
> 
> Investing your savings in NTMA savings products with that level of very high default risk at such a low return is, in my opinion, just not worth it.


 
those same publications were only two months ago ,  predicting that spain and portugal would be in the process of applying for a bailout by now and that the euro would be at parity with the dollar by the middle of this year , spain and portugal had no problem selling bonds last month and the euro is heading for 1.40 to the dollar , the level of bearishness by various commentators is getting a bit tedious


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## Chris (2 Feb 2011)

farmerette said:


> those same publications were only two months ago ,  predicting that spain and portugal would be in the process of applying for a bailout by now and that the euro would be at parity with the dollar by the middle of this year , spain and portugal had no problem selling bonds last month and the euro is heading for 1.40 to the dollar , the level of bearishness by various commentators is getting a bit tedious



No, Portugal sold €1.5bn of €20bn it has to sell this year, and it paid a lot more than what the EU is offering. Spain is looking at proportionately similar numbers.
One "successful" auction does not indicate that the troubles are over.


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## oldtimer (2 Feb 2011)

It appears the general concensus on Askaboutmoney about this 4 year Solidarity Bond is a thumbs down and it is a bad and high risk investment. Indeed the general advice on Askaboutmoney is not to touch any An Post products in the present climate. Fair enough. I hope that message gets out to the thousands of people who have their life savings in what they assume are safe products.


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## Bessa (2 Feb 2011)

oldtimer said:


> It appears the general concensus on Askaboutmoney about this 4 year Solidarity Bond is a thumbs down and it is a bad and high risk investment. Indeed the general advice on Askaboutmoney is not to touch any An Post products in the present climate. Fair enough. I hope that message gets out to the thousands of people who have their life savings in what they assume are safe products.



We have over 200k invested in the Savings Certs, which started in Sept. 2009. Should we take this money out ?. Where should we then invest it ? We have max. guaranteed funds in the other irish banks ( except Anglo and EBS ). We are worried about An Post for a while now.


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## callybags (3 Feb 2011)

> We have over 200k invested in the Savings Certs, which started in Sept. 2009. Should we take this money out ?. Where should we then invest it ? We have max. guaranteed funds in the other irish banks ( except Anglo and EBS ). We are worried about An Post for a while now.


 
Bessa

I would be very reluctant to base any major financial decisions on the views of anonymous posters on the internet.

You should seek, and pay for independant advice.


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## Chris (3 Feb 2011)

callybags said:


> You should seek, and pay for independant advice.



I fully agree with this. You are talking about a lot of money and it would be worth paying for some advice. If it is safety you are looking for then it would make sense to look into something like German bonds for example. Talk to an advisor is the best thing you can do to put your mind at rest.


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## Firefly (3 Feb 2011)

Bessa said:


> We have over 200k invested in the Savings Certs, which started in Sept. 2009. Should we take this money out ?. Where should we then invest it ? We have max. guaranteed funds in the other irish banks ( except Anglo and EBS ). We are worried about An Post for a while now.



Withdraw all of your money. Place it in a big, black bag and swing by my place for a cuppa


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## shnaek (3 Feb 2011)

Firefly said:


> Withdraw all of your money. Place it in a big, black bag and swing by my place for a cuppa



What streets would they pass on the way to your place? Any dark ones?


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