# An Post Installment Savings : offering 20% after 5 years, avg annual compound 3.75%



## Staple (28 Aug 2007)

Instalment savings with An Post are offering 20% after 5 years, average annual compound rate of 3.75%.
As there is no tax or levies payable, would this be a good regular monthly saving option?


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## ClubMan (28 Aug 2007)

*Re: An Post*

3.75% is the equivalent of 4.69% gross from an account subject to _DIRT_. At the moment there are regular saver accounts offering 7% (although check the terms & conditions of each for details of rate guarantees, restrictions on access to money etc.). You can also get up to 5.22% on demand deposit lump sums. See the _Financial Best Buys _forum for the latest deposit rates on offer. In the past _An Post _rates were attractive but no longer in my opinion.


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## Staple (28 Aug 2007)

*Re: An Post*

As this product is tax free, would the comparable rate not be higher when compared to other taxable products ?
If you are self employed, you would save 41% plus levies 5%, therfore the 3.75% should be grossed up to give a gross rate of 6.9%.
Would this be correct ?


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## CCOVICH (28 Aug 2007)

*Re: An Post*



Techless said:


> As this product is tax free, would the comparable rate not be higher when compared to other taxable products ?
> If you are self employed, you would save 41% plus levies 5%, therfore the 3.75% should be grossed up to give a gross rate of 6.9%.
> Would this be correct ?


 

You will only save tax at 20%-your tax and PRSI bands are irrelevant.


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## ClubMan (28 Aug 2007)

*Re: An Post*



Techless said:


> As this product is tax free, would the comparable rate not be higher when compared to other taxable products ?
> If you are self employed, you would save 41% plus levies 5%, therfore the 3.75% should be grossed up to give a gross rate of 6.9%.
> Would this be correct ?


No - if you earned 3.75% net from an account subject to _DIRT _then the equivalent gross rate before DIRT would be (3.75 / 8) * 10 = 4.6875%. The tax advantage of the _An Post _accounts don't make up for the fact that compared to other deposit products on the market the rate payable is poor. Obviously the _An Post _rate is fixed and most other deposit rates are variable but I still don't think that _An Post _offer a good deal and have not done so for many years now.


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## Staple (28 Aug 2007)

*Re: An Post*

I don't understand.
I thought that if you are self employed and pay the top rate of tax, you would have to pay tax 41% and levies 5% on your income including investment income ?


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## LDFerguson (28 Aug 2007)

*Re: An Post*

Interest earned on deposits is only subject to DIRT tax, not income tax or PRSI.


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## Staple (28 Aug 2007)

*Re: An Post*

I thought deposit interest was taxed at you marginal rate, be it 41% or 20% and then you get credit for any DIRT deducted ?


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## Staple (28 Aug 2007)

*Re: An Post*

Mea culpa


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## messyleo (28 Aug 2007)

*Re: An Post*

I believe your standard rate band is increased with a tax credit corresponding to the amount of DIRT tax you paid, so that you are only liable at the standard rate. However, I believe PRSI and the health levy are payable on deposit interest as well (I think?) The An Post account may or may not be exempt from this?


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## gonk (28 Aug 2007)

*Re: An Post*



Techless said:


> I thought deposit interest was taxed at you marginal rate, be it 41% or 20% and then you get credit for any DIRT deducted ?


 
Not so. See here:

[broken link removed]

"The payment of retention tax at the standard rate by individuals liable to income tax at the higher rate is regarded as satisfying the individuals' full liability to tax."


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## Guest127 (1 Sep 2007)

*Re: An Post*



gonk said:


> Not so. See here:
> 
> [broken link removed]
> 
> "The payment of retention tax at the standard rate by individuals liable to income tax at the higher rate is regarded as satisfying the individuals' full liability to tax."


 
except if its the credit union, even though they now deduct tax at source. I have argued this point with my local tax office but to no avail. I also emailed credit union hq but again no definitive answer. I thought the new post accounts were 21% over 5.5 years. Wouldn't go myself  as there are better options out there at the moment. If interest rates fall they will still be available for some time as an post is very slow to change.


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## ClubMan (1 Sep 2007)

*Re: An Post*



cuchulainn said:


> except if its the credit union, even though they now deduct tax at source.


Depends on which class of _CU _account(s) you have. See [broken link removed].


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## rki747 (1 Sep 2007)

*Calculation Confusion!!!*

Sirji,

I would like to know the formula for calculating annual return%. I have invested in ABC stock on 23rd Aug.07 at 2683 which is currently at 2515 on 31st Aug. my absolute return is -6%. But my advisor sent me an annual return of -88.31% is that correct. How can I calculate this in Excel. Please help me sir. Regards, RKI747


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## ClubMan (1 Sep 2007)

*Re: Instalment savings with An Post are offering 20% after 5 years, average annual compo*

Does it really make any sense to extrapolate an annual return from a one week paper loss in equities?


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## the mai rose (2 Sep 2007)

anybody know if the new savings account with the post office, postbank, is a good account to open


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## ClubMan (2 Sep 2007)

There are better options out there. The _An Post/Postbank _account offers restricted access (not even all _POs _can deal with these accounts) and a poor interest rate compared to other deposit accounts on offer (see the _Financial Best Buys _forum).


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## the mai rose (2 Sep 2007)

thanks clubman. im looking for a regular savings account, suspose there are many better options out there


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## ClubMan (2 Sep 2007)

Yes - see the _Financial Best Buys _forum. _EBS's _offering seems to have the fewest restrictions and maybe the best rate guarantee but check the terms & conditions of each to make sure that they meet your needs.


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## blass (30 Sep 2009)

*Re: An Post*

Does anyone else think that this Installment savings account has become better value of late?


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## Duke of Marmalade (30 Sep 2009)

*Re: An Post Installment Savings : offering 20% after 5 years, avg annual compound 3.7*

I want to correct some loose info in this thread.

Instalment Savings are a *6* year product with the first year for the collection of the instalments.

The CAR is *3.37%* per the An Post website

Savings Certs with a 5.5 year term and 21% growth (CAR 3.58%) are a better bet.

Annual deposit accounts are subject to 25% DIRT and levies and PRSI (I think).  Don't be surprised if this increases.

Longer term deposit accounts and insurance products are subject to DIRT (exit tax) at 28% though insurance policies are not subject to levies.  I think most "long term" deposits are structured as annual so that the DIRT is in fact 25%.

IMHO Savings Certs are the best value medium term deposit style investments around.  No way can you get 3.58% after tax guaranteed for 5.5 years anywhere else.  As soon as this crisis abates and it already is beginning to, deposit rates will fall back below the mortgage rate.


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## Askook25 (9 Dec 2009)

*Re: An Post Installment Savings : offering 20% after 5 years, avg annual compound 3.7*

anybody tell me.... i am also searching for that....

__________________
Compound Interest Formula


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