# Saving Certs vs Savings Bonds



## Ballymoheen (20 Jul 2009)

I have read the Best Buy which advises that the best buy for the 3 year term is the Savings Certificates 17th issue.

I have €30,000 to invest for 3 years but just looking at the an post website the Saving Bond seems to be the best 3 year rate. It states that an investment of €1000 after 3 years will amount €1,100


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## Lightning (20 Jul 2009)

A 10% return over 3 years is aprox. 3.2% AER.


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## oldtimer (20 Jul 2009)

Ballymoheen- You are correct. The 'Best Buys' is a little misleading. It does give the impression Saving Certificates are the best for a 3 year term. Saving Bonds are better because, on €1,000 they pay €1,100 (DIRT free) over 3 years, Saving Certificates pay €1,080 (Dirt free) over 3 years.


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## Grizzly (20 Jul 2009)

I would imagine that generally rates might start increasing over the next year or so though?

I see that Bank Santander are offering 6% for a 1 year fixed in the U.K.  What am I required to do if I decide to open an account in the U.K. to make it all legal and above board for our revenue?


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## ianof (27 Jul 2009)

Regarding this thread

Can anyone help me understand the flexibility regarding taking money out of a cert (3 years) and and bond (5 years).

Any penalties and any information on how is interest calculated - it seems to me that you can withdraw your cash if required while still benefiting from annual interest?

Regards
Ian


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## oldtimer (27 Jul 2009)

Firstly, just to clarify, Bonds are 3 years, Certs are 5.5 years. To answer your questions, (1) there are no penalties for withdrawing either bonds or certs. They can be withdrawn anytime. (2) Interest is added to bonds *annually* on the anniversary date of purchase. If they are withdrawn anytime within the first year no interest is added. Interest is added to certs every *six months*. If withdrawn anytime within the first six months no interest is added.


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## rana23 (29 Jul 2009)

Grizzly! It would be ideal to open account with Satander at 6% but will they open it? Once declared on revenue return, everything is above board. No UK banks will open accounts from Irish Residents except HSBC and they pay peanuts anyway. Best place is Isle of Man for sterling. Euro now strong and sterling weak but come end of year sterling could be strong and euro weak.


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## ianof (30 Jul 2009)

Thanks old timer - very clear and thanks for the correction.  Why would anyone not go for the the certs (5.5) over the bond (3) given this additional flexibility?
Regards
Ian


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## oldtimer (30 Jul 2009)

Good question. As I have explained on another thread, at the end of three years Bonds pay slightly more than Certs, €20 more on €1,000 over *three* years. Personally I would always opt for Certs because of their six monthly interest added facility and longer term. Certs continue to earn good interest up to 5.5 years but Bonds cease to earn interest after 3 years and one must start all over again.


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## TomOC (4 Aug 2009)

oldtimer said:


> Firstly, just to clarify, Bonds are 3 years, Certs are 5.5 years. To answer your questions, (1) there are no penalties for withdrawing either bonds or certs. They can be withdrawn anytime. (2) Interest is added to bonds *annually* on the anniversary date of purchase. If they are withdrawn anytime within the first year no interest is added. Interest is added to certs every *six months*. If withdrawn anytime within the first six months no interest is added.



Hi.  I agree that there are no "penalties" for early withdrawal.  However the interest is added monthly after the first 6 months/ year in a tiered fashion.  Interest is paid in small percentages for first few years/ 6 months and gradually increases.  My point is, if someone withdraws early from bonds/ certs, interest rates can be very low even after a few years of saving.  It should not be opened if it likely to be withdrawen before the full term.  
eg. 
After 1 year €102.20 (2.2%)- 2.2% year 1
After 2 years €105.20 (5.2%)- 3% year 2
After 3 years €110.00 (10.0%)- 4.8% year 3

Saving bonds and certs start to make more sense as DIRT increases, another DIRT increase may come in the next budget?  (Already up 25%)

Quote 10. Interest earned on Savings Bonds is exempt from Deposit Interest Retention Tax,
Income Tax and Capital Gains Tax in Ireland and is not returnable as income to the
Revenue Commissioners end Quote

Are all other savings interests from other banks returnable as income to the revenue comissioners in the form of the income levy?  Does this seem to not apply to bonds and certs as per the quote above attached fromm savings bond brocure.  
http://www.anpost.ie/NR/rdonlyres/D...8F/1420/AnPostSavingsBondssingleDL_Purple.pdf

Thanks

Tom


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