DIRT Calculations

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threeckat

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I have €30k sitting in the Credit Union and want to get a better return. I've looked at the various products available and want to clarify the situation regarding DIRT.

The best products seem to be KBC's 48 mth Deposit A/C with a gross return of 18% or €5400 according to the NCA website. I assume that takes account of whthere these things calculated with simple or compound interest, what basis is the DIRT calculated, is it a straight 30% i.e. a net return of €3780 - (anyone have a link to a handy calculator?)

The other option is the State 4 Year Bond with a gross return of 15% or €4500. The net return from the State Bond is €4140 according to their literature (they claim a net return of €13.8%).

My assumption is that the State Bond will give me a better yield despite the lower interest rate - am I missing something?

I'm currently saving €3k per month in my credit union account, having read the best buys thread, I've opened an Ulster Bank Deposit A/C with a 4% 12 month return and am looking opeing an EBS Family scheme too. There is a limit of €1000 per month in both of these, so I have another €1000 to invest, should I open a similar account or is there a wiser way to invest the €300 all together?
 
threeckat said:
The best products seem to be KBC's 48 mth Deposit A/C with a gross return of 18% or €5400 according to the NCA website. I assume that takes account of whthere these things calculated with simple or compound interest, what basis is the DIRT calculated, is it a straight 30% i.e. a net return of €3780 - (anyone have a link to a handy calculator?)
Click to expand...

I dont know exactly, but it cant be as simple as your initial assumption, as DIRT is calculated an taken from the interest every year.

What is the AER ? I think it about 4.2%, based on a basic compound interest calculation of 30K for 4 years gives €5366 interest.

30% of €5366 is €1609. ( The interest you would get is 3757.

If you calculate the compound interest on 30K for 4 years at 2.94%, which is 4.2% after DIRT, you get €3686 interest.
 
The AER on the KBC A/C is 4.22% - but I guess what you're telling me is that after the DIRT the net interest rate is about 3% - so a return of about €3600 to €3700. The State 4 Year Bond would appear to be a better return.
 
The AER on the KBC product is 4.00%. See the best buy thread or the KBC website [broken link removed].

Yes, as per the best buy thread, the State Savings account offers a better return unless you are DIRT exempt.
 
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