Irish Government Bonds for the retail punter

I think I have found a better Govie. The 0.20% Treasury Bond 2027 is priced at 90.88. It matures on May 15th 2027 so it is a 4 year bond, a preferrable term, and precisely comparable with the 4 year National Solidarity Bond. The NSB pays 2% or 0.50% AER. The TB pays 2.08% AER for a €100k investment and 2.34% AER for a €500k investment (using Goodbody charges and assuming subject to 40% tax and 8% USC on the coupons.
A downside is that if interest rates go up you can encash the NSB and reinvest, whereas the 4 year yield on the TB is locked in (no point in encashing and reinvesting). If 3 year Savings Certs where increased from 1% to c. 8% in say 1 year's time then encashing the NSB and reinvesting in the SC would give the same return as the TB.
 
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Protocol said:
From Basilbrush: I asked, and the fees for execution-only Irish government bond purchases through Goodbody are apparently 0.35% (at least for a fairly large purchase), plus the annual fee of €246 (including VAT).
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I have checked with Goodbody and they are quoting 0.75% on first €50k and 0.5% on balance.
 
I should probably have left out the "fairly" in "a fairly large purchase". For the amount I asked about (€1m), they just said the fee would be 0.35%.
 
That's interesting although we don't offer an execution only service, our dealing charges are only 0.20% and 0.25% custody and for non-EU ETFs our clients only pay 0.05% with a minimum fee of €40,
 
basilbrush said:
I should probably have left out the "fairly" in "a fairly large purchase". For the amount I asked about (€1m), they just said the fee would be 0.35%.
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That is interesting. I asked for €500k (just asking) and was referred to their standard schedule - which is 0.75% on first 50k and 0.5% on balance.
 
They are up on degiro...not all of them mind you. Just search for "Irland" without the e. I can't recall if I needed to change some settings to enable viewing/purchasing of bonds
 

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You are the beneficial owner - just as buying shares through Degiro or indeed any broker
 
jpd said:
You are the beneficial owner - just as buying shares through Degiro or indeed any broker
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With GoodBody I have the choice of being the registered owner of the bond or having it in a GoodBody nominee account. This is what Investopedia says of nominee accounts.
Investopedia said:
An investor's shares are legally owned by a stockbroker's non-trading subsidiary or nominee company. The investor is the stock's beneficial owner and has rights over the shares.
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Having lived through the GFC I am extremely nervous of trusting any financial services player and there does seem to be some element of trust needed in De Giro. I also note that De Giro reserve the right to lend stocks in its nominee accounts. I will never be an active trader so super low trading costs are not a huge requirement. If I invest in an Irish Government Bond I want to legally and beneficially own the asset.
 
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So what would be the guaranteed return if investing €100k in money terms in a 4 year TB ?
 
ashambles said:
do you get hit by the commission twice - way in and way out - or is that factored in? The usual fee at the moment from Goodbody is 123e - do they charge 246e if you want to buy bonds?
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I have assumed Held to Maturity. Earlier sale would involve further commission at the same rates. 200 + VAT p.a. was what was sent to me as their fees.
 
Roro999 said:
Thanks very much. Is the tax rate always 40% ? I am retired and all income is taxed at 20% currently.
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I attach the spreadsheet which you can adjust to your own circumstances. The gain on maturity is a tax free capital gain - that's the magic ingredient just like state savings. The 0.20% p.a. interest paid along the way is taxable as income. Your combined tax, USC and PRSI rate might be nearer to 24%, but it won't make much difference as the interest rate is so low.
 

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Duke of Marmalade said:
I have assumed Held to Maturity. Earlier sale would involve further commission at the same rates. 200 + VAT p.a. was what was sent to me as their fees.
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Thanks, makes sense - not used to anything except shares and funds so didn't even think about bond maturity.
 
Can anyone confirm if the 4 year TB referred to above by the Duke is available through Degiro ?
 
ashambles said:
Thanks, makes sense - not used to anything except shares and funds so didn't even think about bond maturity.
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I am more used to savings certs and bonds and with these you really only about maturity although I have just encashed all our joint bonds and certs following the recent review which indicates that NTMA have abandoned their traditional approach of giving very competitive rates.
 
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