Lazy Portfolio/Bonds and certs

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patrickjd

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When creating a so called Lazy portfolio consisting of equity indexes and fixed income instruments how would State Savings Bonds and Certs rate for the fixed income allocation of said portfolio? Any thought?
 
I'm wondering the same, I guess some people might see this as too risky?

You can invest in a bond ETF, I've copy and pasted these from another forum
- iShares Euro Inflation Linked Government Bond UCITS ETF / just 18 holdings (15 French bonds + 3 German bonds), yielding 1.39% pre-tax
- iShares Global Inflation Linked Government Bond UCITS ETF / 115 holdings (48% US, 29% UK, 13% French, 4% German, other), no Italy/Spain/Portugal, yielding 1.22% pre-tax
- iShares Euro Aggregate Bond UCITS ETF , 1672 holdings (!!! ), includes all of Europe incl. big chunk of Italian/Spanish bonds, yielding a smashing 2.07%

Does anybody know the tax implication for the interest payments of these bonds, is there any Dividend withholding tax?
Will some countries take DWT but others won't?
 
patrickjd said:
When creating a so called Lazy portfolio consisting of equity indexes and fixed income instruments how would State Savings Bonds and Certs rate for the fixed income allocation of said portfolio? Any thought?
Click to expand...

No thoughts/alternative suggestions?
 
patrickjd said:
When creating a so called Lazy portfolio consisting of equity indexes and fixed income instruments how would State Savings Bonds and Certs rate for the fixed income allocation of said portfolio? Any thought?
Click to expand...

It is a no brainer as long as John and Mary taxpayer keep the Irish government solvent. The bonds and certs are free of Dirt Tax and PRSI. So Dirt and PRSI is 45%. Only thing is that the money is locked in for a term, and you will not get the full interest if you cash out early.

A European bond either sovereign or corporate - the annual interest payment will be subject to income tax, prsi, usc, free air tax etc etc if just a straight over the counter portfolio, versus wrapped up in a pension or equivalent. Irish, Spanish etc Govt bonds are paying paltry interest at the minute, due to Draghi's 'Do whatever it takes to save the Euro', as well as the artificial low interest environment around the world. They are on a par to Uncle Sam's T bill rates which hardly makes sense considering the debt burdens of some EU countries, including good aul Eire due to our incompetent leaders & advisors. So you would need a good bit more than the current yield EU govt bonds offer to beat the An Post bonds, certs for after tax net return.

I wouldn't be buying EU govt bonds until the next wave of unrest hits Europe, if it does at all, and the bond yields spike up to reflect realistic risks.
 
duineramhar said:
It is a no brainer as long as John and Mary taxpayer keep the Irish government solvent. The bonds and certs are free of Dirt Tax and PRSI. So Dirt and PRSI is 45%. Only thing is that the money is locked in for a term, and you will not get the full interest if you cash out early.

A European bond either sovereign or corporate - the annual interest payment will be subject to income tax, prsi, usc, free air tax etc etc if just a straight over the counter portfolio, versus wrapped up in a pension or equivalent. Irish, Spanish etc Govt bonds are paying paltry interest at the minute, due to Draghi's 'Do whatever it takes to save the Euro', as well as the artificial low interest environment around the world. They are on a par to Uncle Sam's T bill rates which hardly makes sense considering the debt burdens of some EU countries, including good aul Eire due to our incompetent leaders & advisors. So you would need a good bit more than the current yield EU govt bonds offer to beat the An Post bonds, certs for after tax net return.

I wouldn't be buying EU govt bonds until the next wave of unrest hits Europe, if it does at all, and the bond yields spike up to reflect realistic risks.
Click to expand...

Agreed. I actually bought eur1200 worth of State savings bonds on Friday @ 4% over 3 yrs (aer 1.32%)and today the interest was cut to 2.5% over 3 yrs (aer .83%). I got lucky this time.
 
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