national solidarity bond

M

majee

Registered User
Messages
141
I've a fairly basic query on this scheme. I'd be prepared to stick about 25k into this scheme. I understand that I would get an annual 1% interest rate return subject to DIRT each year for 10 years (= 10%). However at the end of year 10 it says '40% tax free bonus at the end of year 10'. What exactly does this mean? Could someone give me a mathematical example? I don't see any discussion on the scheme anywhere. Has anyone participated? Can anyone see any obvious drawbacks to this?

majee
 
Will you not need access to the money for 10 years? The main drawback is the extreme length of the term deposit.

Have you read the term deposit best buy thread?

 
majee said:
However at the end of year 10 it says '40% tax free bonus at the end of year 10'. What exactly does this mean? Could someone give me a mathematical example?majee
Click to expand...

· Gross return of 50% (AER1 4.14%) over 10 years consisting of
o 10 annual payments of 1% p.a. = 10%
[subject to Deposit Interest Retention Tax (DIRT2)]
o 40% tax free bonus at the end of year 10
· Net return of 47.5% (AER 3.96%) after DIRT2


http://www.anpost.ie/AnPost/GeneralTemplates/ProductsAndServices.aspx?NRMODE=Published&NRNODEGUID=%7bC5BABFE0-6E0D-4257-93C7-D87A0FB56B4C%7d&NRORIGINALURL=%2fAnPost%2fMainContent%2fPersonal%2bCustomers%2fMoney%2bMatters%2fNational%2bSolidarity%2bBond%2fFAQs%2f&NRCACHEHINT=Guest#top

My understanding is you get a gross return of 50% (10% interest + 40% bonus) but you pay DIRT on the 10% interest, which leaves you with 7.5% interest + your 40% tax free bonus leaves you with 47.5% net.

€25,000 left for 10 years would be worth €36,875.00 (assuming Dirt stays at the current 25%)
 
You must log in or register to reply here.
Menu
Log in
Register