NTMA 10 year National Solidarity Bond - wise in the long term?

[vf949]

Hi,

From what I can see of the various savings products on offer in Ireland the NTMA 10 year National Solidarity Bond will provide the highest nett interest. It seems to give an AER of 2.79%.

I am considering putting a portion of my savings into this (maybe 10k to 15k out of the 85k that I have saved as I know I will manage without it for the next 10 years) and am wondering do people think this is a wise move or is it too long term?

Is it likely that in a few years time there will be better interest rates available on the market? If so should I put it into something for maybe 3-6 years for the moment and possibly get just as good a rate or better after this then again for another 3-6 years?

Thanks.

 

[Lightning]

Impossible to say, with any degree of certainty, where rates will be in 3-6 years.

The ECB rate is at a historic low, with a further cut appearing likely. In the medium term, some people expect the base rate to return to a 'normal' rate of 2-3%, with deposits & mortgage rates rising in line with the ECB rate. Then again, rates could remain, at low levels, for a sustained period.

One strategy might be to hedge your bets by splitting your deposit into different terms.

 

[vf949]

Thanks for your advice CiaranT.

I have being thinking further about it and decided that the 5 year Savings Cert is a better bet for me.

The interest on the Saving Certs is not far behind the 10 year National Solidarity Bond and if in 5 years time the ecb rate has climbed back up a bit then I won't be any worse off.

The interest on the savings certs in paid every 6 months rather than anually and is not as biased towards going the full term. These are benefits should I for any unforeseen reason require the money.