Risks with National Solidarity Bond

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eddie10

Registered User
Messages
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I am thinking of investing a small lump sum into an posts 10 year National Solidarity Bond but have one or two queries that hopefully someone can help with. I am risk averse and the only risk i can see with this venture would be Ireland unable to pays it debts(in the future) and thus wont be able to get the money out. Has the new EU bailout plan illiminated this risk? Also, i dont envisage using this sum until the 10 years is up as it fits perfect with potential college fees etc, but what are the penalties if you withdraw early. I know you just dont get the Bonus's planned at the various staged but i saw somewhere that they said there was severe interest penalty's for early withdrawal.. Is this correct??
 
eddie10 said:
Has the new EU bailout plan illiminated this risk?
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Reduced risk to zero? No.

eddie10 said:
I know you just dont get the Bonus's planned at the various staged but i saw somewhere that they said there was severe interest penalty's for early withdrawal.. Is this correct??
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Yes, see term deposit best buy thread:

http://www.statesavings.ie/products/Pages/NationalSolidarityBond.aspx (State Savings: National Solidarity Bond)
10 Years 3.96% (A normal deposit account would need to be paying 5.28% to match this rate because this product as the interest is not fully subject to DIRT)
Note 1: €500 minimum, €250,000 maximum (€500,000 for joint account)
Note 2: The bonus on this account is not subject to DIRT, the normal interest is subject to DIRT.
Note 2: Savers will receive the interest in the form of 10 annual payments of 1 per cent and a 'bonus' at the end of the 10 year term. If a saver cashes in their term deposit before the end of the fifth year they will not qualify for the 'bonus'.
Note 3: This is available from May 4th 2010.
Note 4: NB: As the interest penalties are significant on this account, you should only consider this product if you are certain that you will not need access to your money at any stage over the next 10 years. 10 year term deposits are not suitable for most savers. You should also be aware that you take on considerable upward interest rate risk by fixing for 10 years.
Deposit protection: Irish government guarantees all State Savings deposits.
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Thanks CiaranT.
I can understand the upward interest risk but it said when launching the bond "There will be no penalty for early withdrawals and there are no commissions or charges for buying the bond"? So worst case scenario you get your capital invested back if withdrawn early but if we have an inflationary period, in real terms you are down...Is that the interest penalty you are referring to??
 
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