Saving certificates -reinvestment options

We have a few thousand invested for our children's college fund in saving certificates, they are due to mature in a couple of weeks. An Post have sent us some reinvestment options in further saving certificates for 4 or 10 years. They don't detail the interest rate we should earn.

Are there any other options (SAFE) that we should look into. We don't need to access this money for at least 10 years hopefully.

It doesn't need to be An post...

Thanks

It sounds like the 10 year solidarity bond might suit. 2.26% AER net.
http://www.statesavings.ie/products/Pages/NationalSolidarityBond.aspx

Highest interest rate in the term deposits best buys is UK Nationwide's 3 year account which pays 2.20% gross.

Rabo's 10 year account pays 1% gross.

With the way interest rates have been going, I would not be surprised to see yet another cut in State Savings rates in the near future.

Hi,

You would need to have a good read of the AAM Best Buys and familiarise yourself with the current interest rates available generally especially as you are going to tie the money in for such a long time.

Is there any kind of online calculater that I could use to see what I would have approx with the 10 yr solidarity bond based on the amount we want to invest?

Thanks for the advise so far!

TableEnd said:

Is there any kind of online calculater that I could use to see what I would have approx with the 10 yr solidarity bond based on the amount we want to invest?

Thanks for the advise so far!

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The 2.26% AER is the complicated version of the return, required to be shown by legislation for comparability with bank rates. The actual total return on the ten year bond is much simpler -- 25%. Just multiply your investment by a quarter and that's the interest you'll get after ten years.

dub_nerd said:

The 2.26% AER is the complicated version of the return, required to be shown by legislation for comparability with bank rates. The actual total return on the ten year bond is much simpler -- 25%. Just multiply your investment by a quarter and that's the interest you'll get after ten years.

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Should that not read, just "divide " your investment by a quarter, not multiply it, and that's the sum of interest you'll get

noproblem said:

Should that not read, just "divide " your investment by a quarter, not multiply it, and that's the sum of interest you'll get

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No, dividing by a quarter is the same as multiplying by four, e.g.
100 x 0.25 = 25
100 / 0.25 = 400

The Ghoul said:

Rabo's 10 year account pays 1% gross.

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10.00% Gross. 1.00% AER.

The Ghoul said:

With the way interest rates have been going, I would not be surprised to see yet another cut in State Savings rates in the near future.

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The NTMA have previously indicated that they respond when they see that the State Savings rates out of line with bond yields and deposit rates. They are way out of line with bond yields. State Savings pay a lot more than bond yields. State Savings pay a lot more, than deposits, for longer dated terms. There is a case for more cuts. I suspect that the NTMA will wait a while before cutting.

The Ghoul said:

Highest interest rate in the term deposits best buys is UK Nationwide's 3 year account which pays 2.20% gross.

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This might be the best option for the OP. Get a great rate for 3 years and then review options again in 3 years time.

CiaranT said:

This might be the best option for the OP. Get a great rate for 3 years and then review options again in 3 years time.

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Not disagreeing, but a couple of observations I would make: the Nationwide three year rate rate is only 0.2% better than the one year rate. After DIRT, it is barely more than 0.1% better. Does that level of additional return justify the extra time commitment?

On the other hand, if you are not allergic to extra time commitment and want to lock in the best rates available now, the NTMA 10 Year Solidarity Bond is not a total disaster if you encash somewhat earlier than planned. The terms and conditions are available on the State Savings website. They show the encashment bonus at each anniversary after commencement as follows:



We can turn each of those figures into an AER rate and, since they are tax free, further gross up to give the AER you would have to earn in a deposit account on which DIRT was due:



After seven years you are near the Nationwide AER after grossing up.