Simple savings.

Hi all,
First of all, a short introduction because I'm new in the phorum. My name is Augusto, I'm from Argentina. I arrived Ireland 6 months ago. Very happy to stay here, found Ireland a really nice place with excelent people. (trying to survive in this weather )

Thanks to everybody.

I was looking some information about savings and found in this phorum which is plenty of useful info, but honestly all this stuff is very hard to understand when you are new here.

So here my questions.

I found this thread: http://www.askaboutmoney.com/showthread.php?t=20747

I get information about the different alternatives but couldn't figure out which is the most suitable in my case. So will really appreciate your experience and comments.

This is my first month saving, and realised that I can be able to save around €1000 every month. That means that I can not get a lump saving because I have not money yet.

Let's go to the regular savings.

Now, I don't want to use this money. I want to keep it in the account as long as possible, but unfortuantelly I cannot stablish how long will be, because I don't know if any day I have to go back urgently and need to take off this money.

I don't understand very well the story with the different kinds of interest. I need simple numbers, can you help me?

I already have a current account in AIB, so I'd like to use it as example:

7.50% (ECB+3%, half in Apr and half in Oct) until 19 Feb 2009
4.30% (ECB) until 1 Jan 2010.
Regular lodgements required (direct debit only): Minimum €10 a month; Maximum €300. You must have a suitable AIB feeder account to open a Regular Saver Account. An AIB Demand Deposit account can be used for this, and attracts no fees.

This ECB is a monthly rate?

So if I have €1000; will I get €1000 + €43 every month?
That's cool, what happen the next month?

I will have €1043 + new €1000, will I earn €87???

Please, could you please give me a hand and clarify that for me?
Thanks in advance!

Hi there

welcome to Ireland - glad you like it here in spite of the weather as it often drives us all to leave!

On your question about ECB - it's an annual rate. So if you lodge €1000 on January 01st 2009, by December 31st 2009 that will have earned €43 interest for the *year*. You also have to deduct deposit interest retention tax (DIRT) at 20% so you will get €34.40 for having that €1,000 on deposit for a year at 4.3%. Note, this only applies where interest is calculated annually, rather than monthly (I'm using this method just to give a clear example). I know that sounds low but, if you can save €1,000 a month, then you will be doing well.

If you save €1,000 on day one of month one at 4.3%, you will get €2.86 for your first month's interest. Then you add another €1,000, you will get €5.74 interest after the second month (€2002.86 * 4.3%/12 minus DIRT). Interest on these accounts are usually calculated monthly (but only payable twice a year) so this example probably reflects things more realistically. If you withdraw money before the interest payment date (e.g. October) you still get the monthly interest up to the date you withdraw though. By the sound of your post, you are looking at an instant access regular saver and that should be taken into account when opening your account. 7.5% is pretty good, even at the moment, but I'd be looking to move that money when the interest rate goes down.

Sprite

p.s. you should also get that entire €1,000 working for you as AIB (in your example) only gives that good rate for €300 a month. There's loads of info on the "best buys" threads on what regular saver accounts give the best interest rate - just be aware of any that require notice periods to withdraw money AND be aware of the termination dates for the special offer interest rates, as they can drop dramatically after that and you should be ready to move the money after that.

Sprite!... hat off after your comments!
Really appreciate your explanation. That clarify a lot all my doubts.

Honestly the rate is not so good in this case, but I think all other companies/banks/ whatever will not pay much more than this.

I need to do it grow quickly and I have not problems to do something more risky to achieve this target.

I will take a look at all other saving options but do you have in mind any other business that could allow me get a bit more succulent interest?

Thanks!

You can always invest in equities (stocks and shares) which offer a potentially larger return, but you can also lose some or all of your money. We can't discuss individual shares on this forum though.

Sprite

asoubielle said:

I will take a look at all other saving options but do you have in mind any other business that could allow me get a bit more succulent interest?

Click to expand...

Do take care when looking at your options.

There is a big difference between deposits (which I assume you mean when you say 'saving') which offer a specific/guaranteed return and investments (which have the potential to provide higher returns, but with the risk of losing money).

In general, the greater the risk the greater the potential reward.

Lots of previous discussion of this on AAM, so take some time to read up on the previous threads and try to identify the correct balance for your specific circumstances (e.g. given that you might require the money at short notice, the potential volitility of equities/shares wouldn't seem an appropriate route for you to go).

Thanks guys for all your comments, I'm finding this matter really amazing and I'm happy to find people like you to give me hand.

Satanta said:

Do take care when looking at your options.

There is a big difference between deposits (which I assume you mean when you say 'saving') which offer a specific/guaranteed return and investments (which have the potential to provide higher returns, but with the risk of losing money).

Click to expand...

Yes, I meant this kind of deposits.

(e.g. given that you might require the money at short notice, the potential volitility of equities/shares wouldn't seem an appropriate route for you to go).

Click to expand...

I was thinking this morning about that, actually I don't have anything to lose, because I have nothing . What I mean is, I'll not need this money shortly. I can just keep some money under my pillow in case I have to go back home (Argentina), but then I can keep money in an account for the rest of life and use it when I'm retired. Doing that I can get free money (doing nothing), right? Of course if I go home, I will not be able to withdraw this money nor deposit more money.

In the short term I can run the risk to spend 1000€ (i don't know if that is enough) buying shares or all other risky transaction. All money earned would go to the savings and keep always the same risky money in the table rolling like in a CASINO. When it's gone, it's gone.

Now, you say shares, do you mean buying shares of a company for example? I'm not sure the money that would have is enough to play this game. I'm not able to handle this kind of transactions so I will need someone "patient" to do that for me (patient because I'm a newbie on that and will need explanations). Any reference who could I contact to?

To be honest with you, I'm not looking to save my life with this business, but believe me, if I can find a business which let me earn €1000 a month, every month, doing nothing... just investing money, I can live in Argentina without the necessity to go every day to an office.

I hope you don't think I'm crazy, I'm 24 and I'm trying to get a good life