State savings 3 year bond - should i buy?

[cyrus]

Looking to move some of my savings into a 3 year state savings bond to earn a little more interest, say 10-12k. Is there any reason to avoid these bonds, is there a risk that i could loose my money?

You can see the details here: statesavings.ie/Downloads/Brochure2.pdf
If they arent advisable whats the safest place to put money for 3 years and earn a similar return?

cheers

 

[Brendan Burgess]

Hi Cyrus

Check out my post on How to protect deposits

The outlook is too uncertain and you should avoid any fixed term products.

Brendan

 

[Black Rock]

However, the term of Saving Bonds is not fixed for 3 years - your money can withdrawn at any time(subject to a 7 day notice period). You may request, without any penalty, full or partial repayment of your original amount (principal).

 

[Brendan Burgess]

But does early withdrawal not reduce the interest rate?

 

[Black Rock]

YES - understandably, if cashed in early,
the rates are adjusted to reflect the shorter time period
for which the money has been on deposit
3 year Savings Bonds rates are as follows -

AER (Annual Equivalent Rate)
End .......Grossed.......Net After
Year.......Up Rate......Tax Rate
1.......... 3.01%........2.20%
2.......... 3.52%........2.57%
3.......... 4.42%........3.23%


The total overall return in percentage terms is
End .......Grossed.......Net After
Year.......Up Rate......Tax Rate
1...........3.01%........2.20%
2...........7.12%........5.20%
3.........13.70%.......10.00%