State Savings Guarantee

bluepaddy

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I’m thinking of investing a lump sum in state savings products. Per the website state savings are:
  • 100% protected by the State
I’m curious what other people think. How safe are state savings?

Thanks.
 
Nothing is without risk, but I’d feel this is about as close as it gets. The risk is seizure by the government, and the only way to avoid this tiny risk would be to hold something like gold personally, which faces all sorts of other risks of much greater likelihood.
 
No, the bigger risk is the insolvency of the state. Given our perilous financial situation, this cannot be ruled out.

For example, anyone relying on a state pension, salary or welfare should diversify by investing elsewhere.

The risk is small, but the impact could be devastating.

Brendan
 
Greece defaulted at a rate of over 50% of government bonds in 2012. Retail investors were excluded.

State savings are not utterly riskless. The risk is still very low in absolute terms, and also lower than the alternatives.
 
I’m thinking of investing a lump sum in state savings products. Per the website state savings are:
  • 100% protected by the State
I’m curious what other people think. How safe are state savings?

Thanks.
Let us stick with safe meaning “unlikely to default” (there are of course other risks such as inflation). For an Irish resident State Savings are by this metric the safest instrument on the planet. Of course there is a very small probability that Ireland inc. will default or reschedule its bond obligations (conf Venezuela). But this does not imply it would default on State Savings; that would be a suicidal political call and would not in any foreseeable situation be required financially; State Savings are way less than 10% of the National Debt. Besides you would likely get good warning of that Armageddon and be able to cash out in time.
Technically, German bonds or Swiss bonds are regarded and priced as the safest instruments, but then they pay negative interest! But, say Ireland defaulted on its bonds against the wishes of the EU then it would be reasonable to expect that as a retaliatory measure the German and Swiss governments would seize Irish resident holdings of their bonds. This is really a very very unlikely scenario, but IMHO more likely than the Irish government defaulting on State Savings - which is why I say these are the safest assets on the planet for Irish residents.
 
It’s depressing. I’m considering putting €5k I’d earmarked for state savings into F&C investment trust instead, or maybe an equivalent
 
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