State Savings Rates Increase For First Time in 16 Years

Just be aware that a couple of years' bad inflation could effectively wipe out the 16pc you receive over ten years.

We've had 10pc official inflation this year and many people would be exposed to even higher rates based on how they spend their money.

Rasputin said:

Well, there are deposits out there that would pay more, after DIRT, for shorter periods, which would be 'guaranteed' up to 100k. Some have easy access, others don't. Better in the sense that we have no idea where interest rates will be in 4 or 5 years time, so rolling it in shorter term deposits might get you back a lot more over 10 years. I was actually making a small point in favor of the 10 year bond, and everyone's situation is different.

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I see what youre saying.

These is nothing here, that I can see, that is significantly higher, assuming amount is at or below 100k. But appreciate these may well increase.

In all cases, the after dirt, net amount, is similar, or lower.
it needs to be above 2.20 % gross, to beat 1.50 % nett on 10 year bond, as DIRT is 33% for all of these products, so one third of your interest is gone.
Albeit, some cumulative compound interest differences, but nothing really significant. Maybe i am missing something.

In many cases, the best rates quoted, apply only to a certain amount, or, the amount guaranteed, is lower then 100k invested, less than 20k is guaranteed, in the case of some of them.

The PTSB Fixed Term rates look far better than the States 3 and 5yr products, even after DIRT

Yes, not bad at all, for a short term, of up to 5years.

but i was looking at a longer term of 10years, and these are both well below the 16% nett, given by the state saving 10 year bond, TSB yields about 11% nett over 10 years, if one reinvested the 5 year one, for another 5 years compared to 16% with state savings.

The PTSB 5 year rate is exactly the same as the 5 year state savings surely?
1.5% before DIRT, so 1% et of DIRT?

messyleo said:

The PTSB 5 year rate is exactly the same as the 5 year state savings surely?
1.5% before DIRT, so 1% et of DIRT?

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Its slightly better.

7.73 % Gross Interest on TSB 5year fixed term, less DIRT of 33% = 5.18 % nett interest, versus 5% on 5 year State Saving Certs.

But its a minuscule difference, €18 extra interest, per each 10k, so splitting hairs here !

Also worth noting, for those who are over 65, the DIRT is reclaimable, so making that 5 year TSB product, more attractive, but even allowing for that, it will still be a little shy of 16%, if reinvested in a second 5 year term.

fayf said:

Also worth noting, for those who are over 65, the DIRT is reclaimable,

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Only if your total overall annual income is below the threshold limits [ €18k single/36k married].

I’ve only looked at this superficially but there doesn’t seem to be much scope for flipping between issues

Take for example the recent issue of 5 year certificates which previously paid an AER rate of 0.59%pa

The new issue is paying 0.98%pa. That’s an extra 0.39%pa over the 5 year term compared to the previous issue. But you would then be invested over a total of 6 years to earn 5.1% if you invested a year ago. (Approx 0.8%pa)

Let’s assume you invested 364 days ago in the previous issue. If you cash in now you receive no interest at all for the previous year. Therefore waiting another day to get to the 1 year point makes perfect sense as you will then earn 0.1% which is over 30% annualised.

You might be happy to cash out take the 0.1% roll over for the new 5 year issue for a premium of 0.39% compared to your current issue.

However, if you stick with it for the remaining 4 years of the original term you will continue to earn 0.59%pa so it doesn’t make sense to cash out and switch to the new 4 year account which is now paying 0.50%pa. compared to the previous rate of 0.4963%pa.

Do not have a clue regarding penalty for closing out early on any of the related products. In any circumstances does it pay to clock out early and clock back in on new rates?

Shirazman said:

Only if your total overall annual income is below the threshold limits [ €18k single/36k married].

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Good catch ! And the net interest is grossed up, so 1,000 in net interest received, means, 1,493, is added to your income.