state savings the better option given dirt?

S

serotoninsid

Registered User
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1,754
Is the 3 year state savings bond the best buy now (assuming it suits to tie up cash for 3 years) - as it works out at 4.30% (by comparison).

Will interest rates rise in this time - to make this deal ..not soo attractive???
 
The DIRT increase obviously makes the State Savings products more attractive.

I have updated the DIRT rate State Savings comparisons in the best buy thread.

Interest rates probably will raise in the 3/5.5 year terms of these products.
 
CiaranT said:
I have updated the DIRT rate State Savings comparisons in the best buy thread.
Click to expand...

That's great. Thanks.

I understood the new DIRT will be 27% (30% in some cases). Why did you insert DIRT @ 29%? Are you taking an average?
 
27% is the rate for non long term deposits.

The rate for long term deposits is 30% (not 29%, I will fixed the rate in the thread).

From RTE:

The rate of DIRT on ordinary deposit accounts will rise by 2% to 27% and on longer-term deposit accounts by 2% to 30%.
Click to expand...
 
CiaranT said:
Interest rates probably will raise in the 3/5.5 year terms of these products.
Click to expand...
I know it's a how long is a piece of string question, but do you think it would work out better taking the best 1 year rate ...year after year and pay the dirt or go with the 3 year deal?
 
serotoninsid said:
I know it's a how long is a piece of string question, but do you think it would work out better taking the best 1 year rate ...year after year and pay the dirt or go with the 3 year deal?
Click to expand...

Personally, I would not lock my money into a NTMA savings product for 3 or 5.5 years, right now.

Outside of safety, from a return perspective, if you can lock for 3 years, it is a very good deal.
 
CiaranT said:
Outside of safety, from a return perspective, if you can lock for 3 years, it is a very good deal.
Click to expand...
Hi Ciaran. Thanks for your post once again. Not sure if I have understood you 100% though. Do you mean, that it shouldn't be done because of concerns about the banking/state/euro scenario thats playing out right now?
 
serotoninsid said:
Hi Ciaran. Thanks for your post once again. Not sure if I have understood you 100% though. Do you mean, that it shouldn't be done because of concerns about the banking/state/euro scenario thats playing out right now?
Click to expand...

'An Post deposits' are used by NTMA to fund the national debt.

Some people believe that the national debt has reached an unsustainable level, and the Irish state will default in the medium term.

Hence, even if you think the risk of default is low, there is risk with this product.

I personally would not be prepared to put my savings in a NTMA product right now.

However, if you think there is no chance Ireland will default, then this product offers a very good rate of return and is worth placing your deposits into.
 
Thanks once again. Apologies once more though....as my little brain tries to catch up!!

So...is there a distinction between the state defaulting in terms of what effect it has on funds in these 'An Post Deposits' and in an Irish bank (which are effectively state-owned at this stage)?
 
serotoninsid said:
So...is there a distinction between the state defaulting in terms of what effect it has on funds in these 'An Post Deposits' and in an Irish bank (which are effectively state-owned at this stage)?
Click to expand...

Irish banks are funded in a different may to the national debt. They are very different and there is the potential for segregation.
 
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