State Savings

M

Michael B

Registered User
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Hi all I've approx €45k in savings and have been logging onto the site for the past few months in the hope of finding some ''peace of mind'' where my savings are concerned. (My paranoia is due to losing app €20k in BOIs Evergreen a few years back). I currently have this in a 30 day notice BOI account which obiously isn't earning for me but I have been nervous of locking away since I was burned. I feel I can afford to put €25/30k in a three year term and from what I'm reading State Savings seem to be the best?/safest option?
Thanks for reading and advise greatly appreciated and to be honest needed.

MB
 
State Savings will offer you the highest return for a 3 year period.

Your deposit is state guaranteed as part of the Irish sovereign debt guarantee.
 
Bonds 3 year term Certs 5 year 6 month term, Huge advantage of these is returns are tax free. As such a good way to recoup losses on your evergreen fund
 
It is fairly likely that anyone invested in the Evergreen fund lost around 40% going through 2008. A 40% loss requires 67% gain to recover the initial investment.

3 year state savings bonds are currently paying 3.23%pa

So anyone who switched out of an investment product and into cash at these rates will need to wait 17 years to recover their initial investment.

Is this really a good way to recoup losses?
 
No Marc, not suggesting that at all, OP has already crystallised his loss simply making the point that with state savings there is no tax liability. Obviously wiser thing to have done was to sit tight and allow market to come back however in this case the horse has already bolted. OP also appears to be risk adverse and afraid of further losses, in my opinion wherever he places his monies he must be comfortable with that decision
 
Thanks for replys all. Unfortunately the advise given to me by ''advisor'' in BOI was to cash out as he didn't see the freefall stopping. He was nice enough to not charge me for early exit...mmmm...!!
Am I right in thinking if id had the b*lls to stay in i would have recouped?
 
Hindsight is a wonderful thing however depending on when you invested you may well have gained some of your losses back. Fund switches into more equity based plans would have generated higher growth levels as it has turned out and this would have been another tax efficient option for you at the time. Nobody has a crystal ball however when investing in these type of arrangements as Marc said buy and hold is usually the best strategy
 
Let's say that you were thinking about the decision to sell on the very worst day of 2009 which for the NeverGreen Fund was the 9th March as far as I can see.

My advice back then would be the same today and the same in the future and would have been based around the old joke about how to get to Limerick i.e. "I wouldn't start from here" but look "here" is where you are.

Things look scary and people want to sell and are selling. That is the other side of the investing coin of risk and return.
You took a risk (knowingly or unknowingly) and you have paid the price so you should wait around for the return. Remember the line from Warren Buffett " you want to be greedy when others are fearful and fearful when others are greedy"

Just at the point when you want to sell is actually when you should be buying.

What actually happened between the 9th March 2009 and yesterday?
The fund increased by 51.17% and until the fund recovers to the amount originally invested, all of that increase is tax free.

For comparison the FTSE All Country World Index over the same period increased by 108.56%

So, yes you should never have purchased a managed fund from an Irish Insurance Company, because you could have had a cheaper, more diversified investment elsewhere, but since you did purchase an investment from an Irish Insurance Company and because the legislation is written in such a way to prevent you from setting off losses against gains on a different fund from a different company (which should probably be challenged as anti-competitive and protectionist but there you go) you will have to grin and bear it until you can get your capital out to reinvest in line with your willingness, capacity and need to take risk.


How do we deal with our natural emotional desire to sell when everything looks bad?
You need to work with an adviser who can protect you from yourself rather than an order clerk who makes a transaction (buy or sell).

"The investors chief problem and even their worst enemy is likely to be themselves" Ben Graham author of the investment classic security analysis and mentor to none other than Warren Buffett.
 
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