Using An Post (NTMA) bonds and certs for regular savings?

[The Ghoul]

Leaving aside talk of armageddon and sovereign default, from a purely interest POV, is this a reasonable idea. You get paid into your current account every week, fortnight or month. As soon as possible after the money goes in, you withdraw some of it, pop in to the post office and get a bond or cert. You do this at regular intervals or everytime you get paid.

I think you can buy as many cert and bonds as you want up to a limit of 120,000. My understanding is you can have 120k in bonds and 120k in certs.

The minimum investment for bonds is 100 quid or 50 quid for certs, I'm not sure if this is per bond/cert or if its the total. Eg can you buy a cert for 100 euro and then buy one for 1 euro or does the subsequent bonds have to be 100 as well. In any case, 50 euro and 100 euro are not a whole lot.

3 or 5.5 years later your savings start to mature and give net interest of 10% or 21%

The aim of doing all this is to prevent money from sitting in a current account making no interest or from going into a regular saver account using a SO where only the first instalment earns the advertised interest rate.

Comments or criticisms?

 

[Slim]

The aim of doing all this is to prevent money from sitting in a current account making no interest or from going into a regular saver account using a SO where only the first instalment earns the advertised interest rate.

Comments or criticisms?

But...in your scenario only your first month's instalment will achieve the full rate of interest, no? Slim

 

[The Ghoul]

But...in your scenario only your first month's instalment will achieve the full rate of interest, no? Slim

True, but you can (more or less) put as much or as little as you like in with each "instalment". And you can have as many "accounts" as you want - each cert or bond is like its own fixed term deposit account.

The problem I see with the 1 year regular saver accounts is that to maximise return you need to
-put in the max amount for the first instalment
-put in the min amount for each of the next 11 instalments
-open a new one every week, two weeks etc.

Ulster Bank have a 1000 max, 1 euro min regular saver paying 4%
EBS have a 1000 max, 100 euro min regular saver paying 5%

If I'm right the Ulster Bank one is actually the better account and has the higher interest rate assuming you switch your SO to the min amount after the first instalment. But if you do that you'll only have saved 1011 euro in one year.

If I get paid 26 times per year will Ulster Bank allow me to open 26 of these accounts? Even if they do, buying certs or bonds in the post office is surely much more convenient.

 

[Slim]

If I get paid 26 times per year will Ulster Bank allow me to open 26 of these accounts? Even if they do, buying certs or bonds in the post office is surely much more convenient.

I see what you mean but it is hardly worth it for the amounts you were suggesting. Simpler to open a PTSB 1 year account or EBS account. I too have been very disappointed with the return on Reguar Savings Accounts but it was a useful way of saving up a lump sum in the Celtic Tiger days!