National State Savings - 5 year plan , what's my total return after the 5 years

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suzyann

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Hello, I would like to put away 100K in a fixed deposit . I am looking at State Savings , I'd like to confirm what my return is after 5 years after tax etc..
Is the total return 109,000 after tax after 5 years with no tax due?

Thanks
 
Is there a limit on the total amount an individual can invest - ie if I make one investment of 120K at a later stage can I add another or is 120k the total amount that can be invested regardless of the number of issues made? thanks
 
You are correct. The current return on 5 year Savings Certs is 9% total (1.74% AER) and it is tax free.

The maximum investment per issue of Savings Certs is €120,000 per issue. The current issue is Issue 25. A new issue generally corresponds with a rate change, so there is no way of knowing when Issue 26 will appear. So you are limited to €120,000 for the time being, and when issue 26 arrives along it will be possible for you to invest another €120,000 at that time. Note that the limit of €120,00 is product specific, so you can invest €120,00 in each of the different products (Savings Certs, Savings Bonds, National Solidarity Bond, and up to €250,000 in prize bonds)

If your investment is open ended, I.e. you have no fixed date when you will need the money, you could also consider National Solidarity Bonds. These are a 10 year product. But as with any State Savings product, you can withdraw at any time. The return on these is as per the following table. So if you put your money in this rather than the Savings Certs, and took it out in 5 years you would get less, but if you left it for another few years you would do better.

TermAERInterestYour Return
Year 10.00%0.00%€100,000.00
Year 20.50%1.00%€101,000.00
Year 30.66%2.00%€102,000.00
Year 40.74%3.00%€103,000.00
Year 51.17%6.00%€106,000.00
Year 61.29%8.00%€108,000.00
Year 71.37%10.00%€110,000.00
Year 81.54%13.00%€113,000.00
Year 91.66%16.00%€116,000.00
Year 102.01%22.00%€122,000.00

The annual return in the case of 5 year Savings Certs is as follows:

TermAERInterestYour Return
Year 10.00%0.00%€100,000.00
Year 20.75%1.50%€101,500.00
Year 30.83%2.50%€102,500.00
Year 41.11%4.50%€104,500.00
Year 51.74%9.00%€109,000.00

There are other options out there which offer better rates in the short term, and while they may not have the same State Guarantee that State Savings do, many do benefit from guarantees such as the €100,000 Deposit Guarantee Scheme (DGS)
 
Hi Suzy, From statesavings website the return on €100k would be €9000.
I think you're limited to €120k per person. Terms are a bit vague and suggest a limit per issue/cert so you may be able to invest in a different term product
  • Minimum €50 up to maximum €120,000 per individual per issue
 
Freelance said:
You are correct. The current return on 5 year Savings Certs is 9% total (1.74% AER) and it is tax free.

The maximum investment per issue of Savings Certs is €120,000 per issue. The current issue is Issue 25. A new issue generally corresponds with a rate change, so there is no way of knowing when Issue 26 will appear. So you are limited to €120,000 for the time being, and when issue 26 arrives along it will be possible for you to invest another €120,000 at that time. Note that the limit of €120,00 is product specific, so you can invest €120,00 in each of the different products (Savings Certs, Savings Bonds, National Solidarity Bond, and up to €250,000 in prize bonds)

If your investment is open ended, I.e. you have no fixed date when you will need the money, you could also consider National Solidarity Bonds. These are a 10 year product. But as with any State Savings product, you can withdraw at any time. The return on these is as per the following table. So if you put your money in this rather than the Savings Certs, and took it out in 5 years you would get less, but if you left it for another few years you would do better.

TermAERInterestYour Return
Year 10.00%0.00%€100,000.00
Year 20.50%1.00%€101,000.00
Year 30.66%2.00%€102,000.00
Year 40.74%3.00%€103,000.00
Year 51.17%6.00%€106,000.00
Year 61.29%8.00%€108,000.00
Year 71.37%10.00%€110,000.00
Year 81.54%13.00%€113,000.00
Year 91.66%16.00%€116,000.00
Year 102.01%22.00%€122,000.00

The annual return in the case of 5 year Savings Certs is as follows:

TermAERInterestYour Return
Year 10.00%0.00%€100,000.00
Year 20.75%1.50%€101,500.00
Year 30.83%2.50%€102,500.00
Year 41.11%4.50%€104,500.00
Year 51.74%9.00%€109,000.00

There are other options out there which offer better rates in the short term, and while they may not have the same State Guarantee that State Savings do, many do benefit from guarantees such as the €100,000 Deposit Guarantee Scheme (DGS)
Click to expand...
As these are state savings do we need to concern ourselves with the 100,000 DGS, or are they automatically guaranteed and if so is there any overall maximum.
 
Meath Lady said:
As these are state savings do we need to concern ourselves with the 100,000 DGS, or are they automatically guaranteed and if so is there any overall maximum.
Click to expand...
The guarantee in relation to State Savings is separate from the DGS and is in fact broader and stronger. ALL savings with State Savings are guaranteed by the state, up to the limits you are allowed to invest.

See here

Rest assured​

The repayment of all State Savings money is a direct and unconditional obligation of the Government of Ireland. Funds saved in State Savings Fixed Term products and Prize Bonds are placed in the Central Fund of the Exchequer and are used to fund Government expenditure. They form part of the National Debt of Ireland.
Click to expand...

100% protected by the State​

All of your savings, no matter how much you save with us, is protected by the State. At State Savings there is no upper limit of the amount protected, and there is no expiry or end date for this protection.
Click to expand...
 
Hi Freelance , When you say There are other options out there which offer better rates in the short term, and while they may not have the same State Guarantee that State Savings do, many do benefit from guarantees such as the €100,000 Deposit Guarantee Scheme (DGS)

If i was going with a known Irish bank e.g AIB , I could see that the return is 3% for 2 years ( I think this would be subject to capital gains tax) so value of investement of 100K after 2 years would be 3K less capital gains tax so would be marginally better than both State Savings 5 year plan after 2 years and also the 10 year solidaritary bonds but would need to ensure that after the 2 years interest rates did not decline?


Is my understanding correct above ?


Thanks in advance
 
Absolutely not
If you deposit € 100,000 with AIB and get back € 103,000 after 2 years, then the € 3,000 is subject to DIRT at 33% - so you will get € 102,100

There is no capital gains tax involved
 
I imagine it is the AIB 2 year fixed term deposit that is being referred to, in which case it is 3% per year, so after investing €100k for the two years you would in fact get about €6k in interest, less tax.
 
jpd said:
Absolutely not
If you deposit € 100,000 with AIB and get back € 103,000 after 2 years, then the € 3,000 is subject to DIRT at 33% - so you will get € 102,100

There is no capital gains tax involved
Click to expand...
Thank you
 
Hi , I have a 10 year Solidarity Bond with €70k on deposit. Forecasted payout upon maturity is 16% ( circa €81k) . Interestingly I got a statement in the post two weeks ago and it shows a balance of only €70717 after four and a half years ( Aug 2019). This seems an exceptional poor return and I am considering other investment options. Any suggestions welcome.
 
The return on National Solidarity 10 year bonds is set at the beginning of the investment.

It looks like you invested in the 10 Year National Solidarity (Issue 6) which has returns as follows for € 70,000.
The encashment value after each year is as follows, showing the annual interest rate
These product are designed to give the highest rate advertised only if you keep them for the full period. Early encashment is penalised

The value at the end of each year was known to you before you purchased the bond

Year 1 (2020)70,0350.05%
Year 2 (2021)70,1750.12%
Year 3 (2022)70,3500.17%
Year 4 (2023)70,7000.25%
Year 5 (2024)72,1000.59%
Year 6 (2025)73,5000.82%
Year 7 (2026)74,9000.97%
Year 8 (2027)77,0001.20%
Year 9 (2028)79,1001.37%
Year 10 (2029)81,2001.50%
 
Many Thanks. Yes the return is guaranteed but I missed the point of the early encashment penalty.
 
These products are a concrete example of investment rules

Low risk = Low return
High risk = High return

Locking in your money for long periods at no risk is guaranteed a low return scenario and should only be undertaken by extremely cautious investors. It is certain that the money returned at the redemption date in 2029 will be worth less than the money invested in 2019 when you take inflation into account

Already, Consumer Price inflation from August 2019 to Feb 2024 was 17.5%, so that you would need € 82,000 to purchase the equivalent of € 70,000 five years ago (https://visual.cso.ie/?body=entity/cpicalculator)

However, you will definitely get your 81,200 - but by then it will probably have lost another 15-20% because of inflation
 
All studies show that in the long term, ALL high risk assets give a higher return than low risk assets

Of course, as we know in the long term we are all dead - but over a 10 or 20 year period this is true 99% of the time

The only assets that match or beat inflation over a 20 year period are shares, property and possibly other exotic assets such as rare paintings, etc etc. Cash, bonds do not
 
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