€27,000 in Rabodirect account, can I do better with my money?

K

Krew Bot

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I opened and lodged €10,000 into a rabodirect savings account 8 months ago, in that time I have made a few lodgements every few weeks which has brought my current total up to €27,000.

The last time I logged in I noticed I can now transfer my money into a Rabo term account ranging from one month to five years, but to me it looks as if the rates are identical to what I am currently getting in my Rabo savings account which I can access with a days notice. I am most likely incorrect but I see no benefit to transferring my money into a Rabo term account if this is the case. Am I wrong?

I am nearly 23 and currently very single. I don't own a house but I intend to either emigrate, buy my first house or possibly start my own business by the time I turn 26, which gives me three years to gather as much money as I can. The route I follow depends on a few factors such as self belief or falling in love and taking the traditional route of settling down.

I am willing to put my money away for a further 18-24months. I figure I can possibly save €20-30,000 per year for the next two years so I really want to maximise my return.

I'd greatly appreciate any advice.
 
Welcome to AAM, Krew Bot.

Since you clearly meet the definition, why not have a look at some of the 'regular saver' options listed in the best buys forum? If you can feed a couple of grand a month into two or three of those accounts you could be earning over 7% AER.

However, check the current terms carefully before committing, as the rate guarantees attached to some of them are approaching their expiry date (e.g. the EBS product currently guarantees at least ECB + 3% until 1st April 2008, but thereafter doesn't guarantee any better than ECB until 30th Apr 2010. The AIB guarantee of at least ECB + 2.50% is set to expire even sooner, but I would imagine that a new guarantee will be in place by 1st January...).
 
The "advantage" of the term accounts is that the rate is guaranteed not to change over the term, whereas the rate on the account you currently hold could change at any time.
Of course, whether this is an advantage or not depends on what you think ECB rates and market rates will do over the term of your investment.

As mentioned by DrMoriarty you could think of doing some "active management" e.g. if you can get €27900 together:
*put €14900 into First Active E-Saver - rate 5.22% on balances below €15000
*open First Active Regular Saver with €1000 - rate 7.15%
*open Anglo Regular Saver with €1000 - rate 7%
*leave remaining €11000 in existing Rabo Savings Account - rate 4.3%
*manually drip €1000 per month from E-Saver to First Active Regular Saver (according to other posts here you do not need to set up a standing order on First Active Regular Saver account - need to check)
*manually drip €1000 per month from Rabo to Anglo Regular Saver
After tax, you'll gain about €360 extra over the first year for doing this, compared to leaving all the money in the Rabo acccount.
€1320 interest versus €960 approx.

Additional amounts you save over the year could be fed into EBS, Halifax, Bank of Ireland, AIB regular savers - all attracting high interest rates - see DrMoriarty link above

However you'll have to weigh up whether you could be bothered with the hassle of all this
 
Thanks for the replies.

My rabodirect account is only open 8 months so would I be best off leaving the money there for a further 4 months to avail of the 4.3%. Is the interested calculated and added at the end of the 12 months or on a monthly basis?


Btw, fantastic website. Hopefully I won't be such a moron with my money from now on.
 
Interest is calculated on a daily basis, so you can draw out your money anytime and interest will be added up to day you withdraw.
 
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