Large short term cash deposit... what to do?

[Philbert]

Hi folks,

Long time lurker, first time poster.

I need to keep a 7-figure sum in cash (AIB current a/c) for about a year or thereabouts. Following which time it will be used to purchase various assets.

I have read numerous posts over the years where members have vigorously recommended to split cash across multiple institutions to benefit from the Deposit Guarantee Scheme.

I really don’t want to have to do this to be honest and, aside from the hassle, there wouldn’t be enough institutions to cover it all.

So my questions is this.. Is there really a material risk here (particularly given the timeframe)? Would it essentially require AIB to go belly up for this money to be at risk? I take it that is highly unlikely.

Would really appreciate your thoughts and what you would do in this scenario.

Many thanks.

P.

 

[Up Rovers]

Hello,

I'm not knowledgeable about finance but even I would say that the 2007/2008 crash and Covid have taught us all that anything can happen tomorrow, so putting all your eggs in one basket, is not a good idea.

Certainly a current account which does not have time delay withdrawals is not the place for a large sum of money. There are so many scams, hacks, thefts or call it what you like, a current account is not the right place.

Presumably you will not run into Revenue problems also with a large sum of money appearing out of the blue.

Are you in a position to spread the money in jointly held accounts which would, at least, bring the Guarantee figure up to €200,000 per institution.

 

[Ravima]

You need to keep the money with AIB. For a 12 month period. Why keep it in current account? Although instrest rates are close to zero, you might as well get something on it and tie it up for the year, or even 6 months.

Anyway, it would take AIB to go bust for you to lose all bar the ECB guaranteed amount. If AIB were to go belly up, then the civil strife in Ireland would put your problems into the shade!

 

[Philbert]

...putting all your eggs in one basket, is not a good idea.

Long term, agreed. But given the timeframe I'm thinking I'll get away with it.

Are you in a position to spread the money in jointly held accounts which would, at least, bring the Guarantee figure up to €200,000 per institution.

Didn't know you could double the DGS on joint accounts, good to know thanks. Would still require too many institutions.

You need to keep the money with AIB.

Nope, can put it anywhere. I have banked with AIB forever, and this is the only reason.

Anyway, it would take AIB to go bust for you to lose all bar the ECB guaranteed amount. If AIB were to go belly up, then the civil strife in Ireland would put your problems into the shade!

This is what I thought and what I was hoping someone would say
I guess I was looking for some reassurance, thanks.

 

[Saavy99]

Do not keep that amount in a current account....just don't

 

[llgon]

You could put 250k into prize bonds per individual and contribute to the prize bonds thread here with your successes.

 

[Philbert]

Certainly a current account which does not have time delay withdrawals is not the place for a large sum of money. There are so many scams, hacks, thefts or call it what you like, a current account is not the right place.

Do not keep that amount in a current account....just don't

Great suggestions, didn't even consider the security aspects. Will move it to a notice deposit account where it's not so easy to withdraw from and might earn a few euro interest in the meantime.

You could put 250k into prize bonds per individual and contribute to the prize bonds thread here with your successes.

I could..

 

[losttheplot]

Would raisin.ie be any use. There are some 6 month term accounts.

 

[Freelance]

But given the timeframe I'm thinking I'll get away with it.

Your post here suggests that your are thinking the opposite !

It sounds like joint accounts (with the doubling of the investment/guarantee thresholds) is an option for you. In that case I would divide it as follows:

Prize Bonds - €500,000 (expect to win approx €1,750, maybe a little bit more due to inflows increasing the €50 prize fund)
Ulster Bank 1 year - €200,000 (expect to earn €400, at .20%, but hurry)
AIB 1 Year (if you are wedded to them) - €200,000 (expect to earn €100, at .05%, but hurry before it goes to zero, negative)
ANO bank - €100,000 at whatever 12 month rate you can get and earn your bus fare to collect it.

The above gives you a bit of pocket money, and more importantly state backed capital security right down the line.

One question - Is your 12 month term more or less fixed, or is there a reasonable possibility that some or all of the cash might not be required for a considerably longer period ?

 

[NoRegretsCoyote]

I have read numerous posts over the years where members have vigorously recommended to split cash across multiple institutions to benefit from the Deposit Guarantee Scheme.

Seven figures is a very big range, but it is worth your while spreading the amount across every retail bank operating in Ireland. It might be worth your while opening an account in somewhere like the Netherlands to take advantage of deposit protection there too. I am not sure how easy it is for non-residents. Prize bonds are generally speaking a waste of time but they are lower risk than a deposit of this size all in the one current account.