Key Post National Solidarity Bond FAQ

Brendan Burgess

Founder
Messages
37,442
An Post FAQ

What is the return on the bond?


end of {br}year|income|bonus|annualised {br}gross return
1|1%|0|1%
2|1%|0|1%
3|1%|0|1%
4|1%|0|1%
5|1%|10%|2.89%
6|1%|10%|2.56%
7|1%|22%|3.8%
8|1%|22%|3.44%
9|1%|22%|3.15%
10|1%|40%|4.29%
Note: The brochure is incorrect in its calculations of the annualised returns. This is discussed in this thread. (Thanks to Homer for calculating the correct returns)

Summary
You will get an annualised payment of 1% which is subject to DIRT - currently 25%.

If you cash it after 5 full years, you will get a bonus according to the above table.

If you hold onto it for the full ten years, you will get a bonus of 40%.

The return does not justify tying up your money for 10 years
Most of us simply can't plan our finances that far ahead.
The world is changing so fast, that you may well want to withdraw your money before the ten years.

The risk
The Irish government is AA rated. Anything could happen in the next ten years. If we don't cut public expenditure and raise taxes, there is a small risk that Ireland will not be able to honour its debts.

Invest in this if you want to support the infrastructure projects

What are the alternatives?

 

Homer

Frequent Poster
Messages
385
Annualised gross return is as follows.

1 1.00%
2 1.00%
3 1.00%
4 1.00%
5 10% 2.89%
6 10% 2.56%
7 22% 3.80%
8 22% 3.44%
9 22% 3.15%
10 40% 4.29%

Regards
Homer
 
Last edited:
Messages
4,738
From the Term Deposit best buy thread:

State Savings: National Solidarity Bond
10 Years 3.96% (A normal deposit account would need to be paying 5.28% to match this rate because this product as the interest is not fully subject to DIRT)
Note 1: €500 minimum, €250,000 maximum (€500,000 for joint account)
Note 2: The bonus on this account is not subject to DIRT, the normal interest is subject to DIRT.
Note 2: Savers will receive the interest in the form of 10 annual payments of 1 per cent and a 'bonus' at the end of the 10 year term. If a saver cashes in their term deposit before the end of the fifth year they will not qualify for the 'bonus'.
Note 4: NB: As the interest penalties are significant on this account, you should only consider this product if you are certain that you will not need access to your money at any stage over the next 10 years. 10 year term deposits are not suitable for most savers. You should also be aware that you take on considerable upward interest rate risk by fixing for 10 years.
Deposit protection: Irish government guarantees all State Savings deposits.
 

SPC100

Frequent Poster
Messages
355
In another thread oldtimer beautifully presented the information like this. I havent checked the figures, but I think it would be worth listing in alternatives, and in the FAQ.

I think the terms and conditions are very restrictive compared to saving certificates. Over ten years €1,000 in this bond gives €475 into the hand, but the bulk of that money doesn't qualify until the ten years are up. Over eleven years Saving certificates give €420 into the hand but look how this money is tiered over the term e.g. half way through the term saving certs will pay half the interest - this bond will pay far less. The options with saving certificates are far better and for the few euro over the term would be my choice.
 
T

Tyrol

Guest
Hi,
If one invests in this bond and the IMf take over/ Ireland goes bust, is your money still safe?
 
Messages
4,738
No, if the IMF/ECB provide emergency aid to Ireland, this does not automatically mean that savers in such products would loose their money.
 

george.shaw

Frequent Poster
Messages
252
No, if the IMF/ECB provide emergency aid to Ireland, this does not automatically mean that savers in such products would loose their money.
Not automatically but important to acknowledge that there is the risk that they could lose their money - not to mention the real euro currency risk - Spain has just been downgraded leading to renewed concerns of contagion in sovereign debt and currency markets.
 
A

Adamant

Guest
Quick question: With the National Solidarity Bond can one keep adding regular amounts (like with the SSIA)? Does this then make it more attractive then Saving Certs for someone with no limp sum but looking to save for 10 years.

Also is the bonus calculated on total amount you have saved by the end of year 10?
 
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