State Saving Certificates

Discussion in 'Deposits' started by Logo, Jan 30, 2017.

  1. Logo

    Logo Frequent Poster

    Posts:
    122
    Currently an investment of 25K with 5 year Savings Certificates gives an interest of €1,250. I'm just wondering if the interest rate rises during that five year period - will re-investment in the newer product to get the improved rate be required, or will the new rate be automatically applied to an existing account.

    Thanks:)
     
  2. Sarenco

    Sarenco Frequent Poster

    Posts:
    4,183
    No - the rate is fixed on purchase, it isn't a variable rate.
     
  3. Logo

    Logo Frequent Poster

    Posts:
    122
    Appreciate the prompt reply.
     
  4. Odea

    Odea Frequent Poster

    Posts:
    311
    The 5 year State Savings. Is this .98% per annum or .98% after 5 years? Thanks
     
  5. dub_nerd

    dub_nerd Frequent Poster

    Posts:
    1,465
    It is 0.98% AER (annual equivalent rate = compounded rate per annum). The AER is shown because it is mandatory to do so, but it is more correct to think of it as 5% total return after five years, especially as most of the return accrues in the last six months. You can take your money out any time but you will not get much of the return as it is on a sliding scale. Do not plan on getting your 0.98% per annum if you cash in before the five years is up.
     
  6. Odea

    Odea Frequent Poster

    Posts:
    311
    Thanks dub nerd. I purchased a chunk of Prize Bonds today and I will stick some more in the 5 year State Savings.

    My existing €100k of Prize Bonds has produced 44 x €50 wins in 18 months. I think there may be a few of the older €75 wins included. The bigger prizes have eluded me so far.
     
  7. dub_nerd

    dub_nerd Frequent Poster

    Posts:
    1,465
    That's a 2.2% return on the Prize Bonds in 18 months -- around double the expected average. Don't worry about the biggies. The small ones are your bread and butter. :)
     
  8. xoxoxo

    xoxoxo Frequent Poster

    Posts:
    65
    Wow - that's great return on your prize bonds. I would have a similar amount invested and have won €50 X 7 and 1x€100 over the 18 months, so a return of 0.45% - not great. I did not have the full 100k invested for the full 18 months though so not a true reflection. Maybe I am just waiting for the €1m win;);)
     
  9. MrEarl

    MrEarl Frequent Poster

    Posts:
    1,185
    A 2.2% return on the prize bonds is probably a lot better than average (no matter what the people trying to sell them might tell us) - particularly given your capital is "risk free".

    Thats a vital point and actually something that justifies a revision in the way the AER's are presented tbh.... if a return is heavily weighted towards the back end of an investment period, it needs to be specifically called out so there's essentially a health warning right alongside the AER calculation.
     
  10. knockshe

    knockshe Registered User

    Posts:
    17
    Odea, your prize bonds are doing well; I have €41k in prize bonds and have won 4x€50 in the past 12 months. Works out at 0.49%. I was certainly expecting a higher eturn so may pull out the funds soon if it doesn't improve.
     
  11. Odea

    Odea Frequent Poster

    Posts:
    311
    I have some shares that are producing between 3% & 5% dividend yield. I was tormented to purchase some more of these. It is difficult not to be tempted. I decided to add to my Prize Bonds stash based on my previous wins. I can tell you if they don't perform I will sell them just as quickly. It is interesting, but it is the same batch of numbers that keep winning. Others...nothing.
     
  12. Logo

    Logo Frequent Poster

    Posts:
    122
    I'd agree that share dividends are fairly decent at the moment but stocks appear to be higher now than ever. Not sure if it's The Donald affect or Brexit but it could be a bumpy ride... Meanwhile I'm playing it safer and purchased some prize bonds recently (even though I haven't had too much luck in the past). I've followed prize bond threads on AAM and Boards.ie over a number of years but yet to read an account of anyone winning more than €100:(
     
  13. MrEarl

    MrEarl Frequent Poster

    Posts:
    1,185
    Ultimately, prize bond returns are down to luck and nothing more...

    I unfortunitely don't tend to be very lucky so I don't see myself putting much into prize bonds anytime soon.
     
  14. dub_nerd

    dub_nerd Frequent Poster

    Posts:
    1,465
    Last edited: Feb 22, 2017
    Have heard that said many times, but never seen any proof. Usually turns out the batches are vastly different sizes, or tracked over an unrepresentative period, or the owner is suffering from a confirmation bias.

    There's a prize bonds thread on here where a poster won €1,000 :)

    While that is true, any game of chance will produce a statistical outcome determined by the arithmetic of the game. If you play long or often enough it is a practical certainty that the average outcome will be achieved. This is the so-called "law of large numbers". With prize bonds it is a matter of investing a sufficient amount for the average to be achieved within a short time horizon. With a single prize bond there is essentially no chance of this occurring, with €100k+ there is a very good chance of achieving the typical return (currently 0.8% tax free) over the course of a year. Many people seem completely unable to grasp this -- they get indignant at the thought that their couple of mouldy old bonds sitting in a shoebox for years have less chance of winning than someone else's freshly minted €100k worth, and believe nutty conspiracy theories about "only newer bonds winning".
     
    Last edited: Feb 22, 2017
  15. MrEarl

    MrEarl Frequent Poster

    Posts:
    1,185
    I do not beleive in such things as new bonds win while old bonds do not and such nonsense, but appreciate that some people actually do seem to believe such things.

    The majority of Irish individuals have sufficient cash to buy prize bonds, so as to achive the average in a relatively short horizon as you propose (even €100k over 1 year would not be anywhere near enough to get the average return, imho). Remember, the financial amount invested in prize bonds and the fact that this number continues to grow, particularly in these times of low deposit returns etc. As such, I refer to my original comment - the returns are down to luck and nothing more (well, for the majority of "ordinary" people over reasonable time horizons).

    Were it not for the fact that your capital investment is protected and can be returned to you at a later date, it would be right up there with playing poker for the majority of people, as I see it :)
     
  16. dub_nerd

    dub_nerd Frequent Poster

    Posts:
    1,465
    I suspect you mean the majority "do not have" sufficient cash. That's true. But €100k is certainly enough according to my modelling, which you can see somewhere in the first dozen pages of this AAM thread (sorry, didn't have time to be more specific):

    http://www.askaboutmoney.com/thread...g-attractive-alternatives-to-deposits.182819/


    Actually, the fixed amount invested is good news for the return. A fixed amount is paid out in higher value prizes and a variable number of €50 prizes is then paid to make the total up to the mandated percentage payout. Basically, the bigger the total fund, the higher the relative proportion of prize money paid in €50 prizes. Since those are the only ones that are important to achieving the average payout, your returns get smoother as the fund gets bigger.

    For small investments, that's true.
     
  17. MrEarl

    MrEarl Frequent Poster

    Posts:
    1,185
    Yes - sorry :)
     
  18. Eddie Peters

    Eddie Peters Frequent Poster

    Posts:
    60
    Is it possible to change from prize bonds to state savings without needing to produce duplicate documents i.e. withdrawal requests, filling new application forms and producing ident documents etc. when the applicant has already proved all requirements with NTMA.
     
  19. dub_nerd

    dub_nerd Frequent Poster

    Posts:
    1,465
    As far as I know, one hand doesn't know what the other is doing. FEXCO do the Prize Bonds, there's some sort of Mickey Mouse ID card for the National Solidarity Bonds, and the others are separate. So unless something has changed in the last couple of year, it's still a separate job each time, which is a pain. Someone correct me if I'm wrong.
     
  20. Laramie

    Laramie Frequent Poster

    Posts:
    300
    There is even confusion in different Post Offices. I wanted to purchase some 5 year Bonds in a Post Office but I was refused because I had no I.D. re money laundering. When I pointed out that I already held other accounts the unhelpful lady in the Post Office insisted that I did need to produce I.D. every time. I pointed out to her that I had my account number on the form. No use.
    I ended up going to a nearby Post Office where they were accepted. I contacted An Post and I was told that the person in the first Post Office should have accepted them. Now I just post them direct.