State Savings Grow Significantly, While Bank Deposits Decline

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State Savings: ( article )
  • €16.75 BN as at 31 January 2016.
  • €370 million, or 2.3% in January alone.
  • 14% YoY growth in Prize Bond investments.
Compare with AIB ...

AIB: ( [broken link removed] )
  • €63.4 BN deposits as at 31 December 2015.
  • €0.6 BN loss in deposits in 2015.
  • Deposits in savings accounts down from €49 BN to €44 BN during 2015.
  • Deposits in current accounts up from €22 BN to €26 BN during 2015.
And compare with the other banks ...
  • PTSB are also loosing deposits significantly based on their interim results.
  • BoI are loosing Irish retail savings deposits ( down €0.4 BN in 2015) but gaining current account deposits.
  • KBC are growing their deposit base. €5 BN as at 31 December 2015. €0.2 BN growth QoQ.
As a whole, low yields on savings accounts is causing money to move from bank deposit accounts into current accounts, State Savings products and some money into higher yield KBC deposits.

The NTMA State Savings products are paying their retail customers far more than the yield on Irish sovereign debt and far more than the banks. How can the state justify this? I would not be surprised if the banks are not lobbying the NTMA again.
 
Personally speaking I keep a large chunk of change in Prize Bonds as I feel the return from the banks isn't worth talking about and the way that the banks are dealing/treating the general public has left me with a feeling of distrust and disgust.
I thought I read somewhere recently that NTMA was reviewing the 10 year bond down by 1%??
 
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Cant find one, I just remember reading that a reduction was on they way, maybe I misinterpreted what I was reading, could have been somebody just speculating
 
I can definitely see a cut on state savings coming. It doesn't make sense for the state to be paying more interest on state savings accounts than it does on the bond market. Add to that the banks dropping their rates on a regular basis, a cut can't be too far away for the state savings accounts.
 
A cut is likely, with the ECB pumpng money into the market. However, one reason not to have a cut for a few weeks is that there is no government at present. Bond rates could spike upwards quite quickly if there was any sense that forming a government was going to be problem. If a government is formed then I'd say a cut will not be far behind.
 
I remember some time back being castigated for saying that state savings over 10 years were bad value for the saver. In fact being sneered at for saying the overall state savings products were a good place for your money. I can remember those that suggested, shall we say, that they were for the financially uneducated. There's some very clever financial advisors and economists out there, watch where you tread!!!!!.
 
We have been talking/speculating about a cut to SS rates on this forum for over a year!

At present I have:
120k (max holding) in the current issue of the 10 year nat solidarity bond.
50k in the current issue of the 4 year nat solidarity bond.
Nothing in the current issues of savings certs or bonds.
120k in issue 17 of savings certs which will mature in mid-late 2017.
100k in prize bonds.

The number of 50 euro prize from the prize bonds is now only a trickle.

If rates are not cut this weekend I am strongly considering cashing in the prize bonds and investing the 100k in either a 5.5 year savings cert or a 3 year savings bond, probably the former. I can always get back into prize bonds when my issue 17 savings certs mature.

Basically what I am getting at here is agreeing with the theme of this thread - in the current interest rate environment and with some relatively good fixed term rates from state savings still available, it may well be time to invest in one of these products.
 
The Ghoul said:
We have been talking/speculating about a cut to SS rates on this forum for over a year!

At present I have:
120k (max holding) in the current issue of the 10 year nat solidarity bond.
50k in the current issue of the 4 year nat solidarity bond.
Nothing in the current issues of savings certs or bonds.
120k in issue 17 of savings certs which will mature in mid-late 2017.
100k in prize bonds.

The number of 50 euro prize from the prize bonds is now only a trickle.

If rates are not cut this weekend I am strongly considering cashing in the prize bonds and investing the 100k in either a 5.5 year savings cert or a 3 year savings bond, probably the former. I can always get back into prize bonds when my issue 17 savings certs mature.

Basically what I am getting at here is agreeing with the theme of this thread - in the current interest rate environment and with some relatively good fixed term rates from state savings still available, it may well be time to invest in one of these products.
Click to expand...

It's a good rate i keep looking at it but it's very low , 100k today to get back 125k in 2026 , that's a long time without 100k , I suppose if you want a risk free return it's as good as it gets .

I'm aggressive with my money I want it working as hard as possible I hold a large amount in equities and a smaller amount in bonds/cash , even though my shares where declining in value I was tempted to cash in the bonds and buy more shares , ultimately I'll measure my bonds in 10 years against my equities investment , I won't feel like I've gained 25% if my equities have risen by 50% I'll think I lost 25% buy investing poorly in state savings.

We know equities give the best return so if we are young enough 10year state savings probably not wise, it depends on your appetite for risk but it could be argued you risk inflation beating you over 10years.

I would say your over exposed to state savings , you've a lot of cash there well done on savings so much , my advice would be to mix it up ( if you haven't already ) and put 120k into the stock market .
 
Fella. thanks for that, those are fair points I have done a lot of thinking about equities and am aware of the historical long term performance of equities but still can't seem to take the plunge.

I think I'm well diversified - I have money in post office certs AND bonds :D

Seriously though, I have employed something of a laddering strategy using state savings products with different maturity dates (although my ladder has plenty of missing rungs)

I like to have fixed term products slowly accruing interest and maturing at various times so that if I need money or want to invest in something I don't have to, say, cash in a 10 year bond that is on year 9 and about to accrue the majority of its interest.

However if cashing in a 10 year bond at year 9 is the right thing to do then I can do that and get the money in 7 days - so while I know where you are coming from and understand about opportunity cost, I wouldn't really agree with your point above that if you have 100k in a 10 year bond that you are 10 years "without 100k".
 
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