State Savings (NTMA) bonds and certs looking good

[dub_nerd]

... a guaranteed investment that will likely be outstripped by inflation is not much good in my eyes.

When did risk free investments ever pay higher than the rate of inflation? I'm no expert, but as far as I can see the gap between inflation and returns on deposits is smaller than it has been in many a year. I'm quite happy to have most of my money locked away safely and only being eroded by a fraction of a percent per annum. (Not as happy as I was between 2012 and 2016 when you could lock in deposit rates way above the rate of inflation, but that was a once off due to the banks being in a bad way and stuck for funds).

 

[settlement]

When did risk free investments ever pay higher than the rate of inflation? I'm no expert, but as far as I can see the gap between inflation and returns on deposits is smaller than it has been in many a year. I'm quite happy to have most of my money locked away safely and only being eroded by a fraction of a percent per annum. (Not as happy as I was between 2012 and 2016 when you could lock in deposit rates way above the rate of inflation, but that was a once off due to the banks being in a bad way and stuck for funds).

I was getting 4.5% previously in Australia (in 2015) I believe. This outstrips inflation, even after tax. But I appreciate the sentiment.

 

[noproblem]

Settlement.
"But outside of Ireland it's common to have interest rates of 4% and higher without having to put away money without touching it and losing interest."

So, 2 years ago you were getting 4% in another continent.
Care to give us lesser informed mortals some details of the statement above that you made yesterday?

 

[settlement]

Settlement.
"But outside of Ireland it's common to have interest rates of 4% and higher without having to put away money without touching it and losing interest."

So, 2 years ago you were getting 4% in another continent.

Yes, I was. It's a big world out there.

Care to give us lesser informed mortals some details of the statement above that you made yesterday?

I already did. If you have a question just ask it.

 

[dub_nerd]

I was getting 4.5% previously in Australia (in 2015) I believe. This outstrips inflation, even after tax.

I think that's probably an outlier example. Australia temporarily has had reasonable economic growth without generating high inflation because of once-off structural shifts in the economy (see here). At the same time, fears over the booming housing market resulted in deposit requirements being raised for Australia's retail banks, leading to higher deposit rates.

Logically you would not normally expect deposit rates to be higher than the rate of inflation as it would siphon money out of the economy, away from productive uses. The best that savers can hope for is that the two are not so divergent that their money is eroded quickly. From what I can see (and as I said, I'm no expert) the difference between deposit rates and the headline rate of inflation is actually lower in the current low interest rate environment than previously. This is what I think savers should be looking at, rather than being discouraged by nominally low interest rates.

Inflation can go to zero and negative, whereas -- as CiaranT suggested on another thread today (here) -- there tends to be some resistance to deposit rates going to zero.

 

[settlement]

I think that's probably an outlier example. Australia temporarily has had reasonable economic growth without generating high inflation because of once-off structural shifts in the economy (see here). At the same time, fears over the booming housing market resulted in deposit requirements being raised for Australia's retail banks, leading to higher deposit rates.

Logically you would not normally expect deposit rates to be higher than the rate of inflation as it would siphon money out of the economy, away from productive uses. The best that savers can hope for is that the two are not so divergent that their money is eroded quickly. From what I can see (and as I said, I'm no expert) the difference between deposit rates and the headline rate of inflation is actually lower in the current low interest rate environment than previously. This is what I think savers should be looking at, rather than being discouraged by nominally low interest rates.

Inflation can go to zero and negative, whereas -- as CiaranT suggested on another thread today (here) -- there tends to be some resistance to deposit rates going to zero.

Good explanation. Thanks for that!

EDIT: in the context of downtrending rates, I wonder will there be a further decrease in the returns rate offered by NTMA.