Trading212 Increase Euro Interest to 4.20%
- Thread starter Lightning
- Start date
Trading212 seem to have changed the pending offering again.
Trading212 are now going to pay 4.00% from 11 January 2024 matching Trade Republic.
The underlying product will now not just be money market funds. "The engine behind the higher interest rates is a mixture of products and vehicles such as qualifying money market funds, current accounts and time deposits".
Hmmmmm. Is this now 'bank interest' or 'money market interest'?
Trading212 are now going to pay 4.00% from 11 January 2024 matching Trade Republic.
The underlying product will now not just be money market funds. "The engine behind the higher interest rates is a mixture of products and vehicles such as qualifying money market funds, current accounts and time deposits".
Hmmmmm. Is this now 'bank interest' or 'money market interest'?
irishfinanceguy
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With the markets improving isnt the big draw with deposit interests the security, reckon id prefer stocks at this point than this
time to plan
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But what you're trying to do is time the market after it's already started rising. This doesn't have the best reputation as a strategy. Personally I'm happy with the security guarantees of Trade Republic but we've probably discussed that to death in another thread!
irishfinanceguy
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Trade republic ofc but not this option
Their website mentions this.
"Trading 212 is authorised and regulated by the CySEC (Cyprus Securities and Exchange Commission). Your funds are kept in a segregated account, protected by the ICF up to €20,000 and additionally insured up to €1M by Lloyd’s of London"
It seems identical protection to what Lightyear has.
irishfinanceguy
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Thank you for replying to me this looks excellent in that case, albeit its higher tax
irishfinanceguy
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Hello Mr Lighting,
Should we
Their website mentions this.
"Trading 212 is authorised and regulated by the CySEC (Cyprus Securities and Exchange Commission). Your funds are kept in a segregated account, protected by the ICF up to €20,000 and additionally insured up to €1M by Lloyd’s of London"
As per a poster below: Their website mentions this.
"Trading 212 is authorised and regulated by the CySEC (Cyprus Securities and Exchange Commission). Your funds are kept in a segregated account, protected by the ICF up to €20,000 and additionally insured up to €1M by Lloyd’s of London"
Should this be updated regarding “capital at risk
Trading212 offers capital protection (up to the protection level) on un-invested cash. i.e. cash lying idle in your account.
The issue with this product is it seems, based on the email that they sent, that the money will be invested in a qualified money market fund. i.e. your money is placed in an investment. Therefore, it is not clear that capital protection up to the protection level is offered because the money is placed in an investment.
Thoughts?
Wow! Pity about the likely tax implications that stop this being recommended over Trade Republic.
@Lightning would it be worth considering this Trading212 option if one has already maxed out their Trade Republic savings at €50k but still have another €15-20k savings that are going to be left spare at the end of the month once the Advanzia introductory 3.4% interest rate comes to an end? Or is it better to just put that excess into my existing LightYear account at 3.25% interest?
Malone has a good video here
www.youtube.com
New BEST Savings Account Ireland 2024?
► Try out Trading 212*: http://www.trading212.com/invite/11QS32TKvw► Try out Trade Republic*: http://trade.re/DanIn this video, we're talking about the newes...
www.youtube.com
Agree there are no gains, just dividends.
Disagree that they are subject to marginal rate of tax:
- dividends from stocks: marginal rate
- dividends from funds: exit tax / 41%
The same way dividends from distributing ETFs are taxed.
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Thanks for the clarification/correction on this.
Given that most people seem to be classifying this as an investment product, and given that dividends on funds are taxed at 41%, then the T212 option offers a better rate of return that Lightyear (but less than Trade Republic) but offers no capital protection.
I will add T212 to the best buys (it is too high a rate to ignore) will clear indications that there is no capital protection and different tax rate applies.
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I am questioning again if this is really a 41% taxed product and changing my mind.
A few reasons. I have done a lot of reading into this.
Firstly, T212 have said "We are currently making use of term deposits and regular deposits only. When we make use of QMMFs, we will share this on the website and in the client statements.". i.e. there is no QMMF element to this product at the moment. When T212 marketed this product originally it was marketed as exclusively a QMMF product, it now seems that this is just a portion (small?) of the pie and nothing right now. The money is all in deposits with other banks.
On the T212 forum and on Reddit, many people, are saying that this is not taxed as an investment but rather taxed as deposit interest. The reason is that, unlike Plum (and Wise UK) - you are not the personal owner of a stake in a QMMF. i.e. as a poster on T212 puts it "It is the taxed as deposit interest. T212 are paying you interest. How they create the money to pay you that interest (such as put it in a money market fund) is their concern. You are not actually the owner of a personal stake in any specific money market fund, as you would be if you invested through Wise in shares of a Blackrock fund". i.e. even when T212 start the QMMF investment, you are not a personal owner of this stake and hence it is not treated as an investment.
According to T212, unlike Plum and Wise UK, deposit protection does apply to the position that is reinvested in bank deposits. i.e. 20k protection is offered to the portion that is re-invested in deposits and asset protection is offered to the QMMF portion but not capital protection. i.e. the deposit is part/largely/all protected up to 20k.
Finally, some banks, and some other brokers, such as Lightyear, do put a portion of your deposit into QMMF but yet everyone says that it is taxed as deposit interest regardless of what the bank/broker does with your money because it is not marketed as a QMMF product and you do not personally hold a QMMF position.
My hunch:
- Plum = QMMF investment = Exit Tax.
- T212 = Bank interest = DIRT.
Thoughts?
A few reasons. I have done a lot of reading into this.
Firstly, T212 have said "We are currently making use of term deposits and regular deposits only. When we make use of QMMFs, we will share this on the website and in the client statements.". i.e. there is no QMMF element to this product at the moment. When T212 marketed this product originally it was marketed as exclusively a QMMF product, it now seems that this is just a portion (small?) of the pie and nothing right now. The money is all in deposits with other banks.
On the T212 forum and on Reddit, many people, are saying that this is not taxed as an investment but rather taxed as deposit interest. The reason is that, unlike Plum (and Wise UK) - you are not the personal owner of a stake in a QMMF. i.e. as a poster on T212 puts it "It is the taxed as deposit interest. T212 are paying you interest. How they create the money to pay you that interest (such as put it in a money market fund) is their concern. You are not actually the owner of a personal stake in any specific money market fund, as you would be if you invested through Wise in shares of a Blackrock fund". i.e. even when T212 start the QMMF investment, you are not a personal owner of this stake and hence it is not treated as an investment.
According to T212, unlike Plum and Wise UK, deposit protection does apply to the position that is reinvested in bank deposits. i.e. 20k protection is offered to the portion that is re-invested in deposits and asset protection is offered to the QMMF portion but not capital protection. i.e. the deposit is part/largely/all protected up to 20k.
Finally, some banks, and some other brokers, such as Lightyear, do put a portion of your deposit into QMMF but yet everyone says that it is taxed as deposit interest regardless of what the bank/broker does with your money because it is not marketed as a QMMF product and you do not personally hold a QMMF position.
My hunch:
- Plum = QMMF investment = Exit Tax.
- T212 = Bank interest = DIRT.
Thoughts?
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ButteredUp
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I agree with your analysis Lightning.
There are 2 key things:
(1) You are not the personal owner of a stake in a QMMF / investment.
(2) Therefore, what the bank/broker does with your deposit is their business. You have purchased a savings product and should be taxed accordingly.
It's 33% tax. This is no different to bank savings products nor Lightyear nor Trade Republic. They are all 33%.
Agreed that Plum is 41% because you own a stake in the QMMF.
There are 2 key things:
(1) You are not the personal owner of a stake in a QMMF / investment.
(2) Therefore, what the bank/broker does with your deposit is their business. You have purchased a savings product and should be taxed accordingly.
It's 33% tax. This is no different to bank savings products nor Lightyear nor Trade Republic. They are all 33%.
Agreed that Plum is 41% because you own a stake in the QMMF.
In reality deposit interest is 37.1%- since they'll be tacking on 4.1% PRSI on the Form 11. (Assuming this PRSI is also gone up by 0.1%?)
Form 12 / my account I assume is also paid with PRSI - but so far I've not heard of any Form 12 filler fillling in numbers to find out.
Form 12 / my account I assume is also paid with PRSI - but so far I've not heard of any Form 12 filler fillling in numbers to find out.
Why would it be 37.1% unless you have over 5k in unearned income?
Social insurance
Social insurance contributions entitle you to a range of benefits administered by the Department of Social Protection.
If you've to do a Form 11, maybe due to company share schemes, then even if the interest is less than 5000 and you've no other "unearned" income you will be charged pay 37.1% for 2024 interest. (I was able to confirm this myself by plugging in some test values - though it was 4% at the time - presumably is still 4% for interest earned in 2023)
In the absence of clear information on what is charged via Form 12 I'm assuming the only people who won't don't need to pay PRSI are people under 16 and over 70.