Is it worth saving for a rainy day in the current climate?
Under-50s are unhappy with how much they can put aside, while over-50s are unhappy with their returns
Apart from the personal satisfaction of saving €720 in a year, do it with PTSB and you’ll earn €11.70 in interest, while AIB will give you €11.51 and Ulster Bank €9.75.
“But when you kick in Dirt tax on the back of that at 33 per cent, you’re not left with a lot,” says Conway of the gains to be made from banks in this category.
Still, it’s better than nothing.
If you’re lucky enough to have a lump-sum deposit knocking around, where’s the best place to watch it grow? Whether it’s stuffed in your mattress or languishing in a low-interest account, without doubt it’s worth moving.
Move €50,000 to KBC’s Smart Access Demand Account and you’ll get €1,300 in interest on its 2.6 per cent rate. A PTSB Online Instant Access Account will give you €1,250 in interest with its 2.5 per cent rate – enough for a nice holiday. Both accounts give you instant access to your money. The maximum lodgment at KBC is €100,000, while there is no maximum at PTSB.
“We’ve seen quite a few instances recently of people putting their property deposit in our Smart Access Demand Account,” says KBC head of retail products Eddie Dillon. “They might need their money at a moment’s notice and with this account they can still be earning a nice, attractive interest rate.”
The rate, however, is on notice to reduce to 2.3 per cent on August 6th.
Tax on savings
With one-third of all the gains you make on your savings being taken by the Revenue Commissioners, is there any way to beat the system?
One way is to opt for tax-free savings with State Savings products. State Savings is the brand name used by the National Treasury Management Agency to describe the range of products offered by the Government to personal savers. While An Post is a sales agent for these products, your money is placed directly with, and is protected by, the Government.
Although rates fell in June, these products still offer good value, given the tax relief available. For example, you can earn 11 per cent tax-free after five years with the Savings Certificate product. So if you invested €5,000, you would have €5,550, or a return of almost €550, at the end of the term.
Put your €5,000 away for a decade in a 10-year National Solidarity Bond and you’ll get 35 per cent gross over 10 years, so you’ll come away with €1,750 more. If you’ve got the extra cash and the nerve, these rates are hard to beat.
Your money isn’t locked away: you can have it all back (and any interest due) when you want, though repayment on these two products takes a maximum of seven days. There’s no penalty, but remember the interest is linked to the length of time the funds were on deposit.
Whether you’re in the cash-strapped 35 to 50 age bracket, hit by negative equity, wage cuts and the expense of raising a family, or you’re one of the over-50s who has managed to dodge all of that, it can pay to save. Just remember to shop around.
Examples drawn from bonkers.ie and itsyourmoney.ie