Rabodirect, the online savings bank and part of the Dutch Rabo Bank group, came here in 2005 and by January 2018, they had some 90,000 customers, with a top credit rating of AA.
Those same customers were told last February they had to move their savings because the bank had decided that they will close down their operations in Ireland on 16th May 2018 after 13 years.
However, those customers between them had €3 billion in savings, a not insignificant sum of money. John Lowe the Money Doctor received many enquiries as to where to invest that money now and what investors should be doing.
So here are the Money Doctor’s 5 points to consider for those who have not yet moved their funds:
1. Under the Deposit Protection Scheme here in Ireland, consumers have their savings protected up to €100,000 per person per institution. So if your savings exceed this amount, spread it to any other deposit takers and keep it under €100,000 or €200,000 for joint accounts.
All funds with the National Treasury Management Agency (NTMA – a government body that manages all government monies including An Post and the State Savings) are guaranteed by the government as is the interest earned from those savings.
An Post’s deposit account is the only one that attracts Deposit Interest Retention Tax (DIRT tax) The NTMA investments include Prize Bonds.
2. The current best three totally accessible and on-demand deposit accounts are:
- KBC Bank - Smart Access account at 0.3% (net 0.189% after 37% DIRT tax) with minimum € 3,000 and maximum € 100,000 per person
- Permanent TSB - Bonus Booster at 0.21% (net 0.1323%) and no more than 2 withdrawals a year.
- An Post/NTMA’s State Savings deposit account at 0.15% (net 0.0945%)
3. For better deposit interest rates, you would have to go longer term… the best current offers are:
- NTMA State Saving … National Solidarity Bond – a 10-year investment offering 16% tax-free on maturity and equivalent to a gross rate each year of 2.38% available online or any post office.
- KBC Bank 35 day notice account offers 0.65% (net 0.4095%)
- Ulster Bank 1 year fixed account offers 0.6% (net 0.378%)
4. Alternative investments to preserve and grow your wealth would include:
- Precious metals – gold, silver and platinum to name but three.
- Collectibles such as coin (numismatics) stamps (philately) vintage wine, vintage cars and motorbikes, scripophily (valuable old share certificates) rock ‘n roll memorabilia, first edition books and art.
- The stock market – the best return of any asset class over any period of time. Currently in the 26th and 2nd longest BULL (rising) market – still some 4 years to go to catch up to the longest (’87 to 2000 and stopped by the dotcom bubble) no one knows when the next BEAR (falling) market will come. As Warren Buffet said the stock market is a mechanism for transferring wealth from the impatient to the patient! The current flavour of the day are the insurance companies’ managed funds which have achieved excellent growth in the last few years. Email me for details.
5. Lifestyle – now is the time to reflect and consider your life dreams and aspirations
- Live comfortably… renovate, extend or improve your home (that 50" 3D television)
- Travel better … perhaps that electric car – does your current one need reviewing? How does that bucket list dream holiday fit into your current plans?
- Family alright? Perhaps one of your children need a leg up on their first home (you can give them €310,000 tax-free - without having to die - under Capital Acquisition Tax thresholds plus €3,000 per parent per year under the Gift Tax exemption)
- Start a new business – you will always need seed capital..or perhaps invest in one with a chance of greater returns.
- Give to charity – there are so many deserving charities out there in need of your money. Perhaps you might even get involved with one.
A nice problem to have if you are one of those lucky 90,000 investors.