Irish State Savings provides an effective means for Irish savers to deposit money with the Irish government. A major attraction of many Irish State savings products is that they are not subject to tax. If you are a low risk saver and want to maximise your return, then Irish State savings products may be a good option for you to consider.
Check the interest rate
There are periods when Irish State Savings products provide very competitive interest rates. This typically happens when the government needs to borrow money. However you should bear in mind that there are also periods when the government is not seeking to borrow when these products will be less competitive than bank deposits.
It should be noted that Irish State Savings tax free products run for 3 and 5 1/2 year periods. It is possible that they could initially appear to be competitive, but could cease to be so due to increases in interest rates.
The 3-year option: Savings Bonds
Savings Bonds from Irish State Savings provide tax free returns over a period of 3 years. Early access to your money is possible, but you should be aware that it will result in forfeiting some of the promised return. You can invest a minimum of €50 and a maximum of €120,000 in Savings Bonds.
The 5 1/2-year option: Savings Certificates
Savings Certificates from Irish State Savings are tax free and tend to provide a slightly better rate than Savings Bonds due to the longer investment period. Otherwise the terms are broadly similar, with the same minimum and maximum investments.
This is a regular tax free savings product with a maximum monthly saving of €1,000 per person and a minimum monthly saving of €25. This product is exempt from DIRT and can be a very competitive facility if you are a regular saver who can afford to leave your saved money in place for more than a year.
This works on a similar basis to National Instalment Savings, but payments are restricted to Child Benefit monthly payments.
The National Solidarity Bonds
National Solidarity Bonds offer returns that are partially exempt from tax over your choice of a 4-year or 10-year period. Early access to your money is possible, but even more than in the case of Savings Certificates and Savings Bonds, returns will be lower where money is reclaimed early. These are:
- While the rate looks eye-catching, broken down annually it may not significantly exceed the rate currently available from Savings Certificates
- Even more than Savings Bonds and Savings Certificates, the return comes at the end of the investment period. If access is needed before ten years have elapsed, the product will not prove competitive
- If interest rates rise over the next ten years, the rate of return on this product may cease to be competitive
Prize Bonds operate like a permanent lottery ticket in that prize draws take place weekly, with prizes ranging from €50 up to €1,000,000. Once purchased, a prize bond is included in every subsequent draw. They can be redeemed for their original purchase price any time from 3 months after the initial purchase.
Other Irish State Savings Products
Irish StateSavings has details on all products. Prizes from Prize Bonds and all final lump sum repayments on the Savings Bonds, Savings Certificates and the National Solidarity Bonds are tax free. All annual interest payments on the Deposit Accounts and National Solidarity Bonds are subject to DIRT.
Risks of State Savings Products
The only event in which the nominal value of savings with Irish State Savings would be at risk, would be if the Irish government defaulted on some of it's financial obligations.
Inflation is the main risk to Irish State Savings Products. High inflation could reduce the real value of these investments.