Savers Hit by Falling Rates and Increased Taxation


There is no doubt that these are tough times for people who hold monies on Deposit.  In addition, the outlook for rates over the next number of years continues to remain bleak. 

There are two developments which have combined to create this negative outlook namely:-

  • Rates have fallen dramatically to a current level of circa 2.3% gross for a fixed 1 year deposit.  Rates for shorter periods are substantially lower.  With the ECB intending to keep its rate as low as possible for the foreseeable future, any increase over the next couple of years is highly unlikely.
  • As if the fall in interest rates is not bad enough, savers are now being impacted by an increase in DIRT in the recent budget to 41%.  For a 1 year account earning 2.3% gross, this will have the effect of reducing the return to 1.36% net.

What can I do to maximize the return on my monies?

Before looking at what options you have, it is important for you to realize that maintaining funds in a deposit account is something you should do only for “convenience” rather than as an investment decision.  To counteract the effects of falling rates and the increase in DIRT, it has never been more important for investors to look at alternative ways of achieving higher returns.

The alternative is to move your monies into a Term Investment for a period of years.  Depending on your attitude to risk, there are a considerable number of options available.

The first decision you need to make is to decide on what risk you are prepared to take.  There are 100’s of funds available ranging from low to high risk.  We believe that a combination of low and medium risk investments provide an investor with considerable potential for growth when compared to deposits.

We enclose for your attention a small sample of the options currently available. 

Whilst this list is far from exhaustive, it will provide you with an idea on how best to utilize your funds.


Medium Risk

Option 1


  • Term 6 years.
  • Early encashment is permitted within the investment period subject to certain penalties and fund value.
  • Minimum Investment €10,000.
  • Medium risk fund which has a solid track record of growth since it’s launch in 2008.
  • This is an Absolute Return Fund, which invests in a wide variety of investment classes including equities, commodities, currencies, corporate bonds etc. It aims to provide positive returns in all market conditions and has a target return of cash + 5% per annum over a 3 year period.  In addition, it has a lower volatility level when compared to other medium risk funds.

Capital Protected

Option 1


  • Investment Term: 5 years 3 months.
  • Minimum investment:  €20,000.
  • 100% capital guarantee, on maturity.
  • 25% of the investment sum is placed on deposit at a fixed rate of 5% gross for a period of 1 year and is returned to the investor at that time along with the interest earned.100% guaranteed. 
  • The balance of the investment sum i.e. 75% is invested in an Absolute Return Bond, which invests in a wide variety of assets including equities, government and corporate bonds.  The aim of an Absolute Return Bond is to provide positive returns irrespective of market conditions.  The fund is managed by Carmignac Patrimoine who has a well established track record in this market. 
  • No early encashment permitted.
  • Closing Date: 31st October, 2013

Option 2


  • Term:  3 Options available namely 3, 4 or 5 years
  • Minimum investment:  €25,000.
  • 100% Capital Guarantee on maturity.
  • The performance of this investment is linked to the Swiss Market Index (SMI).  This Index comprises the 20 largest quoted companies based in Switzerland, including Nestle, Novartis, Roche, UPS, Zurich Insurance etc. 
  • On maturity, investors will receive 200% of the growth achieved by the SMI Index, subject to the following maximum potential returns, depending on the term chosen.

3 year option – 21% (CAR 6.56%)

4 year option – 34% (CAR 7.59%)

5 year option – 50% (CAR 8.45%)

  • No early encashment permitted.
  • Closing Date:  8th November, 2013 or sooner.

Option 3


  • Term 5 years.
  • Minimum investment:  €25,000.
  • 100% Capital Guarantee on maturity.
  • Guaranteed annual return of 2.90% gross paid annually (total 14.50% gross). 
  • In addition to the guaranteed annual return, there is the potential to earn a further 1% gross subject to the performance of the EUROSTOXX 50 Index. 
  • No early encashment permitted.
  • Closing Date:  25th Oct. 2013 or sooner.

Option 4


  • Term: 5 years 1month.
  • Minimum investment:  €10,000.
  • 100% Capital Protection, on maturity, provided by Swiss Bank EFG International, utilising a Corporate Bond issued by Bank of Ireland.
  • This bond is invested in a basket of 12 Global Energy stocks.  The return that you will receive will be dependent on the performance of these 12 stocks over the term of the investment.  Returns are locked in on an annual basis and paid out annually or at maturity.   
  • Early encashment is permitted subject to the value of the bond at the time.
  • Closing Date: 26th Nov, 2013 or sooner.

Option 5


  • Term 5 years (subject to early maturity conditions in years 2, 3 or 4)
  • Minimum investment €20,000.
  • 100% Capital Protection at maturity provided by Investec bank in conjunction with Securities issued by Bank of Ireland.  This Capital Protection is subject to the performance of the bond as outlined below.
  • This investment is linked to the performance of the EuroStoxx 50 Index.  If the index is equal to or above its initial level at the end of years 2, 3 or 4 then the bond will mature and pay an annual return of 10% gross for each year up to maturity.

If the  investment runs for the full 5 years, then 100% of the growth in the EuroStoxx 50, over the term will become payable.

  • If the EuroStoxx 50 falls by more than 50% at any point during the term of the investment and finishes lower than the starting level at maturity, then you could loose a portion of your initial investment.
  • No early encashment permitted. 
  • Closing Date: 25th October, 2013 or sooner.

It is important that each investment structure is tailored to the individual’s needs.  If you would like to discuss what options are the most appropriate for you then please call us on 091 566022.

Kind regards,

David McCarthy,

Managing Director.