Since the rise of the ECB rate, going from 0% in July 2022 to 4.5% in early September 2023, we have been approached by ever more inquiries, seeking more compelling bank deposit rate alternatives. In response, we have leveraged our multiple agencies, with a focus on crediting rating and size, to partner with leading European Banks on the deposit side and leading global fund managers on the (optional) risk-asset side.
Irish Bank Deposit Rate Alternatives
Our leading offerings are called “Structured Product Solutions” and are aimed at providing a better home for both Private and Corporate bank deposits, but also for Credit Unions, Religious Orders, and Charities.
- Deposit only, minimum investment sums start at 100k with a minimum 3yr deposit term.
- However, if combining the guaranteed deposit rate with risk asset returns, then the minimum sum is 250k, with a required 5-year investment term.
- 20.21% compound 5-yr flat rate on sums exceeding 100K.
- 21.14% compound 5-yr flat rate on sums exceeding 250K.
- 21.26% compound 5-yr flat rate on sums exceeding 1m.
Bespoke Structured Product Solutions
You can then between:
- 100% guaranteed return or,
- Combine a guaranteed return, with a risk-asset return.
Most Popular Choices
We have a range of providers and options available, and below we have set out some examples of what’s proving the most popular for both Corporate and Private clients.
Corporate Solution:
What’s quickly proving our most popular option for corporate deposits, is our Structured Product Solution utilising Standard Life, Société Générale, and Vanguard in combination.
Structured Product Example
- 75%: On the guaranteed side, 5yr (AER) is: 3.91%
- 25%: On the risk asset side, 5yr (AAR) is: 6.00%
- The deposit rate is provided by: Société Générale.
- The risk side is provided via Vanguard and their US 500 stock index tracker fund.
Client Type: Corporate
Capital Amount: €250,000.00
Capital Split: 75% deposit + 25% index funds
Investment Term: 5yrs
75% = €187,500
less the 5-year annual charge deducted at source:
€178,125 @3.91% CAR = 21.14%
Gain €37,6516 – tax = €28,242.00
On a 5-year deposit maturity date: €178,125 + €28,242 = €206,367
25% = €62,500
€62,500 @6% AAR = 41.85%
Gain €26,157 – tax = €19,618.00
On a 5-year deposit maturity date: €62,500 + €19,618.00 = €82,118.00
Maturity Value:
On a 5-year maturity date: €206,367 + €82,118 = €288,485.00
Private Solution:
What’s quickly proving our most popular for private deposits, is our Structured Product Solution utilising Standard Life, Barclays, and Vanguard in combination.
Structured Product Example
- 70%: On the guaranteed side, 5yr (AER) is: 3.75%
- 30%: On the risk asset side, 5yr (AAR) is: 6.00%
- The deposit rate is provided by: Barclays
- The risk side is provided via Vanguard and their US 500 stock index tracker fund.
Worked Example:
Client Type: Private
Capital Amount: €100,000.00
Capital Split: 70% deposit + 30% index funds
Investment Term: 5yrs
30% = €70,000
Less 5-year annual mgt. charge deducted at the source
€66,500 @3.75% CAR = 20.21%
Gain €13,440 – tax = €7,929
On a 5-year deposit maturity date: €66,500 + €7929 = €74,429.00
30% = €30,000
€30,000 @6% AAR = 41.85%
Gain €12,556 – tax = €7,408
On a 5-year deposit maturity date: €30,000 + €7,408.00 = €37,408
Maturity Value:
On a 5-year maturity date: €74,429 + €37,408 = €111,837.00
Notes:
- Indicative deposit rates are provided as of 21 August 2023 and may be subject to change.
- The indicative risk rate of return is based on an average 5-year annualised performance.
- The use of risk assets is optional, as is the % split if doing so.
- Early access will incur early encashment charges.
- 100% investment allocation applies.
- An annual management charge of 1.00% applies.
Taxation on Gains:
- Irish bank deposit interest is taxed at 33% on personal, 25% on corporate, and 0% on charity monies.
- Corporate structured product gains are taxed at 25%.
- Personal structured product gains are taxed at 41%.
- Charity-structured product gains are free from taxation.
Free Consultation
Contact: Ken O’Gorman – Director – QFA, SIA, MCIBS – Investment Specialist
One Quote Financial Brokers on 01 845 0049 or email: ken@onequote.ie
