Complete and Utter BoI ripoff??

casper-

Ok .. someone please correct me if I'm missing something here.

I walked into BoI today (I'll skip the long story as to why) and noticed a savings brochure that advertised a 25% bonus on your savings. I thought, "wow!", and picked up a copy.

After reading through page 1, I find out it's a 25% bonus on deposits made in your first year, and you have to commit to seven years with at least €100/month. Fair enough. I figure a guaranteed 25% bonus in the first year plus even slightly-less-than-average returns over the next six years sounds like a sweet deal. You just have to try and deposit more during the first year

Then I get to page three and the section entitled "the costs". There's a 5% annual fee for deposits under €12,00 per year PLUS 1.5% management fee!! What??? These mutual funds they're offering would have to make ~9.5%/year just to keep up with inflation (assume 3% inflation). That's _INSANE_.

Their pretty little graph on page two shows about a 120% increase from 1993 to mid-2003 for their Balanced Fund .. so (again, very general and wavy-hand calulcations here) that's averagin 10% return per year. So really and truly, what would I have gained if I had continually invested €100 in their Balanced Fund starting in 1993? Doesn't seem like very much after you take inflation into account.

</rant>

Now, there's a good chance I'm missing something fairly obvious here .. I'm certainly no financial advisor, or accountant, or anything close. So I'd love it if someone could show me the light

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On a side notem i noticed at permanent tsb today they've got some "mutual fund" - type savings for PRSA that charge 1% / year. Still high in my books (e-Index funds at home are about 0.2%/year or so) but far better than this BoI offering....

Bluehair

Originally posted by casper-
Now, there's a good chance I'm missing something fairly obvious here .. I'm certainly no financial advisor, or accountant, or anything close. So I'd love it if someone could show me the light

Sadly it sounds to me like you're spot on. While mortgages have become much more competative in this country (though you still have to shop round a bit) what they give with one hand they take away with another.

I've long left behind crap like this to look at either investing my money directly (i.e. shares- takes some time but worth it) or tax efficient funds (like the forestry funds).

(the sheer amount absorbed by various 'fees' in most banks saving or investments funds is truely obscene )

casper-

Originally posted by Bluehair
Sadly it sounds to me like you're spot on. While mortgages have become much more competative in this country (though you still have to shop round a bit) what they give with one hand they take away with another.

I've long left behind crap like this to look at either investing my money directly (i.e. shares- takes some time but worth it) or tax efficient funds (like the forestry funds).

(the sheer amount absorbed by various 'fees' in most banks saving or investments funds is truely obscene )

Hmm.. d*mn. You'd think, then, that there would be a good business opportunity for someone to come in (in an ING-type way) and grab a ton of market share by offering more-reasonably priced funds .. or do the fees somehow relate to government tax laws?

Could you give me some more information on these "tax efficient" funds? It sounds like that 1% fee from permanent tsb is "reasonable"..but if there are better options I'd be interested in learning more about those. If it wasn't for the possible problems (and hassle) with exchange rates, it'd almost be better for me to go back and invest in mutual funds in Canada.