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Ulster Bank savings account

  • 01-12-2010 7:43pm
    Registered Users Posts: 66 ✭✭ cillo2000

    Hi Guys,

    The guy in my local Ulster bank suggested the Righttrack Bond Series 6 (5yr 11month term) to me when I enquired about the "cash desk" 1yr deposit account they currently have which earns 3.5% interest.

    Option 1: 5 Years and 11 Months Term
    • 30% of your funds will be placed in a 3 year Fixed Rate Deposit. One third of this Fixed Rate Deposit (or 10% of total investment) matures each year paying 6.00% gross* / CAR** fixed on the balance outstanding.*** At the end of each year, annual interest is added to the partial return of capital due that year and this amount is available for withdrawal.
    • The remaining 70% of your funds will be placed in a 5 year 11month Tracker Bond paying 65% participation in any increase of the RBS European Balanced Sector Index.
    • If you apply on or before 9 November 2010, we'll give you an additional bonus of 0.15% of your initial investment. The early investment bonus will be paid at the end of year 3 for the portion of your funds in the Fixed Rate Deposit, and at maturity for the portion of your funds in the 5 year 11 month Tracker Bond. You will not earn any interest on the early investment bonus.

    Does anyone think these trackers are a good Idea? What are the pro/cons?

    This is what I worked out after I left the bank:

    Lets just say the amount is 100K to invest, if this was placed in the deposit account ("cash desk" @ 3.5%) for 5yrs 11month (lets say 6 years) it would make 21k - dirt. (if the rate stays @ 3.5%)!

    If I invest the same amount in the right-track it will pay 6% on the 30K for the 1st year and release 10k back to me, 6% in year 2 on 20K and release 10 back to me, 6% on 10K in yr3 and pay this final 10k out.

    If I re-invest the money I receive back in the first 3 years into a deposit account with a 3.5% interest and withdraw this when the "right-track" matures + the interest it made in the first 3 years @6% = Just over 8k.

    So this leaves a difference of 13k.... Will the 70% left in the tracker make this kinda money in 6years? - As you can see I don't really know much about the markets - but one would hope the EU will grow and the market will pick-up.
    - The reason I was told about the "right-track" was because the guy in the bank thinks the level of interest on offer in the "cash desk" can't be sustained??? -Should I believe a banker?

    If the EU ups the interest rate surly the banks can't pass this onto mortgage holders and not savers?

    - There is also the freedom of the one year fixed term on the deposit....

    Does anyone have any suggestions on this?
    Has anyone had one of these trackers before? (I know past performance isn't an indicator of future performance bla bla bla, but would be nice to here someones experience).

    Is there a better option out there?


  • Registered Users Posts: 3,827 ✭✭✭ unclebill98

    Like most bonds it depends if you got the spare cash to do withour for that period of time.

    If this bond interests you and because of the amount your talking about you'll have to have a full review with one of UB Financial Planning Managers(FPM). The review takes less than an hour if your simply looking to invest. Only if the review states that the bond is right for you then you'll be able to sign up. I know this will get me some slack but they will not force the bond upon you if the review heads towards that decision.

    This process is in place to protect you from doing something you'll regret.

    As for the Bond itself, its 100 capital safe and atleast it gives you a return on a section of your investment. After that, as you you've stated it may or may not make anything more than the remander of your investment back.

    The bond splits your investment up over a good spread to maximise your return. So you'll never know.

    As for interest rates on savings accounts going forward. UB 3.5% fixed for one year is one of the best on the market. If ECB raise interest rates I can not see this being passed onto consumers as quickly to savings accounts as their mortgages.

    So, go talk to the FPM. you'll have a better idea of what to do after that and as with all other banks they offer the same service. Remember front staff can not offer advice on products like the Right Track Bond an FPM can.

  • Registered Users Posts: 1,032 ✭✭✭ Mc-BigE

    Well, its been 6 years now and i got back 84.35 euros after tax on a 5600 euro investment (Right Track Bond Series 7) . very poor to be honest

  • Registered Users Posts: 66 ✭✭ cillo2000

    Mc-BigE wrote: »
    Well, its been 6 years now and i got back 84.35 euros after tax on a 5600 euro investment (Right Track Bond Series 7) . very poor to be honest
    I know... waste of time. I couldn't get a breakdown from them on the tracker bond to determine why it performed so poorly, surely all stock markets have made significant gains in the last 6 year...