€25k invested in prize bonds

idnkph

I was given bonds as a gift 20 odd years ago. Moved house and lost all documents. How do I follow them up after all this time?

Hibernicis

https://www.boards.ie/discussion/comment/120398519#Comment_120398519

See here:

https://www.statesavings.ie/help-support/help-articles/lost-documents-lost-maturity-notice

Supply them with the following at a minimum:

• All forms of your name that may have been used in the past (Irish/English, Pre marital, Childhood names etc)
• All addresses you lived at
• PPSN
• DOB

My experience with State Savings on this front is pretty bad - they don't appear to make much of an effort to find your documents and are prone to fail to find the documents - so the more you can do to assist the better, and don't be afraid to challenge them. Let us know how you get on.

Atlantis50

I wonder how much longer the NTMA can hold out in not increasing the rates on State Savings products?

When asked by the Indo last month to comment after the Consumers Association of Ireland said it was “an abuse” of savers by not doing so they offered the following stock answer: “We keep rates applicable to State Savings products under review.”

https://www.independent.ie/business/personal-finance/calls-for-ecb-rate-hikes-to-be-passed-on-to-savers-using-an-post-schemes-42329047.html

Varadkar's comments last week on banks passing on interest rate rises would also be relevant:

https://www.thejournal.ie/leo-varadkar-banks-6021542-Mar2023/

Jamie2k9

Has any purchased UK bonds recently.Tried online but they said I need to call so just wondering how that process works?

dxhound2005

https://www.boards.ie/discussion/comment/120399721#Comment_120399721

I think the most relevant part of Leo's statement is this:

"There’s a huge amount of savings on deposit in Irish banks. Never more than was the case."

They got all those deposits in, when paying even less interest than before the minimal increases lately. And they don't want any more deposits, so why offer better rates? The savings market and the mortgage market are two different things.

Leo doesn't mention State Savings, as pointed out in one of the comments:

"He spouts this yet state savings interest rates remain the same."

State Savings are not looking for more deposits. Despite the nominal interest rate on Prize Bonds having been reduced many times, the overall fund has risen every month for years.

POBox19

https://www.boards.ie/discussion/comment/120396531#Comment_120396531

No, you don't have to live there. You'll need a UK bank a/c to buy the bonds and prizes ££ are paid into. Revenue here will probably need you to declare any prizes for taxation. But I reckon that you're better off paying tax on the £ winnings than paying no tax on no € winnings.

POBox19

https://www.boards.ie/discussion/comment/120399893#Comment_120399893

I'm getting some over the next few weeks and I'll detail the process as it goes along.

Hibernicis

https://www.boards.ie/discussion/comment/120399721#Comment_120399721

The National Treasury Management Agency (NTMA) controls State Savings and sets it's interest rates. The monies NTMA raises are used to fund the Government's borrowing requirement. NTMA's plans are to issue €7 billion to €11 billion of bonds over the course of 2023. This is a relatively low amount. NTMA has already raised €4.75 billion in the first quarter and in the last auction a €450 million tranche was raised at .3%. The cover ratio was 3.2 meaning that the bids received for this tranche were €1,440 billion, €990million in excess of what was required. So in simple terms, NTMA doesn't need to pay in excess of .3%, which is coincidentally the Prize Bond coupon. NTMA's responsibility is to optimise the National Debt (i.e. minimise the cost of Government borrowing). So while we all might like NTMA to increase the Prize Bond payout, there is no business rational for them to do so and I would suggest little likelihood of it happening in the short term. Leo Varadkar's comments are not relevant.

Hibernicis

And with that…….

State Savings have today announced the following rate increases to long term products

5 year Savings Certificates increase from 3% to 5%

10 year National Solidarity Bond from 10% to 16%

6 year Instalment Savings from 3.5% to 5.5%

https://www.ntma.ie/news/ntma-announces-new-issues-of-state-savings-products-and-changes-to-interest-rates-5

Rates for the shorter term bonds (3 year Savings Bond and 4 year National Solidarity Bond) and demand bonds (Prize Bonds) remain unchanged.

dxhound2005

I would not tie up my money in any long term product, which has very low returns up until near the very end. Especially since they could be replaced with better rates at any time. Look at the "Show Yearly Returns" on for instance the 10 year product. After 4 years, €1,000 becomes €1,010.

I would prefer to take my chances with Prize Bonds. No guaranteed products are going to get anywhere near the current inflation rate, even the foreign banks offering over 2%.

Atlantis50

Some more details here: https://www.statesavings.ie/help-support/help-articles/revised-rates

This includes the question:

Why is there no change to the Prize Bond Fund Rate?

The NTMA keeps the interest rates for all products, including Prize Bonds under constant review to ensure that the products remain competitive in the savings market generally.  

That's a non-answer. The real answer is probably due to the fact that the PB fund is still growing despite the measly rate.

I suspect if the PB fund was in decline then they may have given the rate a modest increase.

This non-increase in the PB rate has settled it for me that I will cash out some (not all) of my PBs and place the funds in:

• A 3.05% fixed term 12 month deposit with Younited via Raisin Bank (protected by ECB Deposit Guarantee up to 100k).
• A 2.25% instant access on non-invested cash via Lightyear Investing app, interest paid monthly (protected by Estonian Deposit Guarantee up to 20k). They track the ECB interest rate less a 0.75% cut that they take for themselves, so there is a potential for this return to decrease if ECB returns to rate cuts (but again, it is instant access so if rates go south and you'd like to move your money, you're not locked into it).

Both subject to 33% DIRT self-declaration.

dxhound2005

I like how they put a positive spin on the fact that if you bought a product last week, you will get a worse return than if you buy it tomorrow.

I have existing savings with you, will my rates change?

All previous issues of Savings Certificates, Instalment Savings and 10 Year National Solidarity Bond are now closed.

The new rates will have no effect on existing product holders. Money which has already been placed in previous issues of these products will continue to receive the fixed rates applicable when the product was purchased, for the remaining term.

POBox19

https://www.boards.ie/discussion/comment/120402664#Comment_120402664

Translates to “You’re locked in and screwed”.

Heraclius

https://www.boards.ie/discussion/comment/120402664#Comment_120402664

But that person can just sell and buy the new bond if they want. In your example of someone who bought last week that would surely be the logical thing to do.

dxhound2005

https://www.boards.ie/discussion/comment/120402858#Comment_120402858

Look at the "Show Yearly Returns" in the product details. If you held the previous 10 year product for 4 years, you would only get about €1,010 back for a €1,000 investment cashed in early (the actual details of the old products are gone, but it would not be more interest than the new one). If you held it for one year, you would get no interest.

I would never tie money up for such a long period. But the NTMA will not give any decent returns on instant access products, uness they need more money in. Which is not the present position.

Heraclius

https://www.boards.ie/discussion/comment/120402959#Comment_120402959

Your example said last week, not four years ago.

dickface

https://www.boards.ie/discussion/comment/120402587#Comment_120402587

Exactly what i am doing with my "safe" money :) except i am withdrawing 99% of my prize bonds, not some.

Heraclius

https://www.boards.ie/discussion/comment/120402969#Comment_120402969

Yes, I was considering doing the same.

dxhound2005

I should have said 11 months ago. You would still get zero interest, if you cashed it in early to buy the new version.

jaffa20

https://www.boards.ie/discussion/comment/120402195#Comment_120402195

If you don't foresee needing access to the money, I don't see why not? I'm considering the 10 year one tbh. At least if i do need access in the future if my circumstances change, I can get access to it with 7 days notice. Would you recommend keeping it in prize bonds instead? Not getting much luck with them at all.

dxhound2005

As an experiment you could put €10K into the 10 year bond, and €10K into new Prize Bonds. At the end of 4 years, you would be guaranteed €100 interest on the 10 year bond. "If" you had 2 wins on Prize Bonds, you would get the same, but you could easily have no wins. That's the sort of risk I'm happy to take.

There is no interest in Year 1, Year 2 and 3 are poor. After Year 4, it gets better, but you suffer early on. And who can predict whether the NTMA might need money in a few years, and offer much better rates. You would have to let the one you have run its course, or take the hit for cashing in early.

The thing with these products, including Prize Bonds, is that it doesn't matter to the holders if more people buy them, cash them in, or hold them. It is not like gold or shares where people have a vested interest in the prices going up. So make your own choice.

Hibernicis

https://www.boards.ie/discussion/comment/120403251#Comment_120403251

This is a very good post, in particular the last paragraph. Like any financial product/investment, Prize Bonds have Pros and Cons. On the plus side, they are 100% (or 9x%) capital secure, are repayable on demand, offer a nominal interest rate with a quirky but remote chance of upside in the big prizes and most importantly are not subject to the vagaries of the market, Trump's lates brain fart, Putin's latest threat, China's latest rumble or the fallout from the latest imploding bank. Downside is a less than stellar nominal interest rate and a possibility if you are unlucky of 0% return. That's the product - Like it ? Then buy it. Don't like it ? Go elsewhere.

Some other thoughts:

It's a numbers game..... Saying that your Uncle Sean and Aunty Maire bought you 2 prize bonds in 1982 and you haven't won anything in 41 years is roughly the same as saying that they bought you a lotto ticket for your birthday in 2001 and you didn't win - your chances were very very close to zero and that's exactly what you got.

The return curve on State Savings fixed term products. In earlier issues, the return was spread almost evenly over the years. So you could go into a long term product (contract) and exit at will with no notice and a decent return at any point along the line. This makes no sense from the investment manager's point of view. Sometime around 2016/2017/2018 NTMA wised up to this and reduced the early years returns - I don't like this but I understand that they needed to do this to protect the integrity of these "long term" products.

The people I feel really sorry for are those with money in an An Post Book Based Deposit Account. Or a Post Office Savings Account as they were previously known. Many of the holders of these accounts are elderly, trust the State to look after them to a much greater extent than anybody on this forum and are currently receiving a contemptible and frankly disgusting .05% return (Michael McGrath please note - you missed this in your self congratulatory press release yesterday). Many of these are people who worked for this country way back in the grim days of the 1940s and 1950s, are existing just on or above the poverty line, live from pension day to pension day and have a few bob aside, often to cover burial costs. And one of these people with say €3k or €4k in one of these accounts, most likely saved by scrimping and sacrificing, currently gets an annual return less than the price of a cappuccino in a Maxol filling station. I have a very elderly relative who has one of these accounts, opened for her by her father when she was in primary school and who trusts the state to look after her and gets a pittance. That is tantamount to betrayal.

notsocutehoor

Great post Hibernicis - most people have a similar elderly relative

notsocutehoor

I had sorta given up on the Friday lunchtime check, and lo and behold the letter arrived from Killarney this morning, Congratulations €50, last win 20/1/2023, third €50 win this year

Prize Bond bought February 2016

Winnings to date (no winning records kept pre 2005) €2,275 on €11,800 (including reinvestments) worth of PB's bought monthly over a 25 year period plus €20,000 bought in Feb 2016 (eight €50 wins on the February 2016 purchase), plus €20,000 bought in July 2020 (three €50 wins on the July 2020 purchase), plus €30,000 bought in October 2020 (three €50 wins on the October 2020 purchase).

Winnings 2011 €75

Winnings 2012 €150

Winnings 2013 €200

Winnings 2014 €100

Winnings 2015 Zero

Winnings 2016 €200

Winnings 2017 €250

Winnings 2018 Nada, Zilch, SFA

Winnings 2019 €250

Winnings 2020 €150

Winnings 2021 €150

Winnings 2022 €100

Winnings 2023 €150 (and counting)

Roll on next Friday (I might even check)

dxhound2005

The unfortunate thing for elderly or any other age, is that the choices other than the Post Office book, are not attractive either. Credit Unions do not let people know until late in the year what interest rate they will get, or even if it will be zero. Some that I know about paid zero in 2021 and 2022. The banks are a little bit better now, but do not have the footprint of the Post Office, for people who want to use a book.

If the NTMA do not need any money, and have actively tried to discourage it for years, no point in appealing to their better nature to look after the elderly. The Post Office book has plenty of funds flowing in, so why would they increase the "pittance" interest rate? They had a net inflow to that product of €501 million in 2021, year end fund value €4.42 billion.

POBox19

I estimate that the fund was €4.659 Billion at the end of 2022 and now is €4,714,286,000 or 754,285,760 prize bonds in every draw.

feelings

Have had 5k in PB for over 4 years and won nothing. Zilch. Nadda.

Decided to get rid of them recently - what a nightmare. Everything must be done my post. Took months to sell them. A painful process.

dxhound2005

https://www.boards.ie/discussion/comment/120415823#Comment_120415823

I did an exercise on Page 281 estimating it at the end of 2022 as €4,786,995,000. We will see in the Annual Report, which before Covid used to come out in April from memory, but has been later in the year recently.

I was referring to the Post Office book product in my figures above. It had a much bigger net inflow in 2021 than Prize Bonds, despite the miserly interest rate. I think it is the security of the product and convenience that makes it popular.

POBox19

https://www.boards.ie/discussion/comment/120415928#Comment_120415928

What's 100 million these days? I used the last quarter of 2022 and first of 2023 prize amounts by the miserable interest rate to make the estimate.

blade1

https://www.boards.ie/discussion/comment/120399721#Comment_120399721

Say the rates go up,would the interest rate you receive on savings you already have automatically rise or would you have to start from scratch to get a newer rate?