Financial Channel

Hi,

I have €20,000 in cash at the moment and am pretty reluctant about putting it into stocks.

I am being advised by someone close to me to buy BOI shares with it for the dividend. I am more inclined to put it into a 3 month term deposit with rabo that will roll-over automatically.
I have done out the following calulation on what the 20k will return after a year(subject to DIRT). Does it seem correct?

€20,0000 + 4.39% = €20,878 + 4.39% = €21,794.5 + 4.39% = €22,751.3 + 4.39% = €23,750

3750/20000=0.1875 (i.e 18.75% return per annum, subject to dirt)

Is this the way term deposit works? Also, why do they offer the best rate on the 3 month term? Surely this is better than leavin you money sit for five years and only get 4.22%. I have a feeling i've missed something along the way?

Actually, would it not be better to the one month term for 4.02% and let that rollover 12 times. The return would be far greater??

No, your figures are wrong.

When they say 4.39% for a 3 month deposit account, they mean 4.39% per annum, not for the 3 months, so the return would be approximately (read less than) a quarter of this for the 3 month period.

It's only slightly more beneficial to go with the term-deposit accounts.

Yes I was wondering..I thaught there was something to good about it..

Thanks Sean..

Also, there's no guarantee that after the first 3 months the 4.39% rate will still be on offer. If it's only, say, 3.5% by then, you'd have been better off maybe taking the full year guaranteed rate.

I am being advised by someone close to me to buy BOI shares with it for the dividend.
With friends like these..

With friends like these..

???