What are the prospects for interest rates for the rest of the year?

The ECB cut its interest rate from 0.15% to .05%, a record low on the 4th of September, 2014. A rate cut was deemed necessary to prevent deflation from occurring within the Eurozone area, and to strengthen the European Economy. The current rate of inflation in Europe this year was a record low of 0.3%.

Should I hold money on shorter term in the hope that rates will rise?

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Banks are currently less focused on attracting deposits. Our view would be to lock in longer rates now while the opportunity is still there to make a return. High historical deposit rates have been driven by a lack of liquidity in the banking sector. Shorter term demand rates will probably continue to decrease. Many banks offer different longer term products with varying degrees of liquidity. These products allow depositors to optimise their portfolio, whilst still providing flexibility to deal with forecasted cash outflows.

I have €50,000 where should I go with it?

There are still very competitive rates offered by certain banks. It is also vital for consumers to shop around upon maturity of their deposit accounts to ensure they’re getting the best return on their deposit. It also pays to negotiate with your own bank. A 1 year fixed rate can range from a high of 2.15% to a low of 1.50%. Currently 2.15% is a very attractive rate compared to what is on offer currently in the market. Demand rates can range from as low .25% up to 1.75%. For longer term rates customers can avail of 2.0% paid as a coupon every year for 5 years. A 3 year rate would pay 4.5% over the term. Please note rates are changing on a regular basis.

I have €200,000 in the one bank where is the best place to invest and should I split it between banks?

The Deposit Guarantee Scheme protects €100,000 per individual, per institution. Over the past few years, depositors have placed their portfolios across a range of banks so as to capitalise on the different guarantees of each, by doing so depositors can continue to hold a large volume of guaranteed funds.

If security is your chief concern we would recommend diversifying your deposit portfolio. If you have €200,000 it makes sense to place it in two institutions. Firstly decide that holding funds under guarantee is your main objective and then the interest rate.

Finance One is an Independent Financial Intermediary and a key specialty includes Financial Planning. Finance One is regulated by the Central Bank as an Authorized Adviser

Eoin Wilson has been working as a Financial Adviser with Finance One for the last 5 years. He has the following qualifications; Q.F.A, BA Econ, MBS