{"id":12202,"date":"2024-06-20T09:17:44","date_gmt":"2024-06-20T01:17:44","guid":{"rendered":"https:\/\/www.infinitysolutions.com\/?p=12202"},"modified":"2024-06-20T09:17:44","modified_gmt":"2024-06-20T01:17:44","slug":"financial-planning-for-irish-expatriates-why-you-can-do-better-than-irish-government-prize-bonds","status":"publish","type":"post","link":"https:\/\/www.infinitysolutions.com\/blog\/financial-planning-for-irish-expatriates-why-you-can-do-better-than-irish-government-prize-bonds\/","title":{"rendered":"Financial planning for Irish expatriates: why you can do better than Irish government prize bonds"},"content":{"rendered":"

Many Irish expatriates in Asia have invested in Irish government prize bonds, believing them to be a sound and secure investment. However, these bonds are not as advantageous as they appear. We suggest a more effective strategy to maximise the return on your savings.<\/em><\/p>\n

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Irish prize bonds: a good investment? <\/strong><\/p>\n

Since they were introduced in 1957, thousands of Irish families have invested in Irish government prize bonds<\/a> hoping to win big. According to The Irish Times<\/a>, there are over \u20ac4 billion of prize bonds in existence, and \u20ac600 million are purchased each year. \u2018<\/p>\n

With these bonds, the maximum prize on offer is \u20ac500,000 although the chances of winning this are slim. The total annual prize money is around \u20ac15 million. However, in the weekly draws the top prize is only \u20ac50,000 and among the estimated 220,000 winners per year, the average win is a mere \u20ac70 euros.<\/p>\n

While prizes are awarded tax-free and you never lose your initial investment, the odds of making a decent return with Irish prize bonds are poor.<\/p>\n

The chance of winning<\/a> the big prize with a bond worth \u20ac25 is 1 in 140 million, about the same as your chance of winning the Euromillions jackpot and far worse than winning the Irish lotto (10 million to one), both of which offer significantly higher prizes.<\/p>\n

When you take inflation into account, these bonds are simply not a good investment. The Irish Times estimates that with \u20ac10,000 of prize bonds \u2018you would need to have won at least \u20ac900 of your \u20ac10,000 worth of prize bonds last year just to have kept ahead of rising prices.\u2019 Given the statistics outlined above, such a return seems unlikely.<\/p>\n

These \u2018investments\u2019 are effectively government lottery tickets, more akin to low-risk gambling than a genuine investment. However, when you consider the lost potential of \u20ac10,000 invested in prize bonds, the risk doesn\u2019t seem quite so low.<\/p>\n

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Irish prize bonds: the alternatives<\/strong><\/p>\n

Let\u2019s rewind 10 years to 2014 and imagine that you invested \u20ac10,000 in the stock market.<\/p>\n

Compound Wave\u2019s stock market index return calculator<\/a> estimates the growth in value of an investment in four stock market indices over a particular timeframe, based on historical figures. According to the calculator, this is how your investment would have performed over the decade from June 2014 to May 2024.<\/p>\n

Even with the worst-performing stock market index \u2013 the Dow Jones Industrial Average \u2013 your money would have more than doubled. Over the same period, it seems unlikely, although not impossible, that you would have won in excess of \u20ac10,000 on your Irish prize bonds.<\/p>\n

While neither option guarantees a return, one is probable the other is not.<\/p>\n

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Is the stock market too risky?<\/strong><\/p>\n

Of course, the stock market is not risk-free. You are never guaranteed a return on your investment and you could, in theory, lose it all. However, it is possible to mitigate against loss by:<\/p>\n