Stop gift-wrapping your hard earned money for your bank

Returns on deposit related products are at an all-time low with the average deposit rate being offered by various financial institutions hovering around 0.25%. Despite Deposit Interest Retention Tax (DIRT ) of 41% being reduced to 39% from 1st January next, the return on your deposits are depressingly low.

In such an environment, it’s no surprise that savers and investors alike are looking for other alternatives to boost their return and protect against inflation – while not assuming too much risk.

One emerging option is exchange-traded receivables (ETRs ), which allow investors to capitalise on companies’ need for low-cost credit, and ties in with the rise of non-bank lending. ETRs are invoices issued under contract for goods and services supplied to investment-quality companies, or credit-insured invoices from investment grade insurers.

The attraction for such companies is that invoice financing allows them to bridge the gap between long payment terms (often up to 120 days ) and paying their suppliers within 30 days. Credebt Exchange Ltd bridges this gap by purchasing such invoices from blue-chip companies at a discount to face value and using this discount to provide the yield to the investor. It offers a four-tier capital protection process which is insured by AIG.

The current yield available to investors as an alternative to deposits is up to two per cent (negotiable ) and returns can be treated as capital gains which allow you offset your annual allowance of €1,270. Take the following example of €100k investment for 12 months at a rate of 1.5% versus a deposit rate of 0.25%.

After utilising your CGT allowance, you are €1,286 better off than having placed the funds on deposit.Noel Fahey, MD of Fahey Wealth Management has 25 years financial services experience in advising both corporate and personal clients, Give them a call today to discuss or arrange an appointment (091 ) 394187 or (086 ) 3285374. Fahey Wealth Management Ltd, 4 The Hawthorns, Truskey West, Barna, Galway

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