An Irish Times guide to the world of personal finance.
Disability
Is there any type of government financial relief (apart from mortgage relief) for working parents to purchase a house for their handicapped daughter? Our daughter will need a house in a community after we are dead and gone.
We live in a rural area (the nearest shop is a mile-and-a-half away) and we have no choice but to burden ourselves with a mortgage because we don't want her to be a burden on the State in later life.
Mr G.C., e-mail
The only other support I have come across is the disabled person's grant. This is a Department of the Environment and Local Government grant, which is paid through your local council.
The purpose of the grant is to adapt or design accommodation to make it practicable for a disabled person.
The local authority decides if particular accommodation is eligible for the grant, which can be paid, in general, up to 90 per cent of the costs of the works on a private dwelling, with an upper limit of €20,320.
If the house is less than one year old or the grant is being sought for a property at the design stage, the maximum is €12,700 on the basis that newer or design-built accommodation should be less costly to adapt to the needs of disabled people.
There is no income threshold on these grants apart from a bottom limit.
The works involved must cost more than €254. There is no means test.
Your daughter could also apply to the local authority for a housing improvement loan to cover some or all of the difference between the works required on a property and the money available though the disabled person's grant.
If you log on to the Department of the Environment website (www.environ.ie) and check under housing leaflets, you will find one detailing the provisions of the grant.
Prize bonds
In 1999, my husband and I owned four (non-winning) prize bonds between us. In 1999 our savings of £10,000 (in a reserve deposit account) had generated a princely £149 in interest.
On foot of a newspaper article, which praised the returns on prize bonds, we invested our £10,000 in prize bonds in March 2000 and waited to get rich.
In late September 2000, we won £100 and immediately re-invested it in prize bonds. Although we now had £10,120 invested, we won nothing further that year. So our return for the year to March 31st, 2001 was £100, less than our miserable deposit account had earned.
In the year 2001, the Prize Bond Company halved the £100 prizes to £50 but the number of such prizes was increased.
In September 2001, we won £50, which we immediately re-invested in prize bonds. We have won nothing since. So our return for the second year, despite an increase in both our investment and the number of prizes, stands at £50.
We are now just at the end of the second year. The two years have yielded exactly £150, which we could have earned in one year had we left our savings in that miserable deposit account!
Are we just unlucky? Should we put our money back into a deposit account and feed it into a special savings incentive account or one of the upcoming pension accounts?
We are both nearing 50. We have no mortgage and no private pensions. We can't afford to take risks with our savings.
Ms G.R., e-mail
You're right; with no private pension you certainly cannot afford to take risks, yet that is just what you are doing. Prize bonds are a gamble - essentially the same as the Lotto, even if the odds are somewhat better. A better analogy would be horse racing, not generally a venue for those unable to lose money.
The prize bond website says investments of €1,000 have a 4/1 chance of wining a prize in a given year. Holders of €4,000 have an evens chance of winning. But these are just the odds. Every evens favourite does not deliver and we all want to be on the 20/1 outsider.
Your investment should have returned at least two prizes a year but even that would not necessarily have produced a competitive return, as these prizes, had they materialised, might have been at the lower end of the scale.
The minimum prize in the weekly draws is €75 with the top weekly prize of €20,000. The first weekly draw each month replaces the weekly top prize with a monthly award of €150,000.
The prize fund is 2.75 per cent of the total fund. As the fund grows, additional €75 prizes are added. Your bonds, as I guess you know, go into each draw, regardless of whether they win, until you redeem them. All winnings are tax-free.
Your experience shows that you cannot necessarily believe everything your read. I have to say it does seem to be an example of going from the frying pan to the fire, as the interest rate you were receiving on your deposit account before moving your savings into prize bonds seems poor. As a comparison, you can currently get 3.5 per cent a year from Northern Rock on demand deposits - a return of €350 before DIRT on your original investment.
What now? There is no doubt that you should put the money into special savings incentive accounts if you do not already have these open.
Each of you is entitled to put up to €254 per month into such accounts, drip-feeding it from an account such as that with Northern Rock. With the Government €1 for €4 hand-out and interest returns, SSIAs will almost certainly pay you more than you will ever get from prize bonds.
At the end of the five-year SSIA term, I would suggest strongly that you consider putting the return into providing for your pensions.
Please send your queries to Dominic Coyle, Q&A, The Irish Times, D'Olier Street, Dublin 2 or e-mail to dcoyle@irish-times.ie. This column is a reader service and is not intended to replace professional advice. Due to the volume of mail, there may be a delay in answering queries. All suitable queries will be answered through the columns of the newspaper. No personal correspondence will be entered into.
