Is money safe in the post office?

[raisinbran]

I have 20k in a Post office 12 month growth Bond. With the financial problems Ireland is experiencing do you think its safe to leave there?

My understanding is that the money you have deposited with The Post Office is actually with Bank of Ireland.

This article from the Telegraph tells you what you need to consider.

"Spreads on Ireland's 10-year bonds have risen to 405 basis points. Gavan Nolan from Markit said credit default swaps measuring bond risks on Irish banks are nearing the levels of Icelandic banks shortly before they defaulted two years ago, reaching 955 for Anglo Irish (senior debt), 615 for Allied Irish and 530 for Bank of Ireland.

That means people trading in financial markets yesterday were charging Bank of Irealand 5.3% more interest than the interest rate on the safest German Govt 1o Year bonds. The higher rate of interest reflects the risk of default. In theory your deposit is covered by the Irish Govt credit protection scheme but Ireland itself is in severe financial difficulty. So far Irish Govt, ECB and IMF are saying Ireland wil not default on its obligations. What the financial markets are saying is that the financial situation facing ireland and the Irish banking system is approaching that of Iceland just before it defaulted.

Who is right? Are you getting a high enough rate of interest to compensate for the risk? Can you afford to lose the money?

Only you can answer those questions.

Up to 30K will be covered by the government bank deposits compensation scheme (actually, think it may be more now) so don't worry, you will not lose the money, but it may take a few weeks to be refunded if it comes to the worst. This was what happened with the deposits in the Icelandic banks. Individuals are covered but not companies and councils etc, this was where all the losses were with the Icelandic banks collapse.

If you are making a good return, I would stick with it.

Thanks for the explaination and advice.No I can't afford to lose it,as for getting a good rate its a wapping 3.3%!!.Dilema is I have a lot of cash spread around at the moment waiting to buy a house(when market settles) so running out of places to put it.