• Saving sentiment on the up, driven by an improving environment for savers
• Half of Irish people are saving regularly compared to one-third that invest on a regular basis
• Consumers most likely to invest in pension funds above all other vehicles
The Bank of Ireland/ESRI Savings and Investments Index measures the overall sentiment of Irish households towards savings and investments. The monthly Savings Index increased to 100 points in October from 98 in September. The monthly Savings Index comprises two aspects; a Savings Attitude Index and a Savings Environment Index.
The monthly Savings Attitudes Index asks people about their saving behaviour and how they feel about the amount they save. 49% of people now say they save regularly, compared to 44% a year ago and the proportion of people who do not save remained unchanged at one in three.
The Savings Environment Index, which explores households’ views on the environment for savings, increased by 7 points to 100 in October 2017. The underlying upward trend in the Index was maintained last month with 40% of respondents feeling it was a good time to save. This compares to 38% last month and 32% per cent a year ago. An improving environment for savings has been a key factor behind the gradual improvement in the overall Savings Index in recent years. Consumers appear to be taking a precautionary approach to their savings in order to manage their upcoming Christmas spending.
On the investment front, almost one-third (32%) of Irish households indicate they invest on a regular basis, which is lower than the proportion of households saving regularly at 49%. The most common investment made by households was in pension schemes at 29% with investment in shares and funds at 3%.
Investment activity was more prevalent amongst the younger demographic (those aged under 50) and amongst those in managerial/professional occupations. Despite the lower incidence of regular investment, more Irish people still felt it was a good time (32%) than a bad time (20%) to invest.
Retirement Optimism Index
The finding that pension schemes were the most common investment vehicle used by Irish people also echoed the results from the first reading of our bi-monthly Retirement Optimism Index. This found that 55% of Irish people had some financial preparation in place for retirement. However, despite this 44% of people overall still felt they would find it difficult to live comfortably in retirement from a financial point of view.
Commenting on the Bank of Ireland Savings and investments Index, Tom McCabe, Global Investment Strategist, Bank of Ireland Investment Markets said: “A key feature of October’s Savings and Investment Index was the rise in sentiment toward saving among Irish households. This was a direct result of more Irish people thinking that now is a good time to save, a trend that has become more visible over the last number of years.
“The initial data on investing clearly show that we are more a nation of savers than investors. This may suggest a preference for capital security on savings compared to potentially higher returns from investments. The low interest rate environment remains a big challenge for Irish savers. Against this backdrop, it will be interesting to see if sentiment towards investing improves over the medium term. The data from the Savings and Investment Index should help us tackle questions like this.”
Note to editors:
Please note whilst the Savings Index continues the historical ESRI structure, the Investment Index only begins in October 2017 so initial insights are presented in this month’s press release. The historic figures for the Savings Index have been rebased to correspond to an overall starting Index value of 100 for October 2017. Changes in the Index going forward will be measured versus these starting October values. It must be noted the Retirement Optimism Index data is calculated using a sub-sample of 400 observations for September 2017 and may differ when a full months’ data is available (November 2017).
About the ESRI/Bank of Ireland Savings and Investments Index:
The Bank of Ireland/ESRI Savings and Investment Index tracks household attitudes towards savings and investment as well as monitoring their perspectives on the current and future savings and investment environment. Understanding savings behaviour provides insight into how households smooth consumption, plan to make big purchases and build up buffers which can be drawn down in times of economic stress. Monitoring household investment patterns gives an understanding of how they are putting their money to work, their financial diversification, and their appetite for risk. The Bank of Ireland/ESRI Savings and Investment Index also provides a Risk Barometer and a Retirement Optimism Index to give insight into household risk taking and retirement planning. These will be presented on alternate months.
The Bank of Ireland Savings and Investment Index is produced monthly from a minimum sample of 800 consumers aged 15 years and above. The ESRI carries out the Savings and Investment Index research to ensure the indices represent a national sample.