BY JOHN ELLIS, FINANCIAL ADVISOR
We are a nation of savers. We save 12.8% of our disposable income with €168 billion sitting in banks and credit unions, according to the Central Statistics Office (CSO). Yet, more tan half of us earn less than 1% interest, while inflation eats into the true value of our cash like a silent thief. The result? Our real wealth is vanishing before our eyes.
September’s CSO figures paint a grim picture: headline inflation hit 2.7%, an 18-month high with food prices soaring 4.7%. Beef is up 23.6%, milk 12.1%, butter 11.7%. A pint of stout now costs in and around €6, up 25 cents on last year. Even the UN’s Food and Agriculture Organisation reports world food prices at their highest in over two years. With ECB rates on hold at 2%, the purchasing power of savings is still shrinking fast.
The Budget was a stark reminder; we are on our own and we must do our own work. Too many of us leave money in current accounts earning 0.01% or instant-access pots nearing zero. The Central Bank estimates this national habit cost households €800 million in unearned interest in 2024 alone. Irish savers, it seems, prize instant access above growth.
Why the caution? Blame the 2008 crash? During Covid, our savings surged 13-14% and never reduced. It is understandable, we do not want to get caught out again. But fear is costing us dear. There are fixed-term accounts offering 2-3% go abegging while €168 billion languishes at near-zero.
Leave €10,000 in a 0.01% account and inflation at 2.7% wipes out €269 in real value a year. Lock it for a year at 3% and you are ahead, provided you do not need it tomorrow. Most of us have not asked: “When will I actually need this?”
Younger savers show flickers of rebellion. A third of Gen Z Revolut users believe stocks and ETFs beat property for long-term wealth; they hold 16.5% of the platform’s exchange-traded funds. Social media has demystified investing, though we need to be aware of hidden fees and especially the danger of treating the markets as a casino.
For the rest of us, diversification is the sane path. Use this rule of thumb: cash for bills, pensions for tax breaks, then diversified market funds for growth. Americans save less but invest more, thereby compounding wealth while we and our European neighbours leave our money on deposit. Over decades, the gap can be life changing.
Shopping around helps. Irish rates top out near 3%, but EU banks may pay more, with €100,000 protected under similar guaranteed schemes. Switching means paperwork, yet the alternative is watching savings melt away.
The ECB will not come to the rescue. Rates stay at 2% through 2026 as economists say because inflation remains on target, while growth limps along. So Irish savers must act.
This is not about gambling on tech stocks or timing markets. It is about refusing to let hard-earned money evaporate. Match short-term cash to instant access, lock medium-term funds in notice or fixed accounts, and invest the rest prudently. Plan, diversify, review annually. This week, check your rate. If it is under 2%, move it.
Our love affair with cash is understandable but it is time to move on. The rainy day we are saving for is upon us and it is costing us a fortune.
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