Bank of Ireland/ESRI Savings and Investment Index falls to lowest level since launch

• Overall Index falls back in March with fewer people saving and investing
• Savings sentiment deteriorating among the over 50s
• Irish people more optimistic on retirement in March

The Bank of Ireland/ESRI Savings and Investments Index decreased to 98 points in March from 102 in February 2018. This is the lowest reading for the Savings and Investment Index reached since its launch in October 2017.

Savings Index

This month the Savings Index decreased by 4 points to 99, the lowest level for the index since September 2017. The monthly Savings Attitudes Index, which asks people about their saving behaviour and how they feel about the amount they save, decreased to 99 points in March from 103 in February 2018. The proportion of people saving regularly fell to 46% in March, the lowest level since July 2017.

Weaker saving rates were most visible among under 50s who perhaps are now more inclined to spend due to the improved economic conditions. The poor weather conditions in March also presented an opportunity for consumers to indulge in online spending.

The decrease was compounded by increasing negativity about the current savings environment as this Index decreased by 4 points to 98 in March 2018. The most interesting aspect of this increased negativity was that it was driven more by the over 50s, a group which is more likely to have lump sums available for saving.

Investments Index

The monthly Investment Index decreased by 4 points to 97 in March from 101 in February 2018, the largest fall since the index started in October 2017.

The Investment Attitudes Index decreased by 10 points to 94 index points in March. In doing so the index completely unwound its big February gain. Stock markets remained volatile in the month (world equities were down 3% in euro terms), mainly on concerns about the potential for a global trade war. It is likely that it was this continued market choppiness which caused Irish investment attitudes to weaken.

In contrast the Investment Environment Index increased slightly to 99 index points in March from 98 in February 2018.  The index had fallen sharply in February on the outbreak of volatility in stock and bond markets but it was heartening to see it stabilise in the face of the continued uncertainty. In fact 33% of people still felt it was a good time to invest in March compared to 22% who felt it was a bad time.

Retirement

The Retirement Optimism Index increased to 100 points in March 2018 from 92 in January 2018, demonstrating that people are more optimistic about their retirement. Over half (56%) of people felt they had some financial plans in place for retirement, the highest response thus far for the question. A higher proportion of people also said they could live comfortably in retirement (31% versus 24% in January.

However, 39% of people still said they would find it difficult to live comfortably so there is still work to do for many households to ensure their retirement planning is sufficient to leave them financially comfortable in retirement.

Press Release:

Commenting on the Bank of Ireland Savings and investments Index, Tom McCabe, Bank of Ireland Investment Markets said: “Based on the March results of the Bank of Ireland/ESRI Savings and Investment Index, Irish peoples’ enthusiasm for saving appears to be waning. There could a couple of different catalysts behind this; younger people may be now more inclined to spend as the economy continues to improve and March’s adverse weather could also have reinforced that shift towards spending.

 “However greater numbers of over 50s are increasingly expressing the view that now is a bad time to save. This group is more likely to have lump sums available for saving. Here perhaps people are growing tired of the low interest rates on offer for savings and are now looking for alternative investment options with the potential for higher returns. It will be interesting to see if this causes a shift away from saving and toward investment in the next few months.”

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.