Savings and Investment sentiment moderates in September

‘Weaker saving and investment attitudes pulls index lower in month’

• Saving, investment attitudes fall from record highs in August
• Irish saving habit remains strong, 50% of Irish people were saving regularly in September
• Confidence in the investment outlook at its highest since launch in October 2017

The Bank of Ireland/ESRI Savings and Investment Index, which measures Irish peoples’ sentiment towards saving and investment fell back from its August peak last month, easing from 106 to 103. Despite this, Irish sentiment towards both saving and investment has risen from 100 to 103 in the first year since the index was launched in October 2017.

Savings Index

The monthly Savings Index fell back from 105 in August to 102 in September. The decline was driven exclusively by weaker attitudes towards saving which fell from a record high in August. The Savings Attitudes subindex fell from 112 in August to 104 in September. Saving patterns have been very strong in the first year of the Savings and Investment Index. This remained the case in September with 50% of people answering that they were regular savers.

However the percentage of people that felt they weren’t saving enough rose from 38% in August to 45% in September. The 45% reading is in line with the average response over the past twelve months so it doesn’t necessarily indicate a notable step up in anxiety levels around how much people are saving. However at the margin it could reflect a desire to pick up the pace of saving as we move closer to Christmas. Nervousness around Brexit could also be a factor although September’s regional data wasn’t clear cut on the subject – for example, while dissatisfaction around savings amounts rose in the Border Midwest region the incidence of any saving (regular and occasional) actually fell in the month.

The Savings Environment subindex was unchanged at 99 in the month. Generally Irish people were still of the view that it was a good time to save in September – 41% of people felt it was a good time while 28% felt it was a bad time. However, older savers’ views of the saving environment deteriorated in the month which could reflect the re-emergence of frustrations around the rates of return on offer for deposits in this low interest rate environment.

Investments Index

The Investment Index also fell in September from 106 to 103. As with the savings index, weaker attitudes towards investment were the catalyst for the fall. The percentage of regular investors was stable at 31%. However the percentage of people that said they weren’t investing enough rose to 34% from a record low of 23% the previous month – this drove the Investment Attitudes subindex down to 101 in September from 110 the previous month.

Despite the weaker attitudes to investment, Irish people were very optimistic about the outlook for investment markets in September. 34% of people felt it was a good time to invest in September, double the amount that felt it was a bad time (17%). This drove the Investment Environment subindex up to 106 in September, its highest level since launch. World stock markets enjoyed another solid month in September (up 0.6% for Irish investors) as US stock markets hit fresh all-time highs.

Commenting on the September results for the Bank of Ireland/ESRI Savings and Investment Index, Tom McCabe, Bank of Ireland Investment Markets said “September’s results marked the first anniversary for the Bank of Ireland/ESRI Savings and Investment Index. Although the index dropped in September, Irish sentiment towards both saving and investing has improved over the past year.

“Irish savings patterns have been very strong recently and the improved economy has been the key driver behind this. This continued to be the case in September. On the investment side, it is clear that prices are moving sentiment and that the stock market’s gains are resonating strongly with Irish investors. Ten years on from the collapse of Lehman Brothers, one of the darkest episodes of the Global Financial Crisis, investors appear to be in a better place.”

Retirement Optimism Index

The September results for the Bank of Ireland/ESRI Retirement Optimism Index continue to highlight that Irish attitudes towards the financial aspects of retirement remain changeable. The percentage of people that said they would find it difficult to live comfortably in retirement from a financial perspective fell to 38% compared to 44% in July. In addition the percentage of people saying that they had some financial preparation in place for retirement hit 60% in September, the highest response since the question was first asked a year ago. Together these combined to drive the Retirement Optimism Index up from 95 to 104, the highest level for the Index in its first year.