Bank of Ireland has today released its latest Savings and Investment Index which tracks household attitudes towards savings and investment as well as monitoring their perspectives on the current and future savings and investment environment. It is produced quarterly from a nationally representative sample of 1,000 consumers aged 16 years and above.
The index which was declining pre-pandemic, has surged over the past year, the first signs are emerging that the appetite for saving is dropping. In May last year, 55% of people surveyed indicated they saw it as a good time to save, but this has now dropped to 47% (June 2021). The re-opening of the economy is contributing to this, as pent up demand begins to get released.
By contrast, attitudes to investing have begun to move upwards. In June 2021, 36% of people surveyed saw it as a good time to invest, the highest since the survey started (it stood at just 23% in February 2020). The Savings and Investment Index increased slightly to 104 in the second quarter from 103 in the first quarter, its highest level since 2018, buoyed by the Investment Index while the Savings Index dropped.
Confidence about life in retirement has also continued to strengthen. In June 2021, 45% said that they see life in retirement as quite or very easy. This contrasts to 36% in February 2020. When asked about financial preparedness however, the change is less dramatic. In February 2020, 58% saw themselves as prepared or somewhat prepared, which rose by just 3% to 61% for June 2021.
In March 2021, concerns about personal and family health were understandably elevated amongst peoples’ concerns. Back then 71% of those surveyed indicated they were concerned about their family’s health. By June 2021, as lockdown measures begin to ease, this has dropped back to 54%. Asked about their personal health, this was cited as a concern for 53% in March 2021 but by June it had dropped to 39%. Clearly as the vaccination programme has intensified concerns about family health are being alleviated.
In March, 80% of those surveyed indicated that a further wave of Covid was a concern for them. By this June the number has fallen back to 64%, Bank of Ireland suggests that while the concern is easing, the majority of people continue to be worried about a further wave. With concerns about the Delta variant creating a further wave in August/September, Bank of Ireland say it is clear that mood is still one of concern despite the reach of the vaccination programme.
In March 2021, one in three (34%) surveyed were concerned about paying every day bills. By June this had dropped to one in four (25%). Concerns about job security had fallen from 27% to 22% and concerns about income reductions from 41% to 34%.
Commenting on the index, Chief Investment Strategist at Bank of Ireland, Kevin Quinn said, "Government pandemic supports have bolstered consumer financial confidence, while higher savings rate has provided an added layer of financial reassurance over the past year. But this quarter’s survey results suggest a shift in attitudes on saving, which is understandable as things reopen and there are more options to spend. We are also finding a growing awareness amongst Irish consumers about low interest rates on savings and increased activity in investing as a result."
He added, "We see this with our customers who are increasingly open to conversations about investing rather than leaving surplus cash on deposit. I believe that this trend will continue given how long this dilemma is likely to be with us."