The latest Bank of Ireland/ESRI Savings and Investment Index has been released this week. The 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.
The monthly Savings Index increased to 102 in July from 99 in June, driven by a big rebound in the Savings Environment sub-index from 94 to 100. The most interesting aspect of the July increase in this sub index was a big improvement in sentiment among older savers that typically have larger lump sums for saving.
Regular savings patterns remained strong in July with 50% of people saving regularly, up marginally from 49% in June. However people were less happy with the amounts they were saving – 47% of people felt they weren’t saving enough in July, leading to an unchanged reading of 103 for the Savings Attitudes sub index.
The percentage of regular investors rose slightly to 32% but people were less happy with the amounts they were investing in July. The percentage of people that weren’t investing as much as they would like jumped to 41% in July, the highest response since the index launch and up from 31% the previous month. This was the main cause of the fall in the Investment Attitudes sub index.
The most striking decline was in the number of people who felt they would be able to live comfortably in retirement from a financial point of view. The percentage who felt they would find it financially difficult jumped to 44% in July, the highest response since the question was first asked in November 2017.
Speaking this week, Tom McCabe from the Bank of Ireland Investment Markets said, "Savings sentiment improved sharply though, driven by greater optimism among older savers who tend to save larger amounts. Recent ECB comments on possible interest rate changes may have fed greater optimism on deposit rates among these savers. It remains to be seen whether this marks a real turning point in savers’ confidence around what they can earn over the next few years."