The latest Savings and Investment Index from Bank of Ireland was released yesterday which tracks household attitudes towards savings and investment as well as monitoring their perspectives on the current and future savings and investment environment.
The index shows a strong recovery in the first quarter of 2022, with a 9% increase bringing it to pre-pandemic levels. The Index was 96 in February 2022 compared to 87 in November 2021 when it plummeted as the Omicron wave hit.
As the pandemic recedes, attitudes to savings are normalising, but worries about inflation are rising. Forty two percent of consumers say it is a “good time to save now” compared to 38% in February 2020 before the pandemic hit. However, the level of concern people express about jobs, paying bills and other day to day worries has become more elevated. Forty two percent of people expressed a concern about every day bills compared to 35% in November ’21, which is higher than any point in the pandemic. By contrast concerns about family health continue to trend downwards with 62% still concerned, but this compare to 75% back in May 2020.
During the pandemic period, the Savings Index had risen considerably reaching a high of 110 in March 2021. Since then it has trended down and dropped significantly in the final quarter of 2021, as a Christmas spending splurge looked likely, while attitudes to saving now seem to have normalised to pre-pandemic levels.
The Retirement Optimism Index saw a significant drop in the February survey falling to 109 from 118 in November 2021. When asked about how comfortable they expect to be in retirement, the survey showed a drop from 125 to 112, perhaps reflecting that increasing inflation and economic concerns were making them feel less certain about their finances and long term retirement plans.
While it’s important to clarify that this survey took place prior to the Russian invasion of Ukraine, the Investment Index rebounded from the lows seen late last year, with an increase to 95 last month compared to 88 in November ’21.
Attitudes to investing improved slightly, recovering to an Index level of 99 compared to 97 in November. There was also a higher incidence of people investing (up to 122 from 116 in November ’21), and a significant increase in the number of people who don’t believe they are investing enough (a new low of 75 from a pandemic period high of 90). There was also a jump in the number of people seeing the environment of 6 months’ time as a good time to invest (up from 82 in November ‘21 to 97 in February ‘22).
Looking towards the future, Chief Investment Strategist at Bank of Ireland, Kevin Quinn said, "The investment market has been volatile in early 2022 with the twin effects of changes in central bank policy and the Ukraine war both leading to a market correction. This research, which took place before the war in Ukraine started, showed a stabilisation in attitudes to investing and a significant increase in the proportion of people who don’t believe they are investing enough. I suspect that there is a growing recognition amongst some consumers that it’s no longer enough to save given near zero interest rates. Many are looking elsewhere for their longer term plans, especially in the face of inflation concerns."
Source: www.businessworld.ie
