- Financial Security No.1 objective for savers
Some 60% of people are concerned about not getting a return on their savings, with younger people and those aged 55+ most concerned about the declining value of their savings as the cost of living continues to surge. Furthermore, men are significantly more concerned about the impact of inflation on their savings than women – 65% as opposed to 56%. These are among the primary findings of the latest nationwide savings survey of 1,000 adults commissioned by Aviva Life & Pensions Ireland DAC (Aviva).
The survey, conducted by iReach Insights, also found that 24% of savers don’t think about getting a return on their savings, and 16% of respondents are not concerned about returns at all. The survey further probed people on the plans they had for their savings, with financial security as the number one savings objective amongst 47% of respondents, followed by saving for holidays and a rainy-day fund each at 31%, and home renovations at 23%. Only 11% of respondents had no plans for their savings. The Aviva savings survey found that:
- While the return on investment is the most important factor for savers, the fees charged was the second highest priority, highest amongst those aged 55+
- The stability of the financial institution and security of the savings and investments came third on the list followed by quick access to savings
Commenting on the findings, Eoin Kennedy, Head of Product, Marketing and Pricing, Aviva Ireland Life said: “Our survey reveals that the ‘rate of return’ offered is the most important factor in choosing a savings option, followed by the fees charged. This is most evident amongst the youngest and oldest age groups – the groups with typically the least and most amount of savings being most worried in this regard. Paradoxically, despite the protracted low interest rate environment that we have experienced in recent years, a previous savings survey that we undertook found that most savers in Ireland hold deposit accounts in banks or credit unions, most of which are not getting any return. According to a recent Central Bank of Ireland report*, Irish household deposits grew to €144 billion at the end of May 2022 – a significant amount of money earning almost nothing for hard-pressed savers.
“There are multiple choices nowadays as to where people can put their savings, depending on their saving objectives, whether they want to grow their savings or simply hold onto them, and how often they want to access to their money. Therefore, the duration of your saving goals, i.e., whether they are short-term or long-term should certainly impact how consumers approach choosing their savings vehicle. Growth is key with a long-term saving objective such as retirement or a child’s college fund and is generally best served by an investment fund or pension fund. Short-term goals on the other hand, such as having a rainy-day pot, saving for a holiday or family event, or reducing debt, might be more suited to a bank or credit union account where you have stability of savings, no risk, and quick access to your money if you need it.”
Plans for savings:
The Aviva savings survey found that the top five plans for savings are:
- Financial security (47%)
- Rainy day fund (31%)
- Holiday (31%)
- Home renovations (23%)
- New car (21%)
Eoin Kennedy continued: “The survey also shows how our saving priorities shift with our stage in life. For example, saving for a car is a priority for 4 in 10 young people, whereas slightly older cohorts i.e., those between the ages of 35 – 54, are much more likely to be saving for their children’s education.
Young adults are probably saving more than previous generations, such is the pressure to build a deposit for a house purchase, save for a possible wedding or for other important milestones in life. Conversely, older people have generally amassed more savings sometimes as a result of inheritance and/or their life-long savings habit. They have been through this before and have experienced periods of high inflation in their lives, so it’s not surprising that so many are now worried about the impact of inflation on their savings.
“We would urge savers who are concerned at the lack of return on their savings to consider getting financial advice from a broker who could steer them through the myriad of options available that have the potential to provide a return, whilst taking their personal risk appetite and savings term into account”, concluded Eoin Kennedy.
Anne Mathews, Communications & PR Manager
Phone: 087 246 0358
Notes to editors:
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