Irish households are sitting on record cash balances.
According to the Central Bank of Ireland, we now hold well over €163 billion in deposits. For many families, that cushion has been hard-won, the product of careful budgeting through a cost of living squeeze.
But there’s a stark truth that needs to be emphasised: leaving the bulk of our long-term savings in cash is quietly eroding our future wealth.
Over the past decade, negative and near-zero interest rates offered poor returns. Even today, when rates are higher, inflation can outpace what ordinary deposit accounts deliver.
If we want future generations to build wealth with confidence, and if we want Irish businesses to access the long-term equity capital they need, we must make it easier for people to invest for the long run. A simple, proven way to do that is a Savings and Investment Account, or SIA.
ASIA is exactly what it sounds like – a straightforward account that allows people to put money into diversified, regulated investments with fair, transparent fees and appropriate consumer protections, while benefiting from tax incentives that reward long-term saving.
It provides a user-friendly way of setting money aside with the potential to grow in line with the real economy.
Euronext Dublin recently commissioned research by Amarách that found that half of Irish savers would put some of their savings into an accessible investment account if their banks offered it, and this rockets to 74 per cent if the Government were to add a tax incentive.
This isn’t a leap into the unknown. Variants already work well in other countries – France, Italy and Poland are examples.
[ How can you make your savings work harder?Opens in new window ]
In the UK, Individual Savings and Accounts (ISAs) have channelled billions into productive assets while giving citizens a clear, tax-efficient path to invest. Sweden’s Investeringssparkonto (ISK) – a simple, digital account with clear rules and portable between providers – has helped create one of the strongest retail investor bases in Europe.
And just this week, the European Commission issued a recommendation calling on member states to establish savings and investment accounts, to encourage savers to invest in accessible products, backed by shares and bonds, and incentivised by tax measures.
The direction of travel is clear.
Ireland should move early and decisively. We have a well-regulated market, high levels of savings, and a generation under the age of 50 who are digitally fluent yet priced out of many traditional wealth-building routes. Give them a tool that is simple, clear and fair ... and they will use it with benefits all round.
Firstly, households will build wealth more effectively. Regular, long-term investing clearly outperforms keeping long-term savings in cash, especially once you account for inflation.
That return difference compounds powerfully over decades. As one example, for a 28-year-old contributing €200 a month, the gap between cash-like returns and diversified market returns can be the difference between financial fragility and financial resilience at age 50. A SIA doesn’t have to just benefit higher earners.
[ How to build wealth in Ireland: Save and invest in your 20s and 30sOpens in new window ]
The goal is to expand investment to be accessible to all citizens. It’s also a very practical way to develop financial literacy in our country.
Secondly, Irish businesses will gain access to more domestic capital. Today, we hear a lot about funding gaps and innovative Irish scale-ups looking abroad to find growth funding.
A SIA isn’t a silver bullet but it can help create a broader base of local investors with a genuine stake in Ireland’s productive economy, including through increased investment in listed shares of growing Irish companies.
With everything that’s happening in the world right now, it makes sense to build our home-grown economic and financial resilience.
Getting Irish savers to move from a situation where they leave billions of euro lying idle on deposit to a culture of investment could be transformative from Ireland.
An Irish SIA can be a smart, concrete step that helps deliver this shift by playing to our national strengths: a tech-savvy population, high savings and world-class financial regulation. By not having an Irish SIA model, Irish savers, Irish businesses and the Irish economy are all potentially missing out.
The European Commission’s call-to-action on savings and investment accounts is a pivotal moment.
I know that Ireland’s capital markets and financial services sector stand ready to work with Government to design and rollout a SIA model that will work for Ireland that would give Irish savers an exciting new opportunity to doing something smart with their money.
We shouldn’t hang about on this. All we need is a signal from Government. The budget on Tuesday would seem likely exactly the right time to do that.
Daryl Byrne is chief executive of Euronext Dublin
