Inertia: the Enemy of the Irish Saver

Inertia (noun): a tendency to do nothing or to remain unchanged.

We wouldn’t normally go to the lengths of explaining a relatively well-known word, but this time it’s all a bit too serious to allow for any lingering doubt. Inertia is one of the greatest threats to Irish savers today.

It was widely noted at the end of September 2021 that Irish households now had €136bn on deposit with banks and credit unions. This is not money that has been sitting there for years, more than €13.5bn was added to the pot in the previous 12 months alone. Note that this is households, there are also many billions of corporate euros on deposit too.

Why do people keep topping up their bank balance all the time instead of finding better alternatives for their money? Inertia has a huge part to play, as it’s just very easy to take the surplus cash that you didn’t spend in the last month and transfer it over to your deposit account. It can be done in seconds in your banking app.

Negatives of bank deposits

Yes, it’s very easy. But it’s also very expensive and not as risk free as you might have thought. Let’s look at the negatives of bank deposits.

• Bank deposits are not risk free. Your deposits are only guaranteed up to €100,000 with any one bank. We all saw in the financial crash that this must be considered. Bank defaults are not everyday events, but they happen.
• Interest rates are at 0%. In fact, Irish banks have been advising business customers of negative interest rates in recent years, with this applying to larger deposits for consumers too. Inflation on the other hand has quite aggressively re-entered the fray. Putting your money in the bank can only result in a definite reduction in your standard of living.

At Everlake, we believe that rather than just lobbing any spare cash into a lifestyle losing account, the key is to understand what you want your money to do for you. Then you build a strategy and saving approach around that.

A little effort

Ok, we accept that at the outset there’s a little bit more work involved than a few clicks on your banking app but it’s not difficult. We do most of the work and you then have clarity about what your money will actually achieve for you. It’s a strategic approach to increasing your wealth, as opposed to letting inertia cost you a steady loss of your purchasing power.

The choice is simple and it’s yours; a little effort to develop a wealth enhancing strategy or sit back, do nothing, and get poorer. We believe there is a better path for Irish savers than simply watching your wealth erode in the bank.

At Everlake, we help savers and retirees make the most of their hard-earned savings, whether it’s to see them grow or to ensure they enable you to live to the full in retirement.

Further information can be found in Investment Consulting: Our Approach Download Guide