More people saving during the COVID-19 lockdown
The latest Bank of Ireland Savings and Investment Index shows that slightly more people were saving regularly in the second quarter of this year amid the Covid-19 lockdown.
Bank of Ireland said the latest index shows the resilience of Irish consumers amid the Covid-19 crisis with a significant spike in people thinking that it was a good or very good time to save.
It noted that with less options for spending, the savings index rose to its second highest level since the index started in 2017.
But it also signalled that attitudes are likely to shift again with less people seeing the need for saving in six months’ time, which may indicate a rise in spending as the reopening progresses.
Today’s survey show that the percentage of people who saving regularly continued to rise steadily from 46% in the fourth quarter of 2019, to 50% in the first quarter of 2020 to 51% in the second quarter.
About 55% of people now think it is a good or very good time to save, up from just 38% in the first quarter.
But when asked to consider six months into the future, the number drops back to 43% suggesting that spending habits will quickly respond to the re-opening of the economy.
Bank of Ireland’s Investment Index also rose in the second quarter with a small improvement in the investment outlook offsetting weaker short term attitudes towards the immediate environment.
The lender said that in a very volatile period for investing, with equity markets dropping by 30% and then recovering three quarters of these losses in a matter of weeks, attitudes to investing understandably became quite divided.
Some saw opportunity in the crisis conditions with 32% of people saying they saw it as a good time to invest compared to 23% in the first quarter.
But there was also an increase amongst those who saw it as a bad time to invest with 47% seeing it as a poor time to invest, compared to 32% in the first three months of the year. This falls to 33% when asked about how they view things in six months’ time.
Meanwhile, Bank of Ireland’s Retirement Optimism Index showed a 12% rise in three months from April to June.
There was an improvement in the number of people who felt they would face a difficult time when asked about comfort in retirement (dropping from 33% of people to 24%.
There was also an improvement in how people felt about their financial preparedness for retirement, rising to 61% who felt prepared compared to 57% in the first quarter.
Kevin Quinn, Bank of Ireland Investment Markets, said the challenges and difficulties we have faced as a country in the past quarter have been met with great resilience and it appears that this is reflected in how we view our finances also.
“Attitudes to savings have strengthened as might be expected during a period of economic strain of this kind – less spending saw an increase in cash balances for some and those who could afford to put cash aside. With greater uncertainty, the precautionary reason for saving has also come to the fore, and we’ve seen an increase in those who think it’s a good time to save in the short-term,” Kevin Quinn said.
“More surprisingly perhaps, is a significant increase in our optimism about retirement. Perhaps a consequence of people having had time and space to reflect on their futures, there has been a growth in optimism about what life can be like in retirement,” he noted.
“Despite huge volatility in investment markets, attitudes to investing showed a modest improvement, largely driven by improvements in expectations about the investing environment in the months ahead,” he added.