Thursday 22 February 2018

The Ryan Review

Sinead Ryan

Sinead Ryan

The Budget has left savers feeling bewildered.

They thought they were doing the right thing – putting money by for a rainy day and the deluge of recent years made them hold on to it ever tighter.

But while saving might be good for an individual or household, it's a disaster for the economy because to function, it needs to have money constantly moving around.

So Mr Noonan has pulled out his big stick and punished savers for doing what they thought best.

So, what are your options with a lump sum dwindling away in a deposit account?

• First, recognise that you are making no money on it. It is merely being 'minded'.

With DIRT up to 41pc now, and PRSI on passive income at 4pc (which includes interest on savings), there is no asset growth in a deposit account.

Indeed, with inflation at 1pc you could even be eating into the real value of savings without realising it.

• You have time to move savings into An Post. State Savings remain tax free, but expect fierce lobbying from banks to have these rates cut, as happened twice in the last 12 months.

Currently, a five-year savings certificate pays out 11pc.

To match this, a bank would have to offer 3.6pc pa and you're lucky if you're getting 2pc at the moment.

Lock it in now, and it's unlikely the Government will make future cuts retrospective.

Irish Independent

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