{"id":377596,"date":"2026-03-10T11:49:12","date_gmt":"2026-03-10T11:49:12","guid":{"rendered":"https:\/\/www.europesays.com\/ie\/377596\/"},"modified":"2026-03-10T11:49:12","modified_gmt":"2026-03-10T11:49:12","slug":"what-are-the-risks-of-leaving-your-money-on-deposit-the-irish-times","status":"publish","type":"post","link":"https:\/\/www.europesays.com\/ie\/377596\/","title":{"rendered":"What are the risks of leaving your money on deposit? \u2013 The Irish Times"},"content":{"rendered":"

We\u2019re richer than ever before \u2013 new research from the Central Bank of Ireland<\/a> shows that Irish wealth has reached a new high of \u20ac724,000 per household.<\/p>\n

And yet, we remain reluctant to put this wealth to work for us by investing. We still have staggering amounts on deposit earning next to nothing, while figures from the Central Bank show our disinclination to put it to work in the markets. <\/p>\n

This will cost us \u2013 a wealth report from Davy<\/a> last year found evidence \u201cof an overly conservative and\/or passive management of Irish household financial assets\u201d. By keeping so much money on overnight deposit, earning next to nothing, we are \u201csystematically foregoing risk-free returns\u201d, Davy found. Indeed, \u201cthe reality is that we could have achieved more in wealth terms in the past decade with a concerted effort,\u201d the report found.<\/p>\n

But there is an appetite to do more with our money: of those investing, about 32 per cent have only started in the past two years, according to the Central Bank, while the Government has big plans for its proposed tax-free savings\/investment product aimed at boosting participation.<\/p>\n

So, it\u2019s a good time to familiarise yourself with dipping a toe in the markets. Over the space of eight weeks, we are going to guide you through how you can start investing, from stocks to bonds and investment funds to crypto.<\/p>\n

But first, why are Irish people so loath to invest? What are the risks of leaving your money on deposit? And how can you mitigate risks when investing?<\/p>\n

We\u2019re not big investors<\/p>\n

Last year, a report from the Central Bank showed that the Irish have one of the lowest investment participation rates in Europe \u2013 and Europe itself lags behind the United States.<\/p>\n

We hold about 38 per cent of our financial assets in deposits and cash, some way higher than the EU norm of 30 per cent \u2013 and far higher than either Denmark or Sweden (both 13 per cent).<\/p>\n

And a lot of our wealth is in housing; a more recent Central Bank report finds that housing wealth accounts for almost 68 per cent of total net wealth, and represents 60.6 per cent of the total assets of Irish households.<\/p>\n

Moreover, when it comes to investing, Irish households hold just 2.3 per cent of their financial assets in direct investments such as listed equity and debt securities \u2013 lower than the EU average of 7.5 per cent. When it comes to stocks and shares, we allocate less than 2 per cent \u2013 significantly below countries such as Finland (14 per cent) and Germany (7 per cent).<\/p>\n

And it\u2019s not because we love bonds \u2013 Irish investors have just 0.4 per cent in debt securities, compared with Hungary\u2019s rate of13 per cent and Malta\u2019s 11 per cent; or funds – we put just 2.2 per cent of our money into such vehicles, much less than Belgium and Spain (both at 17 per cent).<\/p>\n

But it doesn\u2019t mean we\u2019re not entirely invested: we beat the European average when it comes to investing through insurance products and pensions.<\/p>\n

We love low yielding deposits<\/p>\n

Latest figures from the Central Bank showed households in Ireland had a staggering \u20ac172 billion on deposit as of December 2025 \u2013 and of this, about 85 per cent was earning next to nothing on overnight rates. <\/p>\n

Recent results from AIB showed that from December 2024 to September 2025, deposits rose by a whopping \u20ac4.4 billion at the bank, up by 4 per cent \u2013 despite the bank paying out a rate of 2.25 per cent at best on fixed term deposits. <\/p>\n

[\u00a0Investing in property through your pension. Is it coming to an end?Opens in new window<\/a>\u00a0]<\/p>\n

\u201cIt\u2019s not just all small holdings, there are large deposits out there that are likely sitting in non interest bearing accounts,\u201d says Rachael Morgan, head of strategy at Davy. \u201cIt\u2019s unusual relative to other countries.\u201d<\/p>\n

The reasons are complicated<\/p>\n

So why this reluctance to move our money? <\/p>\n

\u201cIt\u2019s complicated, it\u2019s down to a confluence of factors,\u201d says Morgan.<\/p>\n

First of all, Irish investors still live with the memory of bad investing experiences \u2013 plummeting Eircom shares in 1999, collapsing bank shares post the 2008 global financial crash, for example. <\/p>\n

\u201cThe scars from the financial crisis are still there, and risk aversion is a consequence of that,\u201d says Ian Quigley, head of investment strategy for RBC Brewin Dolphin Ireland. \u201cIt has obviously had a legacy and impact on investors in Ireland.\u201d<\/p>\n

Having money to invest is another factor.<\/p>\n

[\u00a0How can you make your savings work harder?Opens in new window<\/a>\u00a0]<\/p>\n

\u201cI don\u2019t know if people are reluctant to get involved in investing, but they mightn\u2019t see that they can afford it,\u201d says Richard Waring, head of consumer research at Bank of Ireland.<\/p>\n

As Morgan says, \u201cthe reality is that half the population would struggle to survive an income shock\u201d. <\/p>\n

Figures from Bank of Ireland research showed that 45 per cent of the adult population are either struggling financially to make ends meet or are stretched \u2013 with no capacity to save. <\/p>\n

\u201cSo they just don\u2019t have the bandwidth to invest.\u201d<\/p>\n

Where people do have money, they tend to opt for a tax efficient pension \u2013 the greatest source of retail exposure to stock markets, says Morgan.<\/p>\n

Cultural factors are also at play, with a preference in Ireland for real-world assets. <\/p>\n

\u201cPeople love property,\u201d says Morgan.<\/p>\n

And our desire for home ownership can drive people\u2019s savings behaviour.<\/p>\n

[\u00a0I am a selling agent and here are my housing predictions for 2026 Opens in new window<\/a>\u00a0]<\/p>\n

At the younger side of the age spectrum, people are paying high rents while saving to buy a home. And at the older side, people who could invest are holding on to their money in case their children need a gift; almost 50 per cent of first time buyers believe they\u2019ll need help from family to buy a home, according to Bank of Ireland\u2019s research.<\/p>\n

It\u2019s about parents \u201ckeeping the powder dry\u201d to ensure they have cash reserves should their children need it.<\/p>\n

In the Central Bank report, respondents cited a lack of knowledge as being a factor.<\/p>\n

Morgan agrees. <\/p>\n

\u201cConfidence, accessibility of advice, understanding investments is a huge thing. Where do I start? How do I know I\u2019m doing the right thing?\u201d<\/p>\n

And then there is the proximity effect. \u201cPeople are concerned about not having money when they need it,\u201d says Morgan.<\/p>\n

\u201cIf people are saving \u2013 access is really important to them,\u201d agrees Waring.<\/p>\n

\"InflationInflation is currently running at about 2.7 per cent \u2013 but the best returning accounts typically offer less than this. Photograph: Getty Images <\/p>\n

Time constraints are another issue. \u201cWhere does it sit in people\u2019s priorities?\u201d asks Waring.<\/p>\n

The confusing Irish taxation regime is also seen as a problem \u2013 you pay 33 per cent on individual stocks, but 38 per cent on investment funds. And what about offshore exchanged-traded funds? And having to cash in your gains to pay a tax bill every eight years?<\/p>\n

The different charges and commissions that can be levied, such as through allocation rates, can also put people off.<\/p>\n

As Morgan says, \u201cthere is an awful lot of complexity\u201d.<\/p>\n

The risks of not investing<\/p>\n

The contradiction, however, is that while people \u201crationally recognise that in order to preserve the value of their capital they have to earn above inflation\u201d, says Quigley, they aren\u2019t always prepared to follow through. <\/p>\n

\u201cThere\u2019s an awareness of that \u2013 just apprehension around what it could mean,\u201d he says. Indeed this is borne out by the amount of money on deposit. Markets remain volatile, and this level of uncertainty means that people think \u2018I\u2019ll leave it there \u2013 I don\u2019t want to place it at risk\u2019,\u201d he adds.<\/p>\n

But of course, \u201cthey\u2019re avoiding volatility, but they\u2019re not avoiding risk\u201d. <\/p>\n

Inflation is running at about 2.7 per cent \u2013 but the best returning accounts typically offer less than this. <\/p>\n

And if inflation is higher than your return, then you\u2019re effectively losing money. For example, if you have \u20ac10,000 in a savings account, and your return is just 0.5 per cent, if inflation is 3 per cent, then in real terms, you\u2019re giving up \u20ac250 a year.<\/p>\n

\u201cIt\u2019s the concept of the money illusion,\u201d says Quigley, referring to our tendency to consider money in nominal terms \u2013 rather than taking into account the impact of inflation. <\/p>\n

So, we see our money growing by 1 per cent \u2013 but forget that in terms of purchasing power, it has actually lost value.<\/p>\n

Mitigate your risks<\/p>\n

This is not to say that looking for a higher return doesn\u2019t come with a cost.<\/p>\n

\u201cEarning a return above inflation doesn\u2019t come for free,\u201d says Quigley, adding that any return in excess of this, is essentially compensation for assuming some level of risk, and the odd difficult period.<\/p>\n

But, says Quigley, the answer for most people is not to be \u201call in or all out\u201d of the markets \u2013 it\u2019s to get their asset allocation right.<\/p>\n

This means holding a combination of cash, bonds and equities, either in stocks or funds.<\/p>\n

\u201cGo longer, diversify and if you need the money back, there are alternatives there \u2013 fixed income products,\u201d adds Morgan.<\/p>\n

It\u2019s also about getting your risk profile right.<\/p>\n

[\u00a0Your financial health in 2026: cut outgoings, beware lifestyle creep and learn how to saveOpens in new window<\/a>\u00a0]<\/p>\n

\u201cAttitude and willingness to tolerate market volatility will vary by individual,\u201d says Quigley.<\/p>\n

So, it\u2019s not about chasing gains.<\/p>\n

\u201cIt\u2019s important that people are honest with themselves,\u201d he says, \u201cif you\u2019re seeking to maximise returns on capital, and you have a low tolerance to market volatility, then you\u2019re going to be miserable\u201d.<\/p>\n

After all, if you feel every move of the market feel too keenly, it will be \u201cincredibly stressful\u201d he adds.<\/p>\n

So then, it\u2019s important to put a plan in place \u2013 for return, and peace of mind.<\/p>\n

\u201cIn general, our experience is to avoid complexity as much as possible. Complexity tends to get people into trouble,\u201d says Quigley. <\/p>\n

In short, Quigley says you need to look for simplicity, when it comes to your investment solutions, and transparency, in terms of costs.<\/p>\n

Markets will move, but Quigley says you can try to remove those challenges by being well diversified and well spread.<\/p>\n","protected":false},"excerpt":{"rendered":"We\u2019re richer than ever before \u2013 new research from the Central Bank of Ireland shows that Irish wealth…\n","protected":false},"author":2,"featured_media":186758,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":"","_share_on_mastodon":"0"},"categories":[73],"tags":[625,79,22767,28197,18,2215,173818,19,2003,17],"class_list":["post-377596","post","type-post","status-publish","format-standard","has-post-thumbnail","category-business","tag-bank-of-ireland","tag-business","tag-central-bank-of-ireland","tag-davy-group","tag-eire","tag-for-you","tag-how-to-invest","tag-ie","tag-investment","tag-ireland"],"share_on_mastodon":{"url":"https:\/\/pubeurope.com\/@ie\/116204730535174316","error":""},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/posts\/377596","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/users\/2"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/comments?post=377596"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/posts\/377596\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/media\/186758"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/media?parent=377596"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/categories?post=377596"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/ie\/wp-json\/wp\/v2\/tags?post=377596"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}