Inertia (noun): a tendency to do nothing or to remain unchanged.
We wouldn’t normally go to the lengths of actually explaining a relatively well-known word, but this time it’s all a bit too serious for there to be any lingering doubt. Inertia is one of the greatest threats to Irish savers today.
It was widely noted at the end of August 2020 that Irish households now have €120bn on deposit with banks and credit unions. Note that this is households, there of course is also many billions of corporate euros on deposit too. This is not money that has been sitting there for years, as more than €10bn of this was added in 2020 alone. And within this, €2bn was saved in July 2020 alone!
Why do people keep topping up their bank balance all the time as opposed to finding better alternatives with 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. This can be done in seconds in your banking app.
Yes, it’s very easy. But it’s also very expensive and not as risk free as you might have thought. While we’ve covered this in previous posts, let’s just recap on 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 recently started advising business customers of negative interest rates. This is likely coming for consumers too. Inflation on the other hand is low, but not 0%. So putting your money in the bank can only result in a definite reduction in your standard of living.
We believe at Global Wealth 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. And then you build a strategy and saving approach around that. 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 lead you to 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 Global Wealth, 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.
Would you like to find out more about how Global Wealth can help you to make the most of your savings?