Savings and Investment Index shows more people saving and investors are cautious

The Bank of Ireland Savings and Investment Index remained steady in Q1 2025, flat with the previous Index in Q4 2024, which had seen results returning to pre-pandemic levels. A small uplift in the savings element of the survey, with more people saying they are currently saving, was offset by a slight drop in investment sentiment.

The cost of housing/rent and inflation remain the two biggest concerns and while the proportion of people saving is reaching close to historic highs, investors are expressing a cautious tone.

• Savings and Investment Index flat at 94 in Q1 2025, the same level as Q4 2024

• • Savings Index was 95 in Q1 2025, up 1 since Q4 2024
  • Investment Index was 92, down 1 since Q4 2024

The cost of housing/rent continues to dominate concerns faced by Irish consumers. When asked to say which they were most concerned about, 23% indicated the cost of housing/rent, an increase of 7 percentage points on the Q4 survey, and rising to 39% for 16 – 29 year olds. 21% of respondents indicated that they are most concerned about inflation/cost of living, up 3 percentage points since Q4 2024.

Kevin Quinn, Chief Investment Strategist, Bank of Ireland said: “While Ireland’s inflation rate may have dropped to 1.8% per annum by February, both housing or rent and the cost of living remain the dominant worries faced by Irish households. While the pace of inflation may no longer be as concerning and the European Central Bank has already cut interest rates six times, the cumulative impact of price rises in recent years has left many households still in catch-up mode and it will be some time before this begins to lessen as a concern.  The most notable increase in our survey was the concern about housing and rent, which was the biggest worry for almost one in four households. Inflation and the cost of living was up also, its first increase since February 2023.”

Savings habits are returning slowly

Despite concerns, the survey also showed more people think now is a good time to save than since late 2021. This was also reflected in the incidence of people saving reaching close to the historic highs last seen just before the pandemic in February 2020. Despite this, 57% of households feel that they aren’t saving enough.

“What we are seeing is a slow return to the pre-pandemic way of saving. There’s no doubt people recognise the need to save but when combined with the impact of the cost of living crisis of recent years, the savings habit is only returning slowly. This is demonstrated through a higher incidence of saving this quarter but the smaller amounts that people can afford to put away,” according to Kevin Quinn.

Investing habits remain strong, but a cautionary tone emerges

The amount of Irish households who are investing has remained at its highest level for the second quarter in a row but there is also a cautionary mood. When asked if it was a good time to invest, there was a marginal drop from the previous survey, but there was a noticeable drop in how people viewed the stock market for the coming six months, with 44% believing the world stock market would be down in the next six months compared to 32% in the last survey in Q4 last year.

“The experience that most people have had with investing over the past two years has, in general, been very positive. With almost 50% gains made in global equities in 2023-2024, there is little surprise that more people have the investment habit than ever before. That said, a lot is happening in 2025 to influence how people view the stock market and there is a much more cautious tone as a result. In quarter one alone, we have seen the onslaught of change from the new US administration as well as a very changed landscape in Europe. Many of last year’s winners in the stock market are trailing behind so far this year and markets like Europe have been the winners so far. With markets down to date this year, it is no surprise that investors are expressing a more cautious tone, and I’d expect to see more of this for the months ahead,” said Kevin Quinn.