Majority of Irish investors believe that they are getting a poor return on their investments
The Smart Money Series’ have published the results of a recent survey of their subscribers. This survey examined their habits and attitudes towards savings and investments in Ireland in December 2020.
The highlights included:
Where are people investing?
When asked where they are choosing to invest their savings, the top choice was ETFs at 34% closely followed individual shares. An exchange-traded fund is a type of investment fund and exchange-traded product, i.e. they are traded on stock exchanges and the the ETF is a basket of securities. These products can track indexes e.g Vanguard FTSE 100 tracks the top 100 companies on the FTSE. They are predominantly passive and commonly have much lower fees than an active or managed fund.
They were closely followed by individual shares with 30% of respondents. It’s hardly a surprise that they are an attractive option. People see the seemingly relentless rise of US equities and in particular the recent Airbnb IPO and want to get onboard. Only time will tell whether we see their continued rise or the bursting of a bubble.
1 in 8 of respondents cited the destination for their savings to be investment funds. Some of the most popular investment funds in Ireland include Irish Life and Zurich.These actively managed funds typically have higher management fees than ETFs as they are professionally managed by fund managers. However some would argue that actively managed funds don’t necessarily justify their fees.
Indeed the semiannual SPIVA scorecard (S&P Indices versus Active) published by S&P Dow Jones) cite ‘’most active managers have underperformed their benchmarks, even after accounting for risk. In other words, the perception that active managers may be better suited to
navigate more turbulent market environments or anticipate headwinds is largely unfounded, at least historically.’’
The perennial Irish favourite of property charted surprisingly lowly on people’s list of favoured destinations for their funds with 9% of respondents citing property including buy to let and social housing as their favoured home for their savings pot.
Majority believe they are getting a poor return.
When asked if they believe that they are getting a good return on their investment, the majority at 61% said they believed that they are not. They believe that fees and charges are eroding any potential of a positive return. 36% of respondents think they are getting bang for their buck on their investments. The remainder were undecided.
What people are saving for:
The most popular savings goal in the survey was those saving to build up their pension pot at 44%. The (FIRE) Financial Independence Retire Early movement must be having an impact on the general population as the second most popular goal was 20% saving with the goal of retiring early. The varying goals of Saving for a mortgage, to travel the world and for a child's education were each selected by 11% of respondents.
No financial plan
Finally the survey also found that 60% of those surveyed do not have a financial plan. Smart Money has created a series of courses to address all of this and more. Led by former Barclays chief dealer, co-founder of Baggot Investment Partners and former IIFT head of education Peter Brown the ‘Start to Invest’ course looks at topics including financial planning, investing principles and the pitfalls to avoid.
’It's an uncertain and confusing time for many. They see economies worldwide ground to a halt due to Covid but stock markets going gangbusters. There's a rebalancing of the world economy with some assets looking significantly overpriced and other categories looking stunningly cheap.
Closer to home I'm constantly surprised at how many people are in the wrong investments in terms of risk and fees.
There are a surprisingly easy few quick solutions people could implement to improve their returns, however as I see on a day to day basis in Baggot Investments and from the results of this survey, there are a huge proportion of people who don't bother with creating a financial plan. I address all of these challenges in my Start To Invest course.''
Course lecturer Peter Brown
About The Smart Money Series
Ed O’Riordan set up the Smart Money Series to provide educational events and courses that cut through the jargon, noise and unnecessarily complex content and marketing around investing. The Series aims to help people to discover a sound investment strategy beyond the noise.
It is for anyone who is unsure of the current economic landscape and whether it's the right time to invest or purchase a home, those who are tired of the poor deposit account returns and for anyone who wants to make their money work harder.
You’ve worked hard to make and save your money so now make sure it works equally hard for you. Smart Money runs two investing courses through the series led by former Barclays Chief Dealer and Newstalk markets commentator Peter Brown, the Investing fundamentals course and our Start to Invest course.