Could your money be working harder for you?

Figures published at the end of 2023 show that Irish savers could be missing out on €3.5 billion in interest each year. So what can you do to make your money work a bit harder?

Richard White, Investment Director of Unio

Unlike many economies in Western Europe, which have struggled in the wake of the recent pandemic and ongoing conflict in Ukraine, Ireland has maintained strong growth. There are now swathes of wealthy people in the country who are looking to put their money to work, but they are underserved when it comes to receiving expert financial advice.

Many individuals with high levels of disposable income feel that as central banks have raised their interest rates several times over the last two years, they must now be getting competitive savings rates. They therefore believe it makes sense to leave their cash in their instant-access account.

However, of the estimated €152 billion that the Irish population has in household savings¹, the vast majority is still languishing in low-interest accounts. This is because while banks were quick to raise their borrowing rates, they have been slow to raise their rates for savers. As there are now plenty of accounts that deliver rates at circa 4%, it is a great time for investors to consider moving their money.

Other than an instant-access account, where can I invest my disposable cash?

With more than €14 billion in assets under advisement, Unio is a wealth-management company advising clients on financial planning, wealth management and investment strategies so that they can earn greater returns than those available in traditional savings accounts.

Money-market funds

While some people are happy to hold large amounts of cash over the long term, others prefer to earn regular income from their investments. It generally makes sense to hold some cash in reserve in case of emergency, but you could also consider investing in short-dated money-market funds. These funds work like a typical mutual fund that issues shares to investors and invests in high-quality short-term debt and cash equivalents. This includes debt guaranteed by commercial banks or short-term government debt issues.

While such funds may experience short-term volatility, they are usually a low-risk option, with the returns mirroring interest rates set by central banks. One of the funds we recommend, for example, is AAA rated and has a gross yield of 4%. With money-market funds, you are only invested for a short period – typically three to six months – so your money remains easily accessible. By making the right investment choices now, clients can achieve 10 times the return on their liquid reserves in a cash fund compared with keeping their money on deposit with their high-street bank.

Irish Government bonds

Investing in government bonds is another low-risk option for clients who may have savings of more than €200,000. Irish residents can enjoy tax-free returns on any capital gain on maturity, and tax on any income generated by the investment is only levied at the marginal rate.

Given that interest rates have remained relatively high over the last year, many bonds have been trading at a discount and this has attracted investors into the government bond market. If you recently invested €250,000 in a 0% Treasury Bond 2031, for example, you would realise a gross gain of more than €45,000 (less fees) over the next seven years².

As with any investment, returns aren’t guaranteed. However, money-market funds and Irish government bonds can be a low-risk entry point for individuals with a large amount of disposable income who want to make their money work harder than if it were held in a low-interest current account.

For more information about these savings products, financial planning, investments or any other financial services provided by Unio, please visit:

Unio Financial Services Ltd trading as Unio, Unio Employee Benefits and Unio Wealth Management is regulated by the Central Bank of Ireland.

² Trading at €81.62 as of April 18, 2024