Ciara and Sinead Ryan discussed the government's savings scheme and Ireland's fear of investing.
Personal finance expert Sinead Ryan told Newstalk Daily’ that Finance Minister Simon Harris said Ireland is lacking in an “investment culture.”
The minister had recently unveiled plans to facilitate investing for Irish people through a new government savings scheme.
A single flat rate of tax will apply to the Government’s new savings scheme, Simon Harris has announced.
The Tánaiste and Minister for Finance has criticised the current tax system as too complex, which he believes deters investment.
Minister Harris added that while the tax rate that will apply to the new saving scheme has not yet been decided, he expected it would be competitive.
“The government doesn't want us to save this way”, Mrs Ryan told Newstalk.
“One in every seven euros of our income is saved. That's too much. It's languishing in a bank. People aren't getting a return. They get cross about that.
“People do not want to be surprised by buying equities, stocks, shares, cryptocurrency and then be left with nothing.”
Simon Harris speaks to the media. Picture by: RollingNews.ie.She said the type of savings scheme Mr Harris presented was popular in many countries whereby you put a certain amount of money into an investment fund instead of a deposit account. This means interest is guaranteed to be won in the normal way.
“You're going to be buying a basket of goods and that might include stocks and shares in companies”, she said.
“The scheme will target people who are low level savers or what they like to call the squeezed middle, the people who feel they get nothing.”
Mrs Ryan emphasised the importance of having money set aside in case of emergencies.
“It's really important to have a nest egg and money put aside for the things that can go wrong”, she told Newstalk.
“Things do go wrong and life gets in the way and we don't want to be reaching for the credit card when that happens or having to beg for a bank loan.
“Experts would say somewhere between three and six months salary should be in a savings account for a rainy day.”
She said that some people have money on deposit even though they've just retired and have half a million quid sitting in their bank accounts.
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“That is not normal saving”, she added.
“That's something else - peculiar to Ireland. There's a blockage there that stops people making the money work for them and part of that is definitely fear.
“There is also nervousness about leaders’ behaviour across the world and how they’re currently dealing with things.
“People have muscle memory of the investments that didn’t work like: Aircom shares, people who invested in property, people who brought their next door neighbour’s house as their pension.”
She said it wasn't surprising that people rather keep money on their savings.
“You can go into your bank app and see the money sitting there.
“You think ‘ it's there. It's safe. I can touch it. it, I can feel it, I can have it tomorrow’
“But to that really important point, you're not really making anything on it sitting there. You're actually getting charged for sitting there and it's going down in value every single day.”
The new investment model proposed by Simon Harris is expected to be modelled after pre-existing successful financial models.
Such investment incentives already exist in the UK through ISA (individual savings account) and in Sweden as ISK.
Main Image: Elderly woman takes out a euro note from her wallet.
