Talk the talk

Sarah Loftus, head of savings and investments at the EBS, talks to David Clerkin.

How difficult is it to encourage people to save, now that interest rates are so low?

We will always need to save for the rainy day and for all sorts of specific purposes, almost regardless of the interest rate. Inflation rates are also low so the low interest rates are not having a significant negative effect on savings.

We see consumer borrowing continuing to surge ahead. How is this affecting saving habits?

Although borrowing is surging ahead, there is still a healthy growth in savings and the country is saving a higher proportion of earnings than has been the case in recent years.

How competitive is the savings market right now? Why should savers shop around if rates are broadly similar among deposit takers?

Shorter-term rates are lower than longer-term rates and consequently, this gives less scope for deposit takers to differentiate themselves. However, over the longer term, the gaps between different institutions can be quite significant. One of our products, EBS SureCertificates, provides a return of 25% over six years while having access to your funds over the period.

You recently published a series of tips for investors. What are the most important?

Decide what type of investor you are in terms of your objectives, your attitude to risk and your timeframes for investment. Spread your investment across a range of options which can include term cash deposits, stocks and shares and property. Contributions to your pension should be maximised for tax relief. You are never too young to start investing.

What should consumers look out for in an investment product?

Investment products as a rule do not provide capital guarantees. However, there is greater potential for higher returns and, especially over longer terms, investment returns have a track record of outperforming deposits by a significant margin.

What do you say to SSIA holders thinking about what to do when the scheme starts to unwind in 18 months’ time?

For anybody who has built up a savings habit over a five-year period, the first thing they should do is to try and maintain that habit and continue saving. Regular saving over long periods is the way to build up a real nest egg. Regarding the actual funds that will mature in SSIAs, people should decide what their priorities are and take into account the level of pension cover they have. If there is any shortfall, as much of the SSIA money as can be afforded should be invested in pensions, with Personal Retirement Savings Accounts (PRSAs) a suitable option for many.

What’s your view on PRSA take-up levels?

PRSA was a new product and the attraction is that charges are capped. PRSAs will eventually replace personal pensions in the marketplace. EBS introduced their own PRSA which is now gathering momentum in terms of take-ups. Its main attraction is that our fund managers, Montgomery Oppenheim have the best five and 10-year returns in the marketplace.