Wise investment by SSIA savers

SAFE special savings incentive account (SSIA) investors who opted for fixed-rate products are on target to get the best return on their investment, a study has found.

And SSIA savers who invested in stock market-driven equity accounts will fare better than investors who opted for variable accounts, the study by Life Strategies, the independent actuarial consultancy, reveals.

It had been expected SSIA investors in equity-driven accounts would fare worst when the scheme ends in 2007 after share values plummeted.

The study also finds the final cost to the Exchequer will be close to €2,660m.

Life Strategies director Dermot Corry said that from an investment perspective, the good news is that the overall picture is positive in terms of product performance.

“Despite falls of 20% in typical investment funds since April 2002, equity SSIA investors are still well ahead of the contributions they have paid themselves, because of the boost of the Government contribution. Based on a typical product, our analysis suggests that the average SSIA has a current market value 9.5% lower than the total contributions paid, including the Government contribution. This is still 14% ahead of the contributions that the individuals have paid themselves. This is because of the benefit of investing a small amount each month, rather than investing the full amount in April 2002,” he said.

The report concludes that investors who opted for fixed-rate deposit SSIA accounts will likely see their investment outperform both variable rate deposit and equity SSIA accounts.

For the average monthly contribution of €158 per account, Life Strategies forecasts the following returns net of tax: fixed rate deposit €12,886; equity account €12,459, and variable rate deposit €12,294.