Irish wealth hits a record €1.3 trillion but households are afraid to invest it in stocks or shares

Investment levels are far below EU averages

A fear of losing money, insufficient cash and a lack of knowledge were cited as the key reasons for not wanting to invest in retail products, according to the report, based on a survey of more than 3,000 adults.

Irish households are amongst Europe's most reluctant stock market investors despite sitting on an enormous €1.3 trillion in cash and savings.

A new report from the Central Bank shows that average household wealth has more than doubled over the past decade, but just 2.3% of financial assets are held in listed stocks and shares. This is less than a third of the EU average of 7.5%. The report found that 38% of assets remain parked in cash and deposits significantly above the EU average of 30%.

Irish people instead hold more of their wealth in indirect investments such as property, life assurance and pensions.

A fear of losing money, insufficient cash and a lack of knowledge were cited as the key reasons for not wanting to invest in retail products, according to the report, based on a survey of more than 3,000 adults.

The report also suggests that a history of limited levels of household wealth and more recent boom-bust cycles may have impacted our appetite for investment and driven a wariness and scepticism amongst many Irish consumers about putting their savings at risk through investment. Trust and confidence are important factors here.

These fears mean Ireland's investment market is highly fragmented, with just 36% of the adult population owning any product beyond a home or State Savings scheme. Those who do invest are disproportionately male, aged between 35 and 54, university-educated, and living in Dublin or other urban centres. Their average household income is €73,000, almost €15,000 above the national figure. The report also found that the wealthiest decile accounts for 78% of all direct capital-market exposure and 80% of indirect exposure through pensions.

Some 10% of people report owning crypto-assets such as Bitcoin, predominantly young males. The amounts tend to be small, with an average of €2,266 and mostly for reasons other than providing for their financial future, with more than half citing curiosity as their reason.

The report recommends a range of actions, including tax simplification, pension reform and greater financial literacy.

At EU level, the limited levels of retail participation in capital markets have been identified as a key issue for the region's competitiveness and growth. This is reflected in the €10 tn of EU citizens' savings that are currently held as bank deposits. 

"By reallocating a portion of their savings into productive investments, EU citizens can benefit from higher returns and build their household wealth, better preparing for long-term future needs. This would also provide vital funding to meet the EU’s long-term investment needs, including the green and digital transition," the report states.

Deputy Governor of the Central Bank Colm Kincaid said: “A properly functioning financial market must reflect and serve the needs and preferences of all consumers and investors."

"In particular, the research shows that, as things stand, financial services is not effective in reaching the full population of potential investors. This means Irish households may not be getting the full benefit of what financial services could do to help them provide for their future.”