Just about everyone wants to be a better money manager and those of us lucky enough to have a bit put by usually want to make it work harder for us. And there is quite a bit put by in the State if the latest figures from the Central Bank are anything to go by.
The total net wealth of households in the Republic rose to a record €1.25 trillion in the first quarter of 2025, an increase of €6.3 billion on the previous quarter. Even more impressively, the total wealth of households in the State has risen by over 40 per cent, or €373 billion, over the past four years.
Unsurprisingly, the great majority of this wealth is tied up in property, with the Central Bank figures indicating that housing represented €855 billion or 68.5 per cent of total household wealth in the first quarter of the year.
The question is what people are doing with the portion that’s not tied up in bricks and mortar. The answer for most of us seems to be not very much. Other data from the Central Bank reveals that household deposits with banks increased by €1.3 billion to a record €167 billion during July. That’s a pretty large chunk of the non-property wealth sitting in accounts that are earning little or no interest.
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Of course, there are very good reasons for people to have at least some money in deposit accounts. Indeed, the consensus view among financial experts is that an essential element of good money management is putting aside some money for the proverbial rainy day.
“The first and most important step in any financial plan is creating a safety net,” says Niall Coughlan, a financial planning adviser at AIB Rathgar. “If you have an emergency fund that covers three to six months of essential expenses, it can turn a potential financial crisis into a manageable inconvenience. Once that foundation is in place, you can then start thinking intentionally about your savings goals, whether they’re short-term, like a holiday or new car; medium-term, like home improvements; or long-term, such as retirement.”
Fairstone Ireland head of pensions and investments Bernard Walsh points out the downside of leaving money on deposit. “Deposit interest rates don’t match, let alone beat, inflation,” he says. “The average rate from the pillar banks is about 0.7 per cent at a time when inflation is nearly 2 per cent. And your personal rate of inflation could be a lot higher than 2 per cent. If someone has a lot of healthcare costs or most of their spending is on food and childcare, their personal rate is much higher than the headline rate. They call it the silent thief.”
Walsh explains the impact of a 2 per cent inflation rate on the value of savings over time: “If you have €50,000, 2 per cent inflation will take €5,000 off the value of that within five years and almost €11,000 in 10 years.”
Equities have historically beaten inflation but that is over longer time horizons, Walsh notes. Stock market investors need to be prepared for what can be a bumpy ride, with sudden shocks and some equally sharp recoveries along the way. He also warns against attempting to pick individual winners on the stock market and to go for diversity instead. “Don’t look for the needle, buy the haystack, is what John C Bogle said in The Little Book of Common Sense Investing,” he adds.
Coughlan agrees. “Putting all your savings directly into equities may feel too risky, especially if you rely on that money for day-to-day security,” he says. “A balanced approach is best. That means keeping some funds in short-term savings for immediate needs, while investing other funds for long-term growth. Even small, regular contributions to an investment can add up significantly over the years as growth builds on growth year after year. At AIB, for example, the AIB life 360 Invest product allows customers to begin investing from €125 a month, with access to a broad range of funds tailored to different risk appetites.”
Generally speaking, a balanced approach means investing in different asset classes such as equities, bonds, commodities and cash equivalents. However, that tends to exclude opportunities represented by private market investing, according to Alan Merriman, co-founder and chief executive of Elkstone.
He explains that even a diversified portfolio of investments in publicly quoted companies is likely to be quite concentrated due to the dominance of the “magnificent seven” big tech stocks. This carries additional risk.
“If you think about all the companies around the world with annual revenues of more than $100 million, 87 per cent of them are private and only 13 per cent are public companies,” he notes. “You can get greater diversification by investing in private companies. Historically, private market returns are better over the longer term.”
Private market investing also includes credit funds, hedge funds and commodities. Merriman explains that credit funds can be engaged in mortgage and auto loan provision as well as lending for infrastructure projects. Hedge funds can provide different return profiles depending on how they are structured, he adds.
“These are all areas people think they can’t invest in, but they can,” says Merriman. “You can ask a financial adviser or broker about options to invest in private markets. There are also investment platforms that give access to private markets.”
Minimum investments vary from about €500 upwards while Elkstone can build a diversified private market portfolio for clients with a minimum investment of €500,000.
There are pros and cons, of course, with the principal disadvantage of private market investing being illiquidity – it can take time to get your money out. Despite that, there is a clear shift to giving access to private markets in the US, according to Merriman. “You need to be in both. They are not an alternative to public markets, it’s an additional investment and you are doing yourself a disservice if you are not investing in both of them.”
