Couldn't someone as risk adverse as Bronte use the new account for bonds / MMF i.e. low return & safe products (although still losing to inflation most likely) - and also tax free, therefore beating something like keeping 50k cash in a regular bank savings account?
Special Investment Accounts limits announced in Budget
- Thread starter Connard
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Peter browne on liveline !! ,the shift in mindset is already happening when even liveline are discussing this. Also the fact that they had peter browne on and not the usual suspects shows that aswell.
Thats a good point though, we are long time since a proper market crash, the timing of this in july 2027 could be interesting, although it will take another 4 years to get to 48K so that should provide a bit of safety. It won't be like eircom or even the financial crash as it will take years before a sizeable investment is built up.
Victor Carrera
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That asset class has always been available through the post office savings certificates.
- 100% state-protected funds
- Tax-free interest returns
- Zero fees or commissions
Broadly speaking, yes.
I would not call deposits in banks "dead money", as they are used to finance lending by banks, but I get your point.
In the EU, households tend to hold more deposits than in the USA.
The EU is trying to encourage deeper capital markets, and part of this is to try to encourage households to hold more capital market assets, rather than simply holding deposits in banks.
This is known as the SIU:
What the EU is doing and why
The savings and investments union (SIU) is built on a simple idea: giving EU citizens more choice and opportunities to make the most of their savings while making it easier for European businesses to access the funding they need to grow, innovate and create jobs.To achieve this, the SIU seeks to make sure that our financial system works as effectively as possible. Better integration of our financial markets should make access to capital simpler and more efficient, both for investors and for businesses. This helps build a more secure future for citizens while strengthening Europe’s competitiveness.
Europe faces significant investment needs to maintain its competitiveness, advance the twin transitions, strengthen security and resilience, and preserve technological sovereignty. The Draghi report estimates these additional needs at around 1.2 trillion EUR annually, with particularly strong demand for investment in areas such as deep tech, clean‑tech, defence, artificial intelligence, and biotech.
A significant share of these additional investment needs relates to small and medium sized enterprises (SMEs) and innovative companies, which cannot rely solely on bank financing. By developing more integrated capital markets – alongside an integrated banking system – the SIU can effectively connect savings with investment needs.
The SIU draws on progress already made under the capital markets union (CMU) and the parallel efforts to develop the banking union.
The idea is that better capital markets would lead to more economic growth, to help us catch up with the USA.
Bear in mind that holding deposits is not risk-free, as the real return can be negative, if inflation is higher than the interest rate.
This is the case at the moment.
Many savings are on deposit in Ireland earning 0.5% to 1% gross. Meanwhile CPI inflation is about 3.5%.
That is a negative 2.5% loss each year.
I know - it can be modelled out in a few minutes. Likely scenario, downside scenario, upside scenario.
If you’re invested in equities. And you can get close to equivalent fees in this. The 1% every year is better than CGT on sale and it’s not particularly close.
The only ace in the hole for CGT is it expires on death. That’s more estate planning than investment planning imo.
We know what the take-up was in Sweden.
Introduced 2012
4m taxpayers hold active ISK accounts, out of 10.5m people.
Total assets are €150bn approx
I predict the take-up here will be lower, as people are very tied to deposits.
The irish stock market withering on the vine now, this year alone ires reit , irish continental group , dcc energy and now kenmare resources are in the process of being taken off the stock market and going private. Will investors in these new accounts be very disappointed that there are very few options left if they want to invest in irish equities. Is all this happening too late to save the irish stock market , the government should have done this a decade ago.
On the risk point, this is where financial literacy education is required. Something like these accounts then can help people to get exposure to the market.
It's also worth noting that the Revolut's and Trading 212's of this world are offering retail investors easier platform access and are clearly getting people to bite. So there is a vibrant market that appears to be growing for investments, particularly in equity markets. The amount of noise about DD arises from a vocal and possibly relatively widespread group who understand what an ETF is and aren't happy with the tax treatment.
I think the media needs to grow up a little, also. I've listened to a few media podcasts and reports post budget and around the SIA before budget, and if you took a shot every time you heard "SSIA" or "Eircom" you'd be well on your way.
Meanwhile, anyone who is invested into something like an S&P 500 tracking fund has seen their wealth increase dramatically in recent years. Ok, outsized performance, but even over the very long run, it's a solid bet.
And again, on risk, how many people are essentially invested into things like equities via their pensions, but don't realise it maybe because it's marketed as a Consensus Bland Appropriate Risk Fund 3? Again, literacy might help here (and also help legions of pension investors who find themselves holding like 15% of their funds in cash aged 30 because they answered the regulatory questionnaire with trepidation).
I think we have an ecosystem that promotes negative outlook on almost any new initiative in Ireland, from SIA to plastic bag levy to probably seatbelts in cars. And then over time the culture adopts and changes.
It's also worth noting that the Revolut's and Trading 212's of this world are offering retail investors easier platform access and are clearly getting people to bite. So there is a vibrant market that appears to be growing for investments, particularly in equity markets. The amount of noise about DD arises from a vocal and possibly relatively widespread group who understand what an ETF is and aren't happy with the tax treatment.
I think the media needs to grow up a little, also. I've listened to a few media podcasts and reports post budget and around the SIA before budget, and if you took a shot every time you heard "SSIA" or "Eircom" you'd be well on your way.
Meanwhile, anyone who is invested into something like an S&P 500 tracking fund has seen their wealth increase dramatically in recent years. Ok, outsized performance, but even over the very long run, it's a solid bet.
And again, on risk, how many people are essentially invested into things like equities via their pensions, but don't realise it maybe because it's marketed as a Consensus Bland Appropriate Risk Fund 3? Again, literacy might help here (and also help legions of pension investors who find themselves holding like 15% of their funds in cash aged 30 because they answered the regulatory questionnaire with trepidation).
I think we have an ecosystem that promotes negative outlook on almost any new initiative in Ireland, from SIA to plastic bag levy to probably seatbelts in cars. And then over time the culture adopts and changes.
I think there is clearly a sea change with the younger generation who are much more literate in this space.
Perhaps it’s a bit negative, but I do ultimately think the only real change you can make is by targeting younger people through the school system (no idea if financial literacy is meaningfully taught, wasn’t in my day).
It’s slow to wait for the generations to turn over but just think trying to teach a 50 year old who’s spent their whole life thinking investing = buying bank of Ireland shares and risk = bad is unlikely to bare much fruit.
Yes Corola, that’s it, I thought it was a savings scheme, until today. Now I know it’s an investment scheme. Nothing wrong with either, but one should not be confused with the other.
Now all the knowledgeable posters on here are annoyed I didn’t realise that.
Bloomberg calls it savings
Earnst & young the same
Ireland's new Savings Account: Making it work | Budget 2027
Ireland's new Savings and Investment Account could transform how people save and invest. Simplicity, tax efficiency and strong protections matter.
www.ey.com
Rte
How will Govt's new savings investment scheme work?
Peter Brown, Managing Director of Baggot Investment Partners, on how the new state-backed Personal Investment Accounts are likely to work in practice.
Etc
I'm guessing no one would have thought of those until they skimmed the likes of this article and saw it.
No, for this type of thing it's the provider who is on the hook for penalties etc. The punter will just have their account adjusted as to put it on the position or would have been of dealt with correctly
Heck Duke, I only looked at it properly today after I read this thread, there was a load of kite flying before the budget and I just assumed it was a savings scheme. It’s not. It’s an investment vehicle, of unknown returns, with risk, no guarantees, unknown costs and the only thing we actually know is you can out in 12k a year, and if you go above 50k your max tax is 1%% of the excess. Which makes it marvellous somehow.
What happens after 3 years, your 36 is worth double *, so you pay tax, you cash out in year 4 and it’s worth 20k.
* because your fund bought the new Ryanair/microsoft at one euro a share.
Duke of Marmalade
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Yep, there have been so many European tech products killed since 2010 because they were bought by Americans....
Hello Wolfie, I’m always salty, what you don’t understand about me is that I’m never sugery. And it would be a mistake to think I’m upset. What I’m surprised at was that I had not realised this is not a savings scheme, not one poster mentioned there was risk to investing in this “thing”.
The people on Liveline are gonna love this, I’ve no idea who Mr. Browne is, my Liveline downloads are after the event, so I’ll be listening back to find out, it’s good for the “mood” of the nation, a comedy show when it had Moan to Joe.
I think my comments, opinions, views are just as valid as any other. Even if I’m not a financial guru on investments.
Yes I’m a non resident, I’m also an Irish taxpayer. Irish budgets affect me, including this latest. I also am conscious of estate planning. In addition, I’m on a trajectory back to residency. Unexpectedly, due to life events and climate change. My timeline back is between 3 and 5 years.
Yes, it's in contrast to bank deposits where they 'will' lose value.
The tax free allowance has me thinking that I'll just invest the max annual allowance in VALL each year until the tax free limit is reached and then reassess. VALL is the relatively new Vanguard ETF tracking global markets (large, medium and small cap) at an annual charge of 0.07%.
It's good that it's a no brainer up to €50k so we don't have to wreck our heads deciding what to do for a few years.
To be honest, I suspect the max annual limit might be higher by the time anyone pays a single cent tax.
It'd be frowned upon by the masses if it were introduced with a max annual contribution of €50k because, as referenced before, it'd be seen as a tax break for the rich. Much easier to introduce it with a €12k annual limit and tweak it later when people understand the product more and realize that it isn't a tax break in the sense that tax is massively down to 1% from 38% (as many people currently seem to believe).
When accounts eventually do exceed €50k, it will be a much more predictable revenue stream for the government and will also be of good, but not massively so, benefit to investors versus deemed disposal. It's most likely in everyone's interest to get more money into these accounts but the government probably want it done in a controlled manner.
In addition to fears of it being incorrectly seen as a tax break for the rich, the low annual limit, as also mentioned before, may also be related to a fear from the government that we'll face a bear market in year 1 and drive the general public away from equity investment.
It's good that it's a no brainer up to €50k so we don't have to wreck our heads deciding what to do for a few years.
To be honest, I suspect the max annual limit might be higher by the time anyone pays a single cent tax.
It'd be frowned upon by the masses if it were introduced with a max annual contribution of €50k because, as referenced before, it'd be seen as a tax break for the rich. Much easier to introduce it with a €12k annual limit and tweak it later when people understand the product more and realize that it isn't a tax break in the sense that tax is massively down to 1% from 38% (as many people currently seem to believe).
When accounts eventually do exceed €50k, it will be a much more predictable revenue stream for the government and will also be of good, but not massively so, benefit to investors versus deemed disposal. It's most likely in everyone's interest to get more money into these accounts but the government probably want it done in a controlled manner.
In addition to fears of it being incorrectly seen as a tax break for the rich, the low annual limit, as also mentioned before, may also be related to a fear from the government that we'll face a bear market in year 1 and drive the general public away from equity investment.