Ifac, Ireland’s farming, food, and agribusiness specialist professional services firm, and a top 10 accountancy firm, is advising Westmeath business owners and savers to look for alternatives to get the best return on their cash deposits.
Since July 2022, the European Central Bank has raised interest rates ten times to control inflation. While higher interest rates should be good news for individuals with cash savings, Irish retail banks have been slow to raise rates for their deposit account holders. Most on-demand accounts still earn less than 1% interest per annum, which, in an inflationary environment, erodes the real value of cash for savers.
“With banks slow to raise interest rates for on-demand deposit account holders, it makes sense to look for alternatives.
“For example, for an individual with €50,000 held on deposit, an interest rate of 0.5% per annum means that the ‘real’ value of their deposit will be just €43,500 after three years, assuming inflation remains at the current 5% level (September 2023 ). In other words, they will see their cash lose around €6,500 of value and buying power.
“While inflation has eased in the last few weeks, it is still expected to stay ‘too high for too long’ according to the European Central Bank. And, although at its recent meeting on 26 October, the ECB’s Governing Council decided to keep the three main interest rates unchanged, there is still a possibility of further rate increases depending on the inflation outlook.
“In this scenario, it makes sense for consumers with cash on deposit to shop around for higher returns. For example, currently, some offerings pay out over 3% per annum where deposits are held for a three-year or five-year term. These offerings are available for both company and personal funds,” Ifac’s Head of Financial Planning, Martin Glennon, said.
In addition, risk is an important consideration when deciding what to do with your cash. As always, before making any decision, it’s important to do your homework and obtain professional advice if necessary. Your local ifac office can point you in the right direction.
Ifac has been at the heart of agriculture and food since 1975, providing quality services and expert advice to its farming, food, and agribusiness clients across the country. Ifac has over 30 locations nationwide and 500 people serving 22,000 clients.
