In the summer of 2026, as the cost of living crisis persists, many Irish households are grappling with the question of what to do with their extra savings. While some may be struggling to make ends meet, others have found themselves with a tidy sum, thanks to the unique circumstances of the pandemic. John Lowe, an expert from MoneyDoctors.ie, offers five savvy ways to utilize these extra savings, each with a focus on financial prudence and long-term security.
One key recommendation is to maintain a Rainy Day Fund, which should ideally cover three to six months' worth of net annual income. This fund is crucial for emergencies, sudden income loss, or investment opportunities. Lowe emphasizes the importance of ensuring liquidity in this fund, allowing for quick access when needed. Additionally, he advises against falling into the trap of short-term, high-interest debt, which can significantly impact one's financial commitments. Instead, he suggests paying off such debts quickly or transferring credit card balances to low-interest options like An Post Money, which offers a 12-month repayment period at 0% interest.
Another strategy is to explore better saving options. Lowe highlights the Zurich LifeSave Special Savings Plus account, which features the Prisma fund, and Irish Life's Pinnacle regular stock market saver account, which includes the MAPS fund with a safety feature that automatically switches between aggressive and passive funds during economic turmoil. These accounts offer competitive interest rates and are suitable for long-term savings, with penalties for early withdrawals.
Lowe also encourages individuals to bolster their pensions, as many working-age people have no retirement savings beyond the state pension. He suggests paying lump sums into pension funds to maximize tax relief, especially for those aged 40 to 50, who can invest up to 25% of their net relevant annual earnings. This is a highly attractive investment, as the government refunds 40% of contributions for 40% tax payers, resulting in a 40% return before taxes.
Furthermore, Lowe points out the safety of certain investments, such as the Deposit Protection Scheme, which guarantees up to €100,000 per person per institution, and NTMA State Savings, including prize bonds, which are government-guaranteed. He also suggests exploring alternative investment strategies like art, philately, numismatics, rock 'n roll memorabilia, wine investment, scripophily, first editions, and precious metals, which can offer both profit and personal satisfaction.
In conclusion, Lowe's advice is a reminder that financial prudence and long-term security are paramount. While the pandemic has presented unique challenges, it has also created opportunities for those who have been able to save. By following these strategies, individuals can ensure their financial well-being and prepare for the future, whether it's for emergencies, investments, or retirement. However, it's crucial to seek professional advice to tailor these strategies to one's specific circumstances.
