If you’ve money to invest – will you get real returns?

Pat O’Sullivan – Head of Investment Strategy, Irish Life

Cash is currently king in Ireland with almost €100 billion sitting in cash. What’s more is this figure is set to rise with €12.2 billion being saved each year. Some of this may be used to pay off debts and some may be used to increase savings.

Remaining in cash in 2009 and 2010 has had its merits as real returns of 8% and 4% were achieved. However, over this same period, there was a significant opportunity cost to this strategy, with global equity markets (FTSE World Index) increasing by approximately 90% from its lows.

With the economic uncertainty and the shock of the credit crisis, which saw financial markets collapse in 2008, it’s understandable why people remained in cash. But, with inflation risks increasing and other sectors continuing to perform well, a move away from cash may be necessary.