Is Inflation Eating Your Cash? The Hidden Risk for Irish Savers
When people think about financial risk, they often picture stock market crashes or economic downturns. But there’s a quieter, more persistent threat that could be doing more damage to your savings than you realise: inflation.
Unlike market volatility, inflation doesn’t make headlines with dramatic swings. Instead, it quietly erodes the purchasing power of your money over time. And for Irish savers, its effects have become increasingly visible — from rising grocery bills to higher energy costs and rent increases.
The Cost of Doing Nothing
While inflation in Ireland has cooled from its 2022–2023 peak of over 9%, it still hovers around 2–3%. That might not sound alarming — until you consider how little most bank accounts are earning in interest. If your savings are growing at just 1% annually while inflation is at 3%, your real return is actually -2%. In other words, your money is losing value every year, even if it looks “safe” in the bank.
Why Playing It Safe Can Be Risky
Understandably, many Irish households remain cautious about investing, especially with memories of the financial crisis still fresh. However, at the end of January 2025, Irish households held over €163 billion in deposits in Irish banks marking the highest level on record. But in today’s environment, holding large amounts of cash in the name of safety could be a costly mistake. The real risk may not be market fluctuations — it’s inaction.
Investing, while not without risk, offers the potential for inflation-beating returns over the long term. Historically, equities (stocks) have significantly outperformed cash, helping to preserve and grow wealth.
Cash vs. Equities: A 20-Year Perspective
Here’s a look at how €10,000 could perform over 20 years, depending on where it’s held:
| Investment Type | Gross Return | Inflation | Real Return | Value After 20 Years |
|---|---|---|---|---|
| Cash | 1% | 2.2% | -1.2% | €7,850 |
| Equities | 8.2% | 2.2% | 6% | €32,071 |
The difference is striking. While cash loses value over time, equities have the potential to more than triple your initial investment — even after accounting for inflation.
Make Your Money Work Smarter
Inflation may be invisible, but its impact is very real. If your money isn’t growing, it’s shrinking. The good news? You don’t have to be a financial expert to take action. With the right guidance and a long-term plan, you can make informed decisions that protects and grows your wealth. To create your long term financial plan, schedule your complimentary discovery call with Eolas Money today by clicking HERE.
Don’t let inflation quietly eat away at your future. Start making your money work smarter — today.
