Financial Regulator warns consumers on making investment decisions about SSIA money

Irish
Financial Regulator warns consumers on making investment decisions about SSIA money
By Finfacts Team
Mar 30, 2006, 15:59

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The Financial Regulator today warned consumers to make sure they are well informed before making decisions about their SSIA money. Research carried out by the watchdog shows that one in three consumers plan to reinvest their money but the Financial Regulator is concerned that some people may commit to investments that they do not fully understand.

To help consumers think about what they want to do with their money, the Financial Regulator has published ‘Your Little Black Book of SSIAs’. It gives free, independent, practical information for SSIA account-holders on what they need to do to get their SSIA money. It also sets out some options people could consider and it provides useful questions to ask before investing any money.

Speaking at the launch of the booklet, Consumer Director Mary O’Dea commented, “Accounts mature from the end of May and people will start to get their SSIA money. This is great news for those who have been saving for the last five years, but now you will need to make a decision about what to do with your money. The most important thing to remember is to take your time and weigh up all your options. If you don’t actively consider all of your options you are effectively letting someone else make the decision for you. SSIAs gave a very good return because of the 25% government bonus. However, this bonus for savings is now gone and people need to be fully aware that investments with higher returns are usually more risky.”

“In addition to the financial products that are currently being developed and advertised to encourage you to reinvest your SSIA money, there are also other investment offers, such as art or overseas property. Be cautious about any offers of high returns. When you are offered a very high return this usually means you are taking a very high risk so make sure you inform yourself beforehand so that you make the right decision for you and your money. Remember – if it looks to good to be true, it usually is.” she said.

Only one in ten people surveyed by the Financial Regulator planned to pay off their debts using their SSIA. “There are lots of options when it comes to using your SSIA money, including paying off some debts or saving for your retirement. If you have debts, it makes good financial sense to tackle your most expensive debts first such as credit card bills or personal loans as you will save more money on interest.

For example if you had a five year €15,000 loan and paid it off after two and a half years you could save €1,000 in interest. Paying money off your mortgage could help reduce your monthly repayments or shorten the length of your mortgage. This will give you more flexibility and peace of mind if interest rates were to rise or if your circumstances changed.” Mary O’Dea added.