Shut up about the SSIA!!

GenericName

Lambsbread wrote:

The poor, who couldn't, gained nothing from the scheme.

- The purpose of the scheme was to quell inflation caused by consumer spending. People who can't afford €20 a month were not the target of the scheme anyway. Well as I understand it?
But did it have a major effect on inflation? Probably not. The contribution didn't stop me buying the big screen TV or branded clothing. And I was a student! What about people earning real money?! Did teach me some good saving habits though.

Lambsbread wrote:

Time and time again this government has frivously spent money on schemes like this or bertie's makeup when our national infrastructure is a joke. The past 10 years of economic growth have given us an outstanding chance to really develop world class infrastructure, the envy of therest of the world, but it has been wasted. The povery gap has increased over this period with the rich cleaning up (or construction companies).

- Couldn't agree more with that sentiment!

Lambsbread

I suppose it was a good scheme to get people to start saving. We are going through a great economic boom, but we could easily go through a barren spell again. You have to wonder if people start to loose their jobs do they have any savings to tide them over a rough patch?

There are plenty of stories around of people struggling with mortgage payments etc etc and you have to wonder what effect six months unemployed would have on these type of people.

It is important for all people to have a fallback should tough times occur. Hopefully one benefit of the SSIA scheme is that it encourages people to save. But i still feel the ones who benefitted the most from the scheme were the ones who needed it the least.

The main problem the governement/Central Bank now face is that monetary policy is controlled by the ECB, so in order to control inflation schemes like this have to be developed rather than increasing interest rates, whcih would probably be of more benefit.

ronbyrne2005

ssia's were an ok return and encouraged saving etc but they werent as good as the average joe thinks. for a start inflation is around 4% now and has beend 3-5% for5 years of ssia so your first contribution in 2001 say is now worth 15% less due to inflation but you get your return plus the banks interest minus the exit tax. if you had of invested the ssia money into a property or if you hadnt enough then a property fund you would have made far more with little risk. Many people dont realise that pension contributions give you far more then ssia's and you can do this all through your working life,when you invest in your pension you get nearly one euro for every one euro you put in if you are on higher rate of tax,sure you cant touch it untill you retire but its yours and it can be invested in shares or lower risk investments.taking account of inflation and alternative investments it wasnt great.
also the money the government contributed isnt the governements its yours! you paid it in tax etc and its not going to hospitals or 3rd world development where many would say it should instead its going to people who generally can afford to save/invest allready to spend more on consumption so they can pay even more tax to the government in taxes on their purchases further fueling inflation and the slow demise of this economy.
http://www.sbpost.ie/post/pages/p/story.aspx-qqqt=DAVID%20McWilliams-qqqs=commentandanalysis-qqqid=14756-qqqx=1.asp

Idleater

TempestSabre wrote:

It was extremely biased to those with money to spare.

shoegirl wrote:

From what I can see most of the people I know who have SSIAs are the lucky bastards who Daddy suibsidises ad lib and for whom Mummy never expected "keep" from at home. They are the same folks for whom Mumsy and Pater are either guaranteeing or contributing to their mortgage. No bloody wonder they could afford to save 254 a month. I was working in a 15k a year job at the time...

I disagree with this sentiment. The minimum contribution to set up an SSIA was £12.50 or thereabouts which is not an unreasonable expense.

One is also permitted to make changes to the amounts lodged (as long as you did at least the minimum) over the 5 year term so when you could afford to put in more you could choose to do that.

L.

r3nu4l

I agree with neried. Come on, €12.50 per month is roughly €3.12 per week!! There are very few people who cannot affor that amount of money.

€3.12 is less than the cost of one pint - one pint less per week = minimum contribution per month + better health and fewer calories!

Smokers only needed to smoke perhaps three less fags a day to save that much cash in the week.

Eat a bag of crisps or choccie bar every day for lunch? If you didn't or even cut back a little you could easily afford the SSIA.

That said, I do know a family that are already wealthy who opened full amount accounts for themselves and their kids and stand to have about €100,000 saved at about the end of it i.e. about €16,000 form the Government so in those cases the rich are getting richer.

However, 95% of people in Ireland could easily afford an SSIA, some chose not to!

GreeBo

ronbyrne2005 wrote:

if you had of invested the ssia money into a property or if you hadnt enough then a property fund you would have made far more with little risk.

True, but only because our property market is "confused...5 years ago it wasnt as obvious as it is looking back now...

ronbyrne2005 wrote:

Many people dont realise that pension contributions give you far more then ssia's and you can do this all through your working life

So true and yet most people dont seem to think about a pension until they are 30, thats the best 10 years of investment gone.
You should be pumping as much as you can into your pension (up to your tax free point) all your life.
Who wants the keep working at 60?:cool:

conor_mc

ronbyrne2005 wrote:

if you had of invested the ssia money into a property or if you hadnt enough then a property fund you would have made far more with little risk.

Hindsight is always 20/20, isn't it?

If you had invested this money in a property, what if the market had crashed 30% on a €150k house? Your 20k SSIA money would be obliterated along with a hefty wedge of 25k negative equity, leaving you with an asset worth 105k.

To make such sweeping statements as there being "little risk" in property and/or equities is quite simply madness and very irresponsible.

There was zero risk in investing in the SSIA - the only competitor in this regard is a deposit account where interest will barely keep up with inflation in a good account. That's why the SSIA was such a good deal.

Comparing it to property/funds is like comparing apples and oranges. Property may well have trounced the SSIA in terms of growth, but you sure as hell didn't know that would be the case 5 years ago.... none of us did.

ronbyrne2005

conor_mc wrote:

Hindsight is always 20/20, isn't it?

If you had invested this money in a property, what if the market had crashed 30% on a €150k house? Your 20k SSIA money would be obliterated along with a hefty wedge of 25k negative equity, leaving you with an asset worth 105k.

To make such sweeping statements as there being "little risk" in property and/or equities is quite simply madness and very irresponsible.

There was zero risk in investing in the SSIA - the only competitor in this regard is a deposit account where interest will barely keep up with inflation in a good account. That's why the SSIA was such a good deal.

Comparing it to property/funds is like comparing apples and oranges. Property may well have trounced the SSIA in terms of growth, but you sure as hell didn't know that would be the case 5 years ago.... none of us did.

But majority of people in ireland beleive that property is a one way bet so if an individual beleived property was a winner they could have invested in a property fund where you only lose what you put in .also they could have put their monthly savings in a tax efficient pension if they intended to keep saving after 5 years as many said they did.those that just intended to spend their ssia now face much higher prices and the cost of delayed consumption,im not upset at all about not investing in an ssia.

DublinWriter

r3nu4l wrote:

I have a maximum amount SSIA and I already know what I'm doing with it so I'm getting sick of it too.

I've the max amount too, but I'm feeling all tingly and glowey the prospect of getting a nice little cheque for €18,000 in 10 months time.

Mmmmmmmmm.......money.

DublinWriter

conor_mc wrote:

If you had invested this money in a property, what if the market had crashed 30% on a €150k house? Your 20k SSIA money would be obliterated along with a hefty wedge of 25k negative equity, leaving you with an asset worth 105k.

OMG...and it will stay only worth 105K until time immemorial, won't it?

Property crashes = short term blips. Look at the UK's example.

conor_mc

DublinWriter wrote:

OMG...and it will stay only worth 105K until time immemorial, won't it?

Property crashes = short term blips. Look at the UK's example.

And what about Japan's 15-year "blip"?

That's not the point anyway. You're trying to compare the SSIA to property in terms of risk and now timeframe, and its like comparing apples and oranges.

SSIA = defined timeframe, guaranteed return (for deposit a/c's at least).

Property = moderate to high risk, indefinite timeframe, geared investment through mortgage therefore exposure to massive losses as well as huge gains relative to the amount invested, huge transactions costs in stamp duty and legal fees etc.

I'm not saying that investing in property wasn't a better bet in 2000, as hindsight proves it was. But it was riskier, and nobody could have known that the property boom would last at least the next 5 years.

conor_mc

ronbyrne2005 wrote:

But majority of people in ireland beleive that property is a one way bet so if an individual beleived property was a winner they could have invested in a property fund where you only lose what you put in .also they could have put their monthly savings in a tax efficient pension if they intended to keep saving after 5 years as many said they did.those that just intended to spend their ssia now face much higher prices and the cost of delayed consumption,im not upset at all about not investing in an ssia.

Agree about pensions, and take your point about a property fund as opposed to an individual property.

Still, the risk is greater - the potential for little or no gain is there too (see Germany, Japan in recent years).

Galway_guy_33

Question for you all...

Lets say for the first two years you paid in 130 euro into your SSIA. Then for the last three years you paid in the max amount (254 i think it is right?) Can you make a lump sum payment of lets say 2976 euro to bring the account up to the max???

I think i know the answer to this already... NO RIGHT???

r3nu4l

conor_mc wrote:

But it was riskier, and nobody could have known that the property boom would last at least the next 5 years.

This is true. It seems that every year for the past eight or nine years the ESRI have been warning of impending negative equity and property price correction.

Problem is that it will end up like the boy who cried wolf.
The huge property crash in the UK during the 1980s caused hundreds of thousands to lose their homes because they couldn't keep up with their mortgage repayments caused by massive inflation. Even today in the UK the banks are far more cautious than Irish banks when it comes to giving out mortgages. loans are a different matter but they are careful about mortgages. I know because I've asked banks in both countries about mortgages and in Ireland myself and the gf can get approximately €100,000 more than in the UK!

A crash could yet happen in Ireland but will anyone listen when the ESRI and Central banks give the true warning?

conor_mc

Galway_guy_33 wrote:

Question for you all...

Lets say for the first two years you paid in 130 euro into your SSIA. Then for the last three years you paid in the max amount (254 i think it is right?) Can you make a lump sum payment of lets say 2976 euro to bring the account up to the max???

I think i know the answer to this already... NO RIGHT???

Correct - limited to €254 per month.