Investment experts have advised holders of equity-based SSIAs, who have taken heavy losses on their investments, to hold their nerve despite plummeting stockmarkets.
Mr Dara Fitzgerald chairman of the Irish Association of Investment Managers (IAIM) said that although equity markets have experienced sharp declines and unprecedented volatility in recent years, comparisons with previous bear markets show that equity markets do rebound following periods of uncertainty, indicating that time is on the side of SSIA investors with equity linked products.
Mr Fitzgerald was speaking at the launch of the IAIM's annual survey of retail investment funds in Ireland which showed that €1.5 billion was invested in retail investment products in 2002. Contributions into investment linked SSIAs accounted for €416 million of the total.
Ongoing market turbulence means more than a quarter of a million people holding equity-based SSIAs are losing money. Worse than that, losses incurred on some accounts are exceeding the Government's €1 for €4 contribution to the scheme.
As a result, institutions are starting to warn investors that they may have to keep their SSIA money tied up in equity funds for longer than the original five-year term if they want their investment to recover and make satisfactory gains.
The exact losses incurred will vary according to the institution managing the account, the type of fund and the time the SSIA was opened, but some SSIA providers say that the 25 per cent Government bonus added at the time of investing has effectively been cancelled out by poor market conditions.
People who invested in equity-based SSIAs in 2001, a full year before the Government scheme closed in April 2002, could be suffering losses of around 40 per cent.
Ms Ann Fitzgerald, secreaty general of the IAIM said investors are holding a large amount of money on deposit until the Iraqi crisis is resolved and rebound is more evident in the global economy.
She said underlying trends indicate that Irish retail investors are becomingly increasingly mature in their approach and have decided to ride out the current downturn rather than fleeing the market. "Based on past experience, these investors will benefit when market conditions improve" she concluded.