Nordea's savings survey: Finns save in bank accounts without a plan

8.9.2009Nordea’s Nordic savings survey shows that accounts are still popular among savers: more than 70% of Finnish savers and investors still deposit their savings in bank accounts. Over half of the savers report that they save without a plan.

As many as 70% of savers with only bank account savings reported that they do not have a special plan for saving. Moreover, there is usually no specific target: just over 20% report having a specific purpose for their savings.

I encourage every saver to draw up a plan. Simply put: use a little time to think over what you want to achieve by saving and for how long you want to save. You usually save more and saving feels more sensible when you have a clear target and set out to achieve it.

Lower return expectations

The survey shows that 39% of savers save in funds and 32% have a privately paid pension scheme. One in four invest in shares. Men are more eager share investors than women. The popularity of shares seems to increase with age: in the age group of 55 - 64-year-olds one in three savers own shares. Most savers are satisfied with no less than 5% on their investment.

Even though more than 60% of savers and investors say they are satisfied with no less than 5% on their investment, return expectations seem to have declined compared to 2006.

Banking adviser and media the most reliable sources of information

Finnish savers consider banking advisers the most important source of advice on savings and investments. The banking adviser’s role is especially important for fund savers. The number two source is the media.

Savers and investors in Finland rely more on the media than they do in the other Nordic countries. Banking advisers are the most important source of information in all Nordic countries but the second most important source is family in all other Nordic countries except Finland.

Four in ten Finnish savers read financial articles in magazines or newspapers at least weekly. People who read such news most often tend to save more than others and have a more detailed plan for saving. People who read financial news at least weekly also save clearly more in shares.

Over half of Finnish savers say that the financial crisis has not affected their saving behaviour. The least affected are people with only bank account savings. Less than one third have increased their preference for savings alternatives with low risk.

Men seek higher risk

Men and women take a different view to risk. Almost half of male savers and investors (47%) want to seek better return in the long run even if there is a risk of losing money along the way. Only one in three women share this view. Instead, clearly more than half of women (57%) prefer to lose as little money as possible even if it means probably getting a little lower return in the long run. Among men, 43% are of this opinion.  

The survey in June interviewed about 1,000 Finns between 25 and 64 years of age having savings. This survey was conducted through a web panel, and about 4,000 people from the Nordic countries took part in it. The survey was conducted by Synovate on behalf of Nordea.

Advice on saving

• Build a buffer: Always maintain a buffer of economic funds in your account for unexpected expenses.
• Different savings targets - different investment horizons: Decide your short-term and long-term savings targets. Divide the amount you are willing to save monthly between the different targets. Short term = bank account and money market funds. Long term = equity products. Remember that the investment horizon gradually changes as time goes by. You can decrease risk by cutting the weight of equities when you are close to achieving your savings target.
• Spread the risk: Do not think “either or” but “both and”. Use both fixed-income and equity products. If you are saving in the long term, you can take more risks and expect higher return.
• Define your risk profile: Ask yourself how substantial value fluctuations you are willing to tolerate. Your answer determines the weight of equity products in your investment portfolio. Long investment horizon decreases the risk of negative return. One modern option is a balanced fund with fixed-income and equity weights matching your risk profile. During an upturn, the fund realises gains from equities and transfers them to fixed-income products. During a downturn, when share prices decline, the fund increases the equity weight. This is called balancing.
• Use alternatives you understand: Never take up savings forms you do not understand. Before making a saving agreement, you must know the costs related to the agreement, the range of value fluctuations and the investment period.
• Agree on how much you want to save each month: When you have drawn up a savings plan, agree on the sum you want to save each month. Without an agreement saving will remain an intention. If your circumstances change, you can take a break from monthly saving.
• Do not wait until you have repaid all loans before you start saving.

Tarja Svartström