5 reasons to activate your savings

Most Finns’ assets consist of their home and savings kept in accounts, which means inflation could have a significant impact on their finances. Inflation is the rate at which the prices of goods and services increase. As a result of inflation, the value of your money decreases so you get less for the same amount of money you needed before.

By saving in a fund each month, you can aim for a higher return on your savings. You don’t need to have a large amount of money to invest – the most important thing is to start today. Your savings will benefit from the effect of compounding and could be worth a lot more over time. 

When it comes to investment, our top tip is a simple one: start now. By saving each month over a longer period of time, you can benefit from times when the markets are falling since you are able to buy more units in a fund with your monthly contribution.

You should start saving immediately even if you have a small income – after all, time is money, so why waste it? The force behind all this is what some people call the eighth wonder of the world: compound interest. If you are wondering how you can save money on a low income, read our tips for saving.

Time is not only your best friend when it comes to investing but it also helps you earn money off of your existing investments. This phenomenon is called compounding. To put it simply: compounding means that you are earning interest on the amount you have already invested. How does it work?

Let’s say you invest 1 000 euros this year with an expected return of 5%. This means that the return on your initial investment will be 50 euros, which will increase the total value of your investment to 1 050 euros. 

What happens if you don’t invest more money next year? You may still get a return on your investment. How is that possible?

Let’s say that you get the same 5% return on 1 050 euros. Last year, your return was 50 euros but now it will be 52,50 euros, as your initial investment has grown 5% from the year before. This means you will have 1 102,50 euros in total.

This is an example of how compound interest works. The effect is at it's best when you save regularly. Read more about the benefits of monthly saving.

Many people tend to avoid saving and investing because they are afraid of making mistakes in choosing equities or funds. They may think investing is difficult or that you need to be an expert to get started. But anyone can become an investor and there’s no need to wait for the right time because the right time is now. Sometimes the prices go up and sometimes they go down but that doesn’t matter if you are saving in funds. By saving monthly, you are already diversifying your investments and risks. When you add compounding to the equation, you can see that your money is truly working for you.

At Nordea, you can find a way to save that best suits you. We offer you a wide range of the latest savings products and various forms of saving at different levels. 

You can start saving with the help of our robo-adviser Nora, meet with an investment adviser, design your own portfolio and much more. Our expert advisers will help you take your savings journey to the next level and make sure you are in control of your savings.

The information provided on this website is intended for general product information only and does not constitute investment advice or recommendations. When it comes to funds or equities, past performance is not a guarantee of future results. The value of fund units or equities may increase or decrease due to market movements, and it is not certain that you will get back the entire amount you invested.