- Why should you start monthly saving?
- With regular monthly saving, you have the opportunity to benefit from the effect of compound interest and you can gain a return not only on your original investment but also on the return paid on it, meaning that you will be paid interest on the interest you have received.
- Your biggest gain from monthly saving is time diversification. By investing in funds each month with a long investment horizon, you’ll even out the effects of market fluctuations.
- Monthly saving doesn’t bind you or your money – if life catches you by surprise, you can adjust your savings flexibly. It’s up to you if you want to save more, withdraw some or all of your savings or stop saving altogether. You’ll have the money in your account in just a few days. And when the situation allows you to start again, you can always resume monthly saving.
By making regular investments in funds, you can grow your savings over time. Money held on a savings account gives you security, but if you invest your savings wisely, you can gain better returns and grow your wealth over time. Regular fund saving is a smart and flexible way of accumulating your savings at a pace that suits your personal circumstances.
- How much should I save?
There is no correct sum for regular monthly saving, but the minimum subscription to Nordea funds is ten euros a month. The rule of thumb is that, whenever possible, you should save ten per cent of your net income every month. You can change the sum if necessary.
- For how long should I save?
In general, a time horizon exceeding at least five years is recommended for savings in a fund or in equities, but it's worthwhile for young savers to think tens of years ahead and to save regularly.
When starting to make monthly savings, you don't need to know how you will eventually use the savings. You may also withdraw your savings as necessary over the years, and you get to use your savings from a fund or equities, for example, within a few days. Thus you can realise even a bigger dream with the savings you have accrued during a longer period of time.
- Monthly saving in an account or in funds?
Short-term account saving for unexpected expenses
At first, you should ensure that you will have enough funds in your current or savings account for the expenses to occur in the next couple of months, as this is the recommended buffer for any unexpected expenses. However, an account is not a recommended alternative for long-term saving, as an account does not yield any return. On the contrary, inflation eats up the value of your account savings and their purchasing power will decline.
Long-term savings in funds to grow your wealth and help reaching your dreams
Saving in a fund every month is a better alternative if your period of saving is longer. Funds suit those who prefer to save regularly every month, as saving in a fund is easy and a more lucrative way of accruing savings than saving in an account. The longer the time horizon is, the more savings should be weighted in funds investing in equities, which at the same time come with a higher risk.
If you prefer, you can opt for active funds that are managed by Nordea’s professionals so you don’t have to monitor the markets or companies as closely as, for example, in direct equity investments.
- What would be a good fund for monthly saving?
The best way for you to find a suitable fund is to answer these questions first:
- What is the risk level you’re comfortable with? Are you willing to take a lot of risk or would you prefer a fund that is as risk-free as possible? The risk and return go hand in hand: the higher the risk, the higher the potential return. Just remember that risks may sometimes materialise and the value of your investment may decline.
- To reduce the risk, you need to diversify your investments based on your risk tolerance. You can spread your investments across different asset classes (such as equities, fixed-income investments etc.), different sectors or different geographical areas. When you save monthly, your investments will automatically be diversified across time. How could you diversify your investments?
- Next, you should consider your investment horizon and investment alternatives. For example, are you investing to be able to travel somewhere or do you have a longer horizon and are planning to buy a home? Or are you perhaps saving for the rainy day or have some other goal? The longer your investment horizon is, the more risks you can take.
- How much can you afford to invest monthly? You can start with a small amount and increase it along the way. In our Funds Now service, you can learn more about different funds. If you want help with building your fund portfolio, you can try our self-service options: the Portfolio Designer or our digital investment adviser Nora. Remember that you can get personal investment advice from us whenever you want. It won’t cost you anything and there are no obligations. When we meet, we will together prepare an investment plan that suits your particular circumstances – we make the suggestions and you make the decisions. I want to book an appointment.
- What if the market situation is not stable?
Don’t stop saving even if the market situation fluctuates
The benefit and idea of monthly saving are that you don't need to react to any short-term market fluctuations in any way. However, it is true that for many of those who are not so well versed in the equity market any drops in market prices may make their heart beat faster. Despite this, the poorest alternative for such investors is to redeem their investments at that point.
After major drops, there have usually been considerable rebounds, and if you withdraw your savings before these rebounds, your return as a whole will end up being much lower. You must accept that there is always small fluctuation along the way and be patient enough to pursue your investment activity.
When the market is low, you will get more fund units for your monthly savings than in good times.
- How can I start saving regularly every month?
You can start saving every month easily with our Portfolio Designer or our digital investment adviser Nora. The Portfolio Designer helps you build a fund portfolio that is diversified and tailored to your needs and investment profile. This tool suits you if you know what type of an investor you are. If you want to establish your investment profile, we recommend you use Nora. You’ll get started with saving into Nora funds quickly and easily. If you want to pick your investment funds by yourself, you can browse our fund range in our Funds Now service and conclude monthly savings agreements in Nordea Mobile or Netbank in the ‘Savings and investments’ section. You can also book a personal meetingOpens new window with us and together we will prepare a savings plan that suits your particular circumstances.
- Can I save monthly in my equity savings account?
The only way to save monthly in an equity savings account is to buy shares every month. Unfortunately, automatically recurring monthly savings agreements are not possible, as the law prohibits fund investments on equity savings accounts. Share prices fluctuate daily, and if you invest in shares, you need to evaluate the content of your portfolio regularly.
- Can I save monthly in shares?
If you want to invest regularly in shares, you can simply buy shares every month or conclude a monthly savings agreement for a fund that invests in the shares you’re interested in. These are called equity funds. Read the fund prospectuses and documents to see which investments and shares are included in the fund you’re considering.
- What does it cost me to save monthly in a fund? What are the costs involved?
Ongoing charges indicate each fund’s total costs during the previous calendar year. They include all costs with the exception of trading costs and a possible performance-based fee. Ongoing charges often include a management fee which is charged from the unitholders once a year by deducting it from the daily net asset value per fund unit.
You may also have heard about a subscription fee, which may be charged when you buy fund units, or about a redemption fee, which may be charged when you sell fund units. We don’t charge these fees from monthly savers if you submit the orders through Nordea Mobile or Netbank.
If the time comes to sell fund units, the sale will result in either capital gains or capital losses. You will need to pay tax on the capital gains. Always check the Tax Administration’s website for up-to-date information. For more information about the taxation of funds, please visit the Tax Administration’s website at vero.fi.
- How can I make changes to my monthly saving?
You can easily make changes to your monthly savings agreements in Nordea Mobile or Netbank. In Nordea Mobile or Netbank, go to ‘Savings and investments’, click the icon for monthly savings and select the agreement you want to change. You can edit the savings amount and the date. You can also choose to conclude a new fund savings agreement.
- Can I save monthly into ETFs as into other funds?
• You can save monthly into ETFs, but you will need to decide on a suitable amount and remember to submit a buy order for the ETF of your choice regularly.
• For other funds, you can make a fund savings agreement, which allows you to make the investment automatically each month.
• You can learn more about the funds we offer in our Funds Now service and start saving monthly into an ETF or some other type of fund in Nordea Mobile and Netbank whenever it suits you the best.
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