On the way towards your dreams and goals

One of the best ways to get started when you’re thinking about saving is to make a plan: 

1. Make the decision to start saving.
2. Think about where you can cut down on your expenses. Are you spending money on things you don’t really need? Could you make coffee at home in the morning and take it out in a travel mug instead of splurging on an expensive takeaway coffee every day?
3. Decide your regular savings amount but remember to be realistic about how much you can afford. You can always change the amount if you need to – it could be anything from a few tens of euros to hundreds of euros if you have more extra cash to spare. 
4. Always put the amount into your savings as soon as you get your salary. It will be much easier to plan your budget for the rest of the month when you have already included your savings amount in your monthly expenses. This will also help you work out if you will have more money than planned left over at the end of the month to add to your savings.

Once you have a plan in place, it will help you get into the habit of saving without even noticing it.

You don’t need a lot of money to start investing 

Many people steer clear of investing because they think they need a lot of money to get started. But this is not true. Almost anyone can start investing. You can get access to a well-diversified and professionally managed investment fund with as little as 10 euros.

If you save, say, 50 euros a month and put it monthly in an investment that generates an average return of 7% annually (this is the historical long-term rate of return on the equity market), in 18 years, you could save a nest egg of 21,500 euros for yourself or your family.*

Whatever the sum, the rule of thumb in goal-oriented saving is: the more return you seek on your savings, the more risks you must be prepared to tolerate. With a moderate approach to regular saving, the risks are lower but your return will most likely be smaller in the long run. Risk-taking, on the other hand, may generate higher returns.

*The performance of your savings will be affected by the fees, charges and other expenses charged by the investment fund. The value of your fund units may also increase or decrease with market movements, and past performance is not a guarantee of future results.

We recommend saving regularly with three different time horizons and for three different purposes:

1. To cover unexpected expenses in your daily life
2. To grow your wealth steadily over a long period of time
3. To save for your retirement over an even longer period of time

If you accumulate cash in your account that you don't need for expenses, you should consider finding an investment with a better return. This will allow the effect of compound interest to do your saving for you.

1. It doesn’t make sense to leave cash lying in an account. You don’t get much of a return on an account and inflation will eat away at your savings’ purchasing power. With that said, you should of course make sure you have enough money in your current or savings account to cover your expenses for 2–3 months. This will help you if you have to pay for something you weren’t expecting.
2. Choose a better-yielding investment and make a saving plan with the help of Nora. Nora is a digital tool which you can use to get a recommendation for an investment fund that suits your needs.  
3. Don’t waste time working out the “right” time or the “right” sum to start investing. Small streams make big rivers.
4. A long-term approach is key when investing. When you start regular saving, the return on your savings in the first years won’t necessarily be good. However, by having a long-term approach, you will allow the process of compounding to generate returns. This means that you will receive a return not only on your original investment but also on the return paid on it, i.e. you will be paid an interest on the interest you have received. 

Watch the video below (in Finnish) to learn why timing is less important when you save on a monthly basis:

• The return expectation is a couple of percent for extremely safe investments and potentially 3–5% for investments with an average risk. 
• If you are a high-risk investor trading in equities, your rate of return could be above 6–7%. Historically the equity markets have grown on average by around 7% annually.

You can mitigate your risks by diversifying your savings or investments. We recommend that you do this by investing in different asset classes, such as equities and fixed-income securities, as well as in various industries, countries or regions.

You can set the annual rate of return to 7%, for example, as the equity markets grow on average by around 7% annually based on historical data. It’s good to remember that the value of your investments may rise or fall. In some years you get a high return on your investments and in some years you make a loss. However, in the long term the average return is typically positive. 

Please note that we cannot guarantee that you will reach the rate of return shown in the savings calculator even if you follow the corresponding investment strategy. The savings calculator is meant to illustrate the returns you could gain depending on the amounts, savings period and rate of return you select. The value of and/or the return on your fund units, equities and other investment or savings products may increase or decrease with market movements and it is not certain that you will get back the entire amount you invested.