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Seven lessons for investing – how to get started


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Difficult, risky and requires special skills! These are common beliefs about investing, says Hannu Nummiaro, economist at LähiTapiola. But learning the basics of investing is an easy way to get started.

Many Finns choose to save in a non-remunerative account rather than investing, because keeping money in a bank account seems a safer option. However, inflation eats into savings in the account: the value of the money falls in the long run as the interest rate paid on savings in the account is lower than the rate of price increases.

“Many people are afraid of losing their money or simply don’t know or understand what investing is all about. Often the threshold to start investing becomes high when people think that investing requires a large amount of money or causes stress and headaches,” says Hannu Nummiaro.

However, he says that insufficient money is by far the biggest reason why investing is not an option. If there are funds left over, you can start investing at any time. Mr Nummiaro points out that it is a common, everyday way of saving, which requires no more than basic skills.

“Once you get started, your fears are dispelled and knowledge replaces your beliefs and convictions. It’s enough to learn the basic skills.”

A simple way to start is by saving monthly into a fund. Alternatively, you can make a lump sum investment. Perseverance is the key to any investment.

“In the long term, the natural roller-coasters of the market smooth out, while in the short term returns can fluctuate widely. Investing for the longer term also allows you to benefit from the interest-on-interest effect and avoid the costs and taxes of selling shares, for example,” says Nummiaro.

He also encourages people to consider diversifying their investments, so that they are not as tied to the performance of a particular stock.

Basic investing skills – how to dispel your fears and get started

1. Risk brings return. Saving money in regular bank accounts is not profitable, so when prices rise, the purchasing power of money falls. If you want a return, you have to be prepared to take at least a moderate risk. One way to manage risk is to invest in different assets.

2. Funds. Diversification is easy with funds. This can be a wise choice, because in the worst case, a single investment can lose all its value. Composite funds can create different risk profiles by weighting equity and fixed income investments differently.

3. Savings every month. You can start regular fund saving with 30 € per month. By spreading your purchases over time, you don’t just buy at the top of the market, but also during asset sales.

4. Interest on interest. As new income accrues on past returns, wealth starts to accumulate at an accelerating rate. A long period of time adds interest to interest. If you dream of financial freedom, for example, it’s a good idea to start investing as young as possible.

5. Investment expenses. In investing, too, the net return, i.e. the return after expenses, is crucial. For example, you may incur costs when investing if you use the help of an expert. On the other hand, external help can make investing easier for you. Always remember to require transparency of expenses.

6. Taxes are paid on investment gains. As a rule, investment gains are taxed as capital gains. Income from funds and investments is only taxed when they are disposed of. If you make direct investments in shares, a share savings account gives you a similar advantage. 

7. Take care of your own peace of mind. The negative emotion of an investment loss is experienced more than twice as strongly as the satisfaction of an investment gain. Take just enough risk to ensure that you can remain calm even in weak moments. Remember that investment values fluctuate daily. Over the long term, the natural roller-coasters of the market smooth out.