The Riksbank struck with a double reduction of the key interest rate last week and is expected to lower the interest rate further when the next interest rate announcement is announced in December. Which means more money for households with loans. Many are now wondering what is the wisest thing to do with the money that is left over. For example, should they go to necessities, or is it time to treat yourself to something? “Nice savings” According to independent economist Günter Mårder, there are a few things to tick off before you can afford it. The first step is to get rid of the expensive consumer loans. – We start with the loans, which often have a high interest rate. These are the loans we have as a result of having bought things, loans on cars, boats or other things that we have pledged. These loans are expensive. We will get rid of them, says Mårder. – This means nice savings in high interest costs. Building up the security buffer When you have completed the first step, it is time for the next step – namely to review the security buffer that may have taken a beating during the economically tough years. – In recent years, many people have eaten up part of the security buffer as a result of it becoming more expensive to live. Now is the time to build up the buffer again to have money for unforeseen expenses. Invest to reduce costs When you have completed the first two steps and succeeded in reducing your short-term costs, it is time to look up and start thinking about future costs – through wise investments. For example, smart energy solutions. – It’s about all the investments we can make to reduce future costs. If we take the car for example. Maybe we neglected to do that extra service. Or maybe we avoided renovating our bathroom even though we knew it was past its best before date. – All that kind of investment or improvement of your home. Additional insulation, or invest in smart energy solutions. All this reduces costs going forward and is positive because it increases resilience for future, more difficult financial situations. Invest in securities In the next step, it is time to start investing in securities, or pay off the mortgage. Here the ten thousand kroner question appears: Should you pay off the mortgage, or start long-term savings in equity funds? – Equity funds can over time provide a return of approximately 7 percent per year. Mortgage rates will be approximately 3.5 percent on average in six months. Here the choice depends on how much risk you are willing to take. – If you want a low risk, you amortize the mortgage. If you want greater potential, you choose the stock market instead. Then you can enjoy it If you have made it all the way to the last step, ticked all the necessities, and secured the future, you can spoil yourself and treat yourself to a little luxury. – Then the imagination can only set limits to what you want to do. Treat yourself and have a good time. It has been tough years in recent years. It’s time to treat yourself a little. Shouldn’t you treat yourself to something along the stairs? – We will do that. Even though I stand here as a teacher and try to teach you what to do, along the way you will treat yourself to little things. You deserve it.
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