We are in tough times financially and saving might not be at the top of the list.
But if you feel like you want to get started, there are some things that are good to think about.
– It is important to learn early how to start saving, which is the key to a healthy and sustainable economy, says Arturo Arques, savings economist at Swedbank.
The most important thing to save for is a buffer. It is about a sum of two monthly salaries to be able to handle unforeseen expenses.
– About eight out of ten families have it. If there is anything we have learned during the war in Ukraine and the pandemic, it is precisely the importance of a savings buffer. So try to prioritize, start with a savings buffer, says savings economist Arturo Arques.
Amortize in case of high indebtedness
But you shouldn’t have all your savings in a buffer, says Arturo Arques. When the buffer is in place, the next tip is to prioritize amortization if you have a high level of debt. And high indebtedness means that you have a loan of more than 70 percent of the home’s value or that you have borrowed more than three times your annual income.
– Many people take this as an expense, but it is a saving. And unlike all other savings, it reduces your interest costs, increases your chances of being able to borrow money in the future and it also reduces your sensitivity to interest rates.
Save regularly
When you save on the stock market, there are three things you should consider, according to Arturo Arques. The first is to save regularly. Arturo Arques wants to strike a blow so that even small sums can grow into a large amount over time.
If you save SEK 300 a month with a seven percent return per year, it will be SEK 51,900 after 10 years. If you save for 30 years with the same conditions, it will be 366,000. It is common to expect an expected return of seven percent. It is founded in the long-term historical returns in the Western world.
Save long-term
The best thing is to save long-term, at least five years, says Arturo Arques. A prerequisite for success on the stock market is to only save money you can spare for 5-6 years, so that you are not forced to sell at the wrong time.
– We all know that the stock market goes up and down. And one way to limit the effect of these ups and downs is to be long-term and save regularly.
To increase the return over time, the risk must be spread over a couple of different funds. For example, 50 percent in a global fund, 30 percent in a Sweden fund and 20 percent in a small company fund or industry fund.
Don’t underestimate the importance of fees
An important thing to think about is the funds’ fees. If we take the same example again with SEK 300 a month and a seven percent return, a fee of half a percentage point makes a big difference to the result. The 366,000 you saved up over 30 years will then be 331,900 instead.
– Make comparisons, as a consumer you should always be price conscious and see that you get as much as possible for the money, says Arturo Arques.