How can you squirrel away savings for a rainy day if you're not born wealthy? That's the conundrum we looked at in this week's All Points North podcast.
The key is to start early and to be in it for the long run. That's the advice from private investor Merja Mähkä. "The older you are the more you have to save, so you should start early," Mähkä told APN.
The investment blogger acknowledged investing isn't an easy ask for people who may not have extra cash or who may find it difficult to save because they lack financial security.
Giving up luxuries
"Investing is scary for a lot of people if you haven't seen it or grown up with it, people don't see it as something they could do," she noted.
"So to get into that mindset is quite a stretch if you're constantly worrying about how to get my children fed. The fewer luxuries you have in life, the harder it is to give things up," she added.
People who want to save and invest need to first get started by auditing their lives to see what they can do without -- such as gambling or that weekly lottery draw.
"It's important to look at the big things. Do you really need a car? Cars are expensive, gas is expensive and all of the insurance and so on. I've been saving for 20 years by not having a car."
People would also do well to take a second look at how they live. Is that costly kitchen renovation really essential and is a large apartment absolutely necessary? "Those are the questions where you can find money to save."
Tips for investing
You should only borrow money to invest if you plan to invest in real estate. Borrowing to invest in the stock market is not advisable at the moment Mähkä said, because stock markets may be poised for a slump after trending upwards for the past 10 years or so. It's also not a smart move if you're new to the finer points of investing and investment markets.
Passive funds like index funds -- a bundle of stocks or bonds that follow the performance of a financial market -- are a good place to start for first-time investors, according to Mähkä. "It started in the US, has gotten to Finland as well, it's taken some time and most Finnish banks offer low-cost index funds... for most people that's really a good way to go."
Investors in Finland looking for good targets to park some extra cash don't need to feel obliged to invest in Finland either. "You can invest in international mutual funds and go with them ... at the same time Helsinki-listed companies, all their information is available in English as well."
ASP savings accounts are a good way for young people to save for a first home purchase. And you don't have to be very young either, since they are available for people up to the age of 39 to begin saving toward home ownership.
The instrument makes it easier for individuals to save towards the down payment for a housing loan -- at least 10 percent. The bank in question then pledges to lend the rest of the amount needed, which is in turn guaranteed by the government. These savings are typically tax free.
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The All Points North podcast is a weekly look at what's going on in Finland. Subscribe via iTunes (and leave a review!), listen on Spotify and Yle Areena or find it on your favourite podcatching app or via our RSS feed.
This week's show was presented by Denise Wall and produced by Egan Richardson. Our sound designer and audio engineer was Laura Koso.