24.01.2025
28% of Estonian residents prefer to invest at least a part of their money left over from unavoidable expenses, and young people are more inclined than older people to increase their savings through investing, according to a Kantar Emor survey commissioned by LHV.
The share of those who invest is highest among 16–24-year-olds (40%) and 25–34-year-olds (38%), and lowest among over-50-year-olds. According to Nelli Janson, Head of the LHV Investor Community, the results show an increase in financial wisdom across all age groups, but especially among young people. “Inflation eats into the purchasing power of money, so everyone should consider investing the money they have saved. Keeping your savings only in a bank account or in cash means a steady decline in its value,” said Janson. She added that investing is one of the most effective ways to grow savings over a longer period. “Time is an investor’s greatest friend, and thanks to the effect of compound interest, investing even small amounts consistently can provide significant peace of mind. Unexpected situations are a part of life, and a bigger savings buffer helps you cope with them better, regardless of your age,” said Janson.
53% of people in Estonia who invest their savings prefer to invest in shares. This is followed by fixed-term deposits (41%), the III pension pillar (39%), index funds (31%), and real estate (28%). These are also the most popular asset classes in which Estonian residents plan to invest over the next 6 months.
Janson pointed out that building a personal share portfolio has long attracted people in Estonia, and investing in index funds is becoming increasingly popular. “It is good to see that the III pillar is also gaining popularity as a tax-efficient investment product,” said Janson, encouraging Estonian residents to make even more use of tax-efficient investment opportunities. As a good example, since last year, you can now contribute 4% or 6% of your gross salary to the second pension pillar instead of 2%.
One of the main reasons given by respondents who only save money but do not invest is the complexity of the investment environment. They are also afraid of losing money. According to Janson, from the point of view of a prospective investor, prudence is more of a strength, as it helps to avoid taking excessive risks. Asset classes also have different risk levels, and it is often worth trying your hand and gaining experience with the safer classes first. “People often put pressure on themselves by thinking that you should hit the bullseye from the outset by purchasing the shares of only one company. However, index funds, which invest in many stocks at once and thus spread the risk, are a better place to start,” suggested Janson. A good way to start investing is to look at the range of investment services offered by different providers. For example, there are solutions where a person makes contributions to the Growth Account in the amount that suits them, and securities transactions with this money are already carried out by the bank’s specialists, according to the choices made beforehand.
Janson stressed that before you start, it is important that you understand the basics of investing, assess your risk tolerance, and set specific and realistic goals to keep you motivated. “This way, a person creates a solid foundation for planning their personal investment journey and strategy. Consistency is the key to future-proofing,” said Janson.
LHV Group is the largest domestic financial group and capital provider in Estonia. LHV Group’s key subsidiaries are LHV Pank, LHV Varahaldus, LHV Kindlustus, and LHV Bank Limited. The Group employs over 1,200 people. As at the end of November, LHV’s banking services are being used by 452,000 clients, the pension funds managed by LHV have 114,000 active clients, and LHV Kindlustus protects a total of 170,000 clients. LHV Bank Limited, a subsidiary of the Group, holds a banking licence in the United Kingdom and provides banking services to international financial technology companies, as well as loans to small and medium-sized enterprises.
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