Family finance experts notice changing trends and advise you to save and invest flexibly and choose more diverse methods.
A representative survey of residents’ investing, saving and retirement savings habits conducted in April on behalf of INVL’s investment management and life insurance group found that three out of four (76%) are saving – that’s 4 percentage points more than last year. An annual survey shows that this number is steadily increasing each year. In comparison, two out of three residents (66%) saved in 2020.
Developments in the deposit market are also encouraging residents to save. The changing interest environment, the end of the pandemic, the increase in consumption and the intensification of competition have changed the savings situation and conditions for customers. Many credit institutions have improved savings conditions and offered high interest rates for term deposits.
For example, Šiaulių bankas has increased interest rates on deposits 7 times since September 2022 alone, and they are now at 4%. (when choosing an irrevocable term deposit Plus for a term of 1 year. The minimum deposit amount is 100 EUR, customers have the option to choose the frequency of interest payments and this does not affect the amount of interest rates).
“We are seeing a trend that more and more customers are interested in deposit products as a form of fund accumulation, we are seeing a growing portfolio of deposits not only among residents, but also among small and medium-sized businesses clients.
Šiaulių bankas calculates that since the middle of last year, the term deposit portfolio of legal customers has increased by 67%, while the residential deposit portfolio has increased by 19%. This shows a clear trend that customers tend to transfer their funds to deposit transactions. Although inflation is still high today, saving in this way results in fewer losses,” notes Aušrinė Vilimavičiūtė, head of the savings and investment projects group at Šiaulių bankas.
According to her, the situation in the market has changed very quickly and drastically – until recently, most banks paid no or very little interest on customer deposits. The rapid increase in customer deposits in banks is due to the Covid-19 pandemic and the restrictions imposed as a result. For example, before the pandemic, Lithuanians spent up to 2 billion while vacationing abroad. EUR. Domestic consumption was also several times higher. Also, worries about the future – the pandemic, then the Russian war in Ukraine – prompted residents to accumulate savings.
If for a few years until now residents have accumulated savings because they could not spend money, for example, on vacation, and at the same time worried about the future, now they are reaping the benefits of this decision. Record inflation scared households no joke.
“Residents feel their purchasing power is diminishing and rising prices are eating away at their incomes. In the latest survey of investment, saving and retirement savings habits of INVL residents , most people say they have saved since 2016, when the survey was launched.
And the majority of non-saving residents (24%) say their income isn’t enough to save (70%) or they don’t have the ability to cut spending (34%). Last year, there were 62 percent respectively. and 28 percent It is interesting to note that in one year, from 20 percent to 11 percent, the number of residents saying they see no point in saving has fallen, and even more – there is no remains more than 3%. residents convinced that their loved ones would help them in an emergency. Last year, there were 11%.
One last thing – over half (51%) of the population indicated that they are looking for additional income in addition to their main income as a goal they hope to save for by investing. This indicator was lower in previous years. This again shows that people do not feel secure with their current income,” notes INVL Investment Management and Life Insurance Group Director of Retail Services, Dr. Dalia Kolmats.
According to A. Vilimavičiūtė, representative of Šiaulių banksas, it is possible to save, invest or devote oneself to one’s future well-being with colossal sums or a few euros, but this is not the most important thing. It is important to have an accumulation or investment goal – to preserve property value or to earn. Risk is also important – because the expectation of a higher return usually means higher risk and the amount of income the family can allocate to savings per month. No less important is the deadline – until you want to save one or another amount. And it is important to remember to separate savings from current funds.
“People often say that maybe now is not the time, that the situation is not easy or something like that. The truth is that today, more than ever, is the best time to start to save or invest. Currently, many market players can offer competitive trading rates, convenient and easy-to-understand investment tools. And there is more information about saving and investing than ever before. before, because this topic is very relevant”, notes the head of the project group on savings and investments of Šiauliai Bankas.
INVL family finance expert dr. D. Kolmatsui says that it is very important to maintain consistency and periodicity in savings and investment and to choose several different instruments that differ in their degree of risk depending on geography and areas of investment.
“Now is a very good time to understand and learn why saving and investing should be diversified and consistent. Due to rising interest rates, term deposits are currently a great savings vehicle On the other hand, if we look at the long-term perspective, a year ago interest rates were around 0. But in the long-term perspective, the yield average annual return of riskier level III INVL equity pension funds, according to data from the Bank of Lithuania, exceeded 7% over the past 10 years, and during this period the average return on deposits was 0.2% But past results do not guarantee future results.
Indeed, when saving and investing wisely, one should consider holding both deposits and shares in pension funds, and perhaps investing independently in mutual funds. Moreover, it is advisable to do it regularly and periodically for best results.
For example, to invest every month, the value of the units of the fund increases or decreases. A mistake many make is to stop investing when the going gets tough, such as during a market downturn like last year. This misses the opportunity to buy units of the asset when their value is lower. It is better not to wait for a favorable moment and constantly save and invest. And remember that investing always comes with risk,” says INVL Investment Management and Life Insurance Group’s Director of Retail Services, Dr. D. Kolmats.
It is recalled that Šiaulių bankas and “Invalda INVL” signed an agreement on the merger of certain retail businesses at the end of last year.
Source: The Delfi