According to the press release, when asked why they do not invest, respondents say they do not have enough savings (45%), fear of losses (32%), lack of knowledge or lack of time (25 % and 19%, respectively).
“Most of the reasons given by Lithuanian residents are subjective attitudes and not objective obstacles. For example, to invest you do not need big savings, you can start with only one or several tens of euros per month Using modern tools, investing can be automated, so for investing residents only need basic knowledge, there is no need to constantly monitor the markets and spend a lot of time,” says Eglė Dovbyšienė, Member of the Board of Directors of Banque SEB and Head of Retail Banking.
For residents who are considering investing but are still hesitant to invest, she suggests following the three most important principles.
The first is to start with small steps
In order to start investing, it is first important to familiarize yourself with the investment services offered in the market.
When you start investing, it is worth paying attention to investment funds first, since the minimum amount that can be invested is suitable for novice investors and is 1 euro. The range of investment funds is very wide: some of them invest in stocks, others – in money markets, bonds, they choose different strategies, countries, regions and economic sectors. The investments and risks of these funds are diversified and liquidity is ensured by the fund manager.
The next step or an alternative for those who want to deepen their knowledge of investments are exchange-traded funds, called ETFs (Exchange Traded Funds). These are investment funds whose shares are traded on the stock exchange. They diversify investable assets and can consist of bonds, stocks, investments in financial instruments linked to commodity prices and other asset classes. True, when investing small amounts and choosing an investment method, you should pay attention to transaction costs, which are not always favorable if the investments are small.
Small amounts may also be invested in other financial instruments such as shares or debt securities. However, it should be assessed on a case-by-case basis whether such investments are suitable for investing small amounts. It should be understood that investing in this way, the investor himself is responsible for the correct allocation of investments, where to invest.
The second is to have a purpose
According to SEB research, even one in three residents of Lithuania who do not invest are deterred by fear of incurring losses. Therefore, it is important for every beginner to determine what risk is acceptable for him, i.e. how much money he could lose in the worst case, so that it is not painful. Investment instruments should be chosen based on this.
“Most residents want to invest their money for only one or a few years, but it is too short to get a higher return. It is important to understand that the value of investments changes because it depends on the state of the economy: when the economy is expected to grow, the value of investments will increase, and when the economy is expected to contract, the value of investments will decrease. over a longer period can compensate for these fluctuations and reduce the risk if the value of the investment falls,” says E. Dovbyšienė.
When investing, you should be prepared to put money aside for a longer period (5-10 years) and not be tempted to use it sooner. It’s easier to do when you have a clear investment goal, like saving money for retirement to ensure financial freedom in the future. A clear investment objective, patience and a long-term perspective are key to successful investing.
The third is to observe and see the result
Among the most common reasons that discourage investment, SEB survey respondents listed lack of time (19%) and lack of knowledge (25%).
“Following up and seeing the outcome is hugely important, but lay investors don’t need to do it every day or every week.” For example, after choosing investment funds, the results are reviewed and investment corrections are made by a professional fund manager, following a clearly defined fund strategy, and the resident only needs to check his basket investment only once or several times a year”, explains the bank’s representative.
Regular investments, even in small quantities, are also useful in that they help to smooth out fluctuations in the value of investments, i.e. securities are bought at a time when the value of the markets increases and when it drops. At the same time, it helps to better understand what is happening in the financial markets, to gain investment experience and to make more confident decisions.
It is recalled that investments are associated with risks. Fees associated with the services provided apply.
In March of this year, the company “Norstat LT” carried out the study on behalf of SEB Bank. 1,122 Lithuanian residents between the ages of 18 and 74 took part in the survey.
Source: The Delfi