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Saving tips

Conscious consumption 

With a saving mindset, small conscious choices in everyday life will make a difference. A conscious consumption will not only help your personal savings - it will also challenge the unsustainable wear and tear culture of today’s society, and ensure the lives of future generations. By trying to limit one’s consumption and striving to obtain a more sustainable one as a woman, this will do good for the private economy, inequality and our climate.

Some concrete tips for conscious consumption are:

  1. Reduce the money spent on fast fashion with low quality that will go out of trend in two months. Reconsider the actual marginal utility of buying an extra piece of garment. Instead, buy few and high quality garments that will hold through different trends and time periods.

  2. Second hand is a cheap and good way to buy good garments cheaply. Swapping, or renting clothes is also a good idea.

  3. Think twice before throwing out your clothes; try repairing them, or donate them.

  4. Be conscious about everyday waste of money spent on takeaway coffee, snacks and mineral water. Start bringing your own coffee and buy yourself a water bottle to refill! 

  5. Become more updated regarding extra prices on groceries, and plan your meals in advance in order to save money. If it someday is not possible to cook your own meal, the app “Karma” is a good way to eat sustainably and economically. 


Invest your savings

If being able to put aside money every month, saving in a fund may generate a better growth than a savings account. Getting started with your savings can be as simple as resisting the spontaneous purchase of a cheap unsustainably produced fast fashion top, that you might only wear once or twice. Instead, placing the equivalent amount of 299 kr every month in a fund with an average return of 6% for 10 years has the potential to grow to 48 580 kr. Not only does this improve your financial status but it also benefits the climate through reducing consumption in unsustainably produced low quality goods. 

*(The money you invest in a fund can both increase and decrease in value and it is not guaranteed that you will recover the entire invested amount.)


Saving in funds

Short term vs Long term 

An important first step is to distinguish the horizon of the savings, whether it is a long-term, over 2 years, or a short-term, 1-2 years, saving. For short-term savings, the money should be allocated to low risk assets such as money market and fixed income funds to avoid the risk of drastic fluctuations in value and potential losses in capital from declines in the stock market. 

For long-term savings, one should expose the savings to higher risk by allocating the money to the stock market to attain a satisfactory return. A good way of doing this is through saving in equity funds. To manage stock market risk, the closer the date of consumption is, one can reweigh the risk of the savings by reducing the proportion of shares and instead increase the proportion invested in interest rates and bonds. Assessments regarding this type of adjustment are relevant to make about 2 years before taking out the savings and using them. In this way, it is possible to avoid that the capital decreases before use due to a downturn in the stock market. In other words, you can take on more risk at the beginning of your savings whilst you may need to review and reduce the risk in your savings later in time to hedge for potential declines.


Types of funds and fees

It has been shown that in the long run, actively managed funds with relatively high fees do not yield more than index. Hence, it is more favorable in the long term to invest in index-linked funds. Index funds are a category of funds that track a chosen market index. By saving in an index fund, an individual investor who may only be able to invest small amounts can achieve the benefits of board diversification at a low cost. 

Low fees are especially important for long-term savings, as the saving over time otherwise risks becoming expensive. It is thus reasonable to select funds with fees of under 0.50%. Yet, sustainable funds tend to be a little bit more expensive and may have slightly higher fees.


ISK information

The easiest way to start saving is to create an ISK account on for example Avanza or Nordnet and have monthly savings in one or two funds. With an ISK, it is easy to save in shares, funds and other securities while not needing to think about declaring. An ISK is free of charge and you can easily open several accounts in order to save for different purposes.

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