A diverse range of financial products is on offer
The range of products available in the financial markets has diversified, bringing more complicated products for customers to choose from. A bank deposit is still the most common method of saving in Finland, but insurance savings, share investments and investment fund shares are also important.
This section presents the most common products available in the financial markets: loans, especially housing loans, deposits designed for savings and investment purposes, the most common investment products (such as investment fund shares, listed shares, index-linked bonds and investment insurances) and pension insurance. This section also provides general information on a range of insurance products.
Sometimes it may be difficult to differentiate between a product and a service. If you do not find here what you are looking for, it is also worth examining the section Financial services where you can find information eg on investment and insurance services.
Make sure you know the costs and risks before making a decision
There are large differences between investment products and their risks, and no such thing as a fully risk-free product exists. If a high return is promised on the product, it also comes with higher risks. In assessing the risks, it is advisable to ascertain whether it is possible to lose both the return and the principal. In the end, the customer is always responsible for the investment choice. It is therefore advisable to examine various alternatives carefully before making the final decision.
Before making your decision, it is also advisable to check the costs related to the product. It is possible that other costs are deducted from the return besides fees and commissions directly charged on the customer. Such costs include commissions paid to asset managers, the broker, insurance company or bank. You should also bear in mind that capital income is subject to tax. It is also worth checking how fast you can turn your investment into cash.
The risks, costs and charges of the product are usually indicated in the advance material the service provider is obliged to deliver to the customer. If the advance material is not provided or is not available, you should be very cautious about your decision. An investor should always remember that higher return is a compensation for higher risks. It is also advisable to check how the return is calculated and what will happen to the principal in various economic situations, for example when interest rates rise or share prices fall.
- Make sure you know the risks.
- Compare different service providers’ products and product features.
- Make sure you know the actual price of the product: return and costs.
- Ask different service providers for an offer.
- Do not buy if you do not understand what you are buying.
- Buy the product on the basis of its features, do not go after giveaways.
17 December 2012