There are many ways to save. Whether the aim is to build a reserve fund to meet unexpected expenses or simply to save up for a deposit on a new car, it pays to save.
One way to save is to pay off short-term debt. Paying off debt can be the most sensible course in household finances.
Reduce your overdraft is a service Landsbankinn offers customers who wish to lower their short-term debt, such as overdraft credit or payment card debt.
You agree to pay a certain monthly amount towards the loan and we offer favourable interest terms.
A robust reserve fund can prevent unexpected expenses, such as repairs and maintenance, equipment purchases or
summer holidays, from derailing the household's finances.
By setting goals and saving, you create a reserve fund that accumulates interest instead of you having to pay interest. It is impractical to apply a long fixed term of deposit to reserves as they should be available on short notice to fund the dream without having to pay for it later.
It pays to think ahead and build a fund with the aim of paying for renovations, affording a handsome down payment on an apartment or car or save for the children’s future. Such a fund can easily be realised once you've set goals about the beginning and end.
Pension savings allow you to build long-term savings that create increased disposable income and the opportunity for a more flexible retirement. We advise our customers to compose a pension fund of mandatory pension savings, supplementary pension savings and regular savings.
Regular savings present one of the most advantageous savings plans. You set the goals and decide on the amount you want to spend on monthly savings or choose to round up each transaction on your card.
In this way you build a robust fund to purchase housing, a car or pay off debt.
With regular savings, you can create a reserve fund or simply save for the long term using savings accounts by depositing any amount from ISK 500 per month or building an asset portfolio by subscribing to funds for at least ISK 5,000 per month. Monthly purchases in mutual funds reduce transaction costs and decrease fluctuations
in returns compared to individual larger purchases.
Each month, two lucky customers who have saved regularly by purchasing fund units for at least one year, receive an ISK 20,000 addition to their assets. Regular savings pay off.
It should be kept in mind that interest and inflation will certainly change during the savings period. This causes returns to fluctuate and the fluctuations differ depending on the selected savings form.
As a rule of thumb, the higher the yield, the more pronounced the fluctuations. It is not wise to take a great deal of risk if you are investing for the short term as fluctuations will then be greater.
If you are looking to invest for the long term you can accept more risk and increase the likelihood of higher returns. It is, for example, prudent to reduce risk with increased age since younger individuals are more flexible and able to wait for fluctuating returns to even out.
In some cases you can achieve better returns by restricting access to your savings to a fixed term. The longer the term of deposit, the
higher the interest. If you are looking to save for the long term, term deposits can be a favourable option.
Indexation is a way to reduce risk in relation to savings. While inflation-indexed savings carry lower interest they are protected against inflation. Should inflation spike during the savings period, indexed savings can yield higher returns despite lower interest rates. When the inflation-index drops the inflation-indexed savings shows minus in indexation, i.e. the principal goes down.
Landsbankinn offers both indexed savings accounts and funds. Purchasing units in funds that invest in inflation-indexed bonds allows investors to achieve indexation without restricting savings to a minimum term of three years.
Landsbankinn hf. Austurstræti 11, 155 Reykjavík, Reg.no. 471008-0280
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