SEB: estonians more cautious than their southern neighbours

Photo: SCANPIX

Residents in the Baltic States are likelier to keep their savings in deposits than invest them in higher-risk investment products. Approximately 40 per cent of households are saving for unexpected events, that is, accumulating a financial buffer, SEB Estonia reported.

A survey conducted by SEB in the three Baltic States has revealed that, unlike their neighbours to the south, Estonian households will not lightly leave their cash reserves at shops or shopping centres, but will rather accumulate them in deposits. Only 15 per cent of Estonian residents surveyed stated that they would purchase durable goods with any spare money, rather than accumulate it in a banking product. For Latvia and Lithuania, this figure was 27 and 43 per cent, respectively. Of the saving solutions offered by a bank, residents in the Baltic States are likelier to prefer deposits rather than higher-risk investment products.

“Baltic households prefer deposits at very low interest rates to investing, since they are mostly reluctant to take risks, which any opportunity for earning a higher return entails. There is also a sentiment that investment is complicated and that one does not know enough about it. Our survey has revealed that in all three Baltic States it is the young who take the biggest interest in opportunities for investment,” said Triin Messimas, Development Manager of Private Loans at SEB.

More than half the respondents in the survey replied that, first and foremost, they are saving money for any unexpected outlays, in order to feel secure. Thus, it is important to be able to tap any accumulated funds straight away.

“For Estonian households, priority No. 1 is paying their bills. After that, a small reserve is accumulated for any unexpected events. Next in priority is saving up for children or for some bigger purpose. Saving up for a pension ranks fifth. However, following preferences currently viewed as being right need not produce the best possible outcome in the management of the financial matters of a household. It pays to come in for a consultation at the bank in order to also precisely get, in addition to a good overview of one’s assets/liabilities, specific recommendations on how to set the right priorities in financial matters, according to the current actual financial needs of one’s household,” Messimas added.