How will regular contributions help reduce risks related to investing?
Regular contributions to the third pillar mean that new shares are purchased continuously regardless of the situation of the financial market – the market may be rising and the prices may be up, but it could also be falling and the prices could be low. In the case of the latter, you can buy more for the same amount of money, the benefit of which you will see when the markets and prices are rising again. This dispersed purchasing helps to reduce the effects of financial market fluctuations on your investments in the long term.
Fluctuations in the financial market are unavoidable in case of all long-term savings, which is why you should remember the following:
The success of saving comes from regular contributions. Continue or configure them in the SEB Internet Bank.
Use up tax returns. The state refunds income tax on third-pillar contributions not exceeding 15% of your gross annual income or 6,000 euros per year. This limit applies to contributions made by both yourself and your employer.
Takes little of your time. Review your previous contributions at least once year (for example at the end of the year) and make adjustments if needed.
Invest responsibly. When you invest at SEB, you can be sure that some of your investments have been made responsibly as we believe that good profitability does not have to come at the price of sustainability.
Take a look at how much you can contribute additionally into your third pillar to use up your tax returns
Endriko Võrklaev
Fund Manager of AS SEB Varahaldus
‘To illustrate drops in the financial market, it is good to compare them with sales at stores. If all stores would sell their goods at a discount of 50%, 70%, or even 90%, would we buy them? Of course we would. If you continue contributions into your pension fund when the market is down, you can benefit from the “discount”. We will get more “discount goods” for the same money, which will benefit us mainly when the markets begin to rise again’.
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* The state returns income tax on third-pillar contributions not exceeding 15% of your gross annual income or 6,000 euros per year. To receive an income tax refund, you must file an income tax return. Income tax is refunded only if you have paid income tax during the year. Taxation depends on individual circumstances relating to a person, including their residence for tax purposes, etc. Legislation governing the tax system may change.
