How to invest as a private person in Finland

Many foreigners in Finland would like to start to invest, but don’t know how. Relax, things are not that complex and there’s already a couple of services available also in English!
As a private person in Finland, you have several options for investing your money. Here are some common investment options available to individuals in Finland:

Investing in shares

You can invest in publicly traded companies by buying shares (also called stocks or equity) through a brokerage account. In Finland you can choose between two types of brokerage accounts. They mainly differ in terms of taxation. Here’s a quick comparison between the two account types:

Book-entry account

This is the standard product (arvo-osuustili in Finnish)! WIth a book-entry account you can not only buy shares, but also mutual funds and exchange-traded funds (see below). In a book-entry account you pay taxes in connection when income is generated, f.ex. when selling a share with profit.

I recommend to use a Finnish brokerage account, f.ex. from Nordnet or your local bank, so that your transactions automatically transmit to your Finnish tax return. This will make filing your Finnish tax return a lot easier.

Equity savings account

This account has tax benefits which is why its use is limited (osakesäästötili in Finnish). One can only have one such Equity savings account at once and one can only pay a maximum of 50 000 euros into it. People who had more than one Equity savings accounts have had to pay penalties.

So what is the tax benefit here? Well, you pay taxes only when you raise your money from the account, i.e. not necessarily when income is generated. As long as you don’t raise any money from the account and always reinvest your profits you don’t pay taxes at all! Of course at some point you will want to raise the cash (and pay taxes), but you will have been able to reinvest all your profits and postponing your tax payment. Quite a big benefit if you think of the snowball effect. See this article for more info on Equity savings accounts.

Investment funds

Investment funds pool money from multiple investors to invest in a diversified portfolio of stocks or other assets. You can invest in investment funds offered by various asset management companies, either directly or through your brokerage account or your bank. The main Finnish banks have lists of their available funds in English and also offer their own in-house investmend fund products like OP China or Nordea European Smaller Companies.
You can also start saving into investment funds on a regular base with small amounts, i.e. 10-15 euros a month.

Exchange-traded funds (ETFs)

ETFs are basically above investment funds which you can trade on stock exchanges like individual stocks. You can buy and sell them throughout the trading day. In order to buy them via a stock exchange you’ll need a book-entry account to hold ETFs (see above).

Real Estate

Investing in real estate properties has been popular in Finland in the past years. Most Finnish real estate investors buy flats with own and loan money to rent them out. Others buy flats in bad shape, rehab and then sell them with a higher price. Finnish proficiency is somehow recommended to succeed as most housing documentation is in Finnish.

As you probably know I am pretty much into real estate investing myself. Drop me a line if you want to know more about real estate investing in Finland.

Peer-to-peer platforms

Platforms that facilitate peer-to-peer lending allow individuals to lend money to others in exchange for interest payments. It involves higher risk compared to other forms of investments, so thorough research and risk assessment are essential. As far as I know there is no Finnish provider at the moment. Please note that a couple of platforms from outside of Finland have been been engaged in fraud and investors have lost their money in such platforms.

Virtual currencies

To my knowledge most investments in virtual (or crypto) currencies happen via international platforms outside of Finland. Virtual currency investments are subject to high risk, so also here it is vital to understand and assess all risks involved. Tax reporting of vast amounts of virtual currency transactions can be challenging, see my separate article here.

Savings accounts and term deposits

Although they provide lower returns, savings accounts and term deposits are low-risk options for parking your money in Finland. Check Kauppalehti’s list of current interest rates for savings accounts and term deposits. Also make sure the provider is from within the EU to be in the scope of EU deposit guarantee (100 000 euro deposit protection per individual).

Before making any investment, it’s important to conduct thorough research, understand the risks involved, and consider your financial goals, investment horizon, and risk tolerance. It may be beneficial to consult with a financial advisor or professional who can provide personalized guidance based on your specific circumstances.