Invest in low-cost index funds. That’s the financial equivalent of “eat your vegetables” – boring, but undeniably good for you. But finding those truly-cost options can be tricky here in Finland where you don’t have access to Vanguard index funds.
Why Nordnet?
Nordnet is not the cheapest option there. It’s quite pricey. But it has a secret weapon for Finnish investors: they handle your taxes. That peace of mind is worth its weight in gold.
The Monthly Savings Hack
Use Nordnet’s “Kuukausisäästösopimus” (monthly savings plan) to buy ETFs every month with minimal fees (just 2.5€ per month). It allows you to bypass the 15€ fee that would normally have to pay to buy ETFs. You don’t even have to stick to it every month. I top up my account quarterly and use the monthly plan then.
| ETF | Expense Ratio | 5-Year Total Return | Market |
|---|---|---|---|
| iShares Core MSCI World UCITS ETF USD (Acc) | 0.20% | 88.50% | Developed Countries1 |
| iShares Core S&P 500 UCITS ETF USD (Acc) | 0.07% | 114.14% | USA |
| Amundi MSCI World V UCITS ETF Acc | 0.12% | 87.55% | Developed Countries |
| SPDR MSCI ACWI IMI UCITS ETF | 0.17% | 76.95% | World |
| iShares MSCI ACWI UCITS ETF USD (Acc) | 0.20% | 79.83% | World |
Index Funds as an alternative
You can also go for their index funds, which don’t charge fees when you add money and are a bit simpler to use. The bad news? Higher annual fees.
| Index fund | Expense Ratio | 5-Year Total Return |
|---|---|---|
| Nordnet Maailma Indeksi | 0.30% | (Not enough data) |
| Nordnet USA Indeksi2 | 0.25% | (Not enough data) |
| OP-Maailma Indeksi | 0.39% (0.35% bonus3) | 87.60% |
| Handelsbanken Eurooppa Indeksi | 0.20% | 51.42% |
| Handelsbanken Usa Indeksi | 0.20% | 117.93% |
| Storebrand Global All Countries A EUR | 0.31% | 83.62% |
The Real Cost of Fees
Fees can make a big difference in how much money you can make from an investment. Here’s how a 1000€ investment grows over 10 years with a 7% yearly return:
| Annual fee percentage | Final amount | Total fees paid |
|---|---|---|
| 0.07% | 1954.32€ | 12.83€ |
| 0.20% | 1930.69€ | 36.46€ |
| 0.25% | 1921.67€ | 45.48€ |
| 0.30% | 1912.69€ | 54.46€ |
| 0.50% | 1877.14€ | 90.01€ |
| 1.00% | 1790.85€ | 176.30€ |
Choosing between an ETF with a €2.5 monthly fee and lower yearly costs or a no-fee index fund depends on how long you plan to invest and how much you can invest each month. Here are the monthly amounts where ETFs start to make sense:
| Investment duration | Breaking point |
| 1 year | 4588e / month |
| 2 year | 2351e / month |
| 3 year | 1565e / month |
| 4 year | 1165e / month |
| 5 year | 923e / month |
| 10 year | 426e / month |
| 20 year | 196e / month |
The monthly breaking points were calculated by simulating incremental monthly investments for different durations and comparing the accumulated values of an ETF with lower fees and a €2.5 monthly charge against an index fund without fees, until the ETF provided a greater net benefit. Assuming 10% annual growth.
Disclaimer: This isn’t financial advice. Do your own research to make informed decisions.
- Developed Countries: United States (71.8%), Japan (5.6%), United Kingdom (3.7%), and the following developed markets: Australia, Austria, Belgium, Canada, Denmark, Finland, France, Germany, Hong Kong, Ireland, Israel, Italy, Netherlands, New Zealand, Norway, Portugal, Singapore, Spain, Sweden, Switzerland ↩︎
- Follows S&P 500 ESG ↩︎
- Osuuspankki gives 0.35% in bonuses annually if you are a member. This can make the effective expense ratio quite low if you can use the bonuses. ↩︎