The beginner's guide to stocks
Are you interested in saving in stocks but unsure of how and where to start? Our beginner's guide will help you to get started and give you advice on what to think about before making your first stock purchase.
Choose which bank you want to use
At the moment, Nordea, Nordnet, Avanza, and Skandia are all great alternatives that offer low commission fees for buying stocks in Sweden. You can always purchase stocks elsewhere, but be aware of higher commission fees.
ISK or KF-account?
All types of bank accounts have their pros and cons. Most people choose to invest through an investment savings account (ISK). With this account you don’t need to declare your profits and losses. Instead, the tax is deducted annually based on the amount you have in your account. This makes investing considerably easier.
Capital Assurance accounts (KF) means that you own stocks through an insurance company. Unlike an ISK account, it can be owned by both private individuals and companies.
When you’ve decided on which bank and what type of account to use, you’ll want to transfer the money to your new account (you might want to set-up recurring monthly deposits, it will make it easier to manage your investments). Information on how to make deposits at your chosen bank can be found here:
Think strategically with your portfolio
- Spread your risks - Buy stocks across different industries and different markets. Don’t put all your eggs in one basket - avoid individual stocks taking too high of a percentage in your portfolio.
- Think long-term - Build your money machine for the long run. The effect of compounding earnings is powerful so be patient! Also, you have to be able to allow for stocks to fall in value from time to time if you believe in their long-term potential.
- Invest regularly - Predicting when markets will rise or fall is extremely difficult, and research has shown that most of those who claim to have had success were simply lucky. If you buy stocks on a regular basis, you will probably end up near the market’s average price during the period of purchase. By investing regularly, you can avoid buying at a time when the market is high or over-priced.
Choose the right commission fee class and avoid paying too much
Each time you buy or sell stocks a commission fee is charged. With our partners, you pay a percentage fee with a fixed lower limit. Nordea has the same prices for everyone, but if you trade via Nordnet, Avanza or Skandia, you will need to choose a plan that determines how your commission fees will be charged. Most of our customers use the plan called Mini, where the commission fee is either 0.25% of the amount you buy or sell for, or a minimum of 1kr (8kr at Skandia). In order to avoid paying too much in commission fees, it's important to choose a plan that best suits you. Read more about commission fees, and find out which plan is best for you at Nordnet, Avanza and Skandia. If you want to read more about Nordea's pricing, you can do so here.
Example: If you have a commission class Mini on Nordnet or Avanza and you buy 3 identical shares of stock for a total of 1000 SEK, you will pay 1000 SEK * 0.25% = 2.5 SEK in commission fees. If the shares cost a total of 300 SEK, you will pay 1 kr in commission fees even if 300 SEK * 0.25% = 0.75 SEK, since the minimum fee is 1 SEK. When you purchase 5 different kinds of stocks for 400 SEK each, you will pay 5 SEK in commission fees.
Choose your preferred market
The Swedish market is the most common markets for Swedish investors. In this market you will find companies that you are familiar with and may already be a customer of. In addition, it’s cheap to trade Swedish stocks for those who want to get started with smaller amounts.
Nordic stocks are relatively cheap. Many investors that already have a Swedish portfolio but wish to spread their risks to several different companies can choose to invest in the Nordic market.
After Sweden, the most common market to invest in is the North American market. It's the largest western market, and is where many major international companies have their registered offices.
Europe offers a wide range of industries and businesses. This market is growing more and more among our customers, but as of now European portfolios are only available from our partner Nordea. Nordea is currently the only bank with a sufficient service at a reasonable price for this market.
Get ready to trade!
One thing to keep in mind are: Since stock trading takes place in a bidding market, an order with your trading platform will be placed when you want to buy or sell stocks. Your purchase or sale will go through when someone has accepted your bid, and therefore it is not certain that it will go through immediately.
Remember that the stock exchanges (the markets where stocks are bought and sold) all have different opening and closing hours, and are closed on weekends and holidays.