Many Estonians have larger amounts of free money on their accounts, which come from inheritance, sale of existing real estate, gifts, or dividends. Most people keep the money on their bank account instead of growing it to make sure it is there for when the need arises.
According to Kristiina Toomei, the Deposit Product Manager at Holm Bank, most of us are rather poor savers due to the legacy of the Soviet era.
‘We have had to live through times when we could only dream of good things. Therefore, it is not surprising that free funds are immediately used to improve your quality of life. For example, people gladly invest in a new car, purchase better household appliances, do repairs at home, or go on a family vacation,’ said Toomei.
Deciding what to do with free funds always takes time. However, the free funds on the account lose value over time and constitute an additional source of risks.
‘There are different kinds of risks – some are internal and some external. If people have a larger sum of money on their account, they are always able to make spontaneous emotion-based purchases with which they tend to reach into savings. In addition, a lot of people have linked their accounts to online shopping environments, which makes their money vulnerable to cybercriminals. The safest way of handling your money is keeping it untied to any payment card and requiring you to act consciously to access it. The time it takes to access the funds acts as a reflection period, which allows you to figure out whether you really do want to spend that money here and now,’ advised the representative of Holm Bank.
According to her, there are several ways to grow or utilise your savings or larger income, each with their own benefits and risks.