Invest correctly according to research, here are the mistakes you should avoid
Common mistakes Swedes make with their pension
Your pension is your future salary, but many people make mistakes that cost them dearly.
Here you will get research-based advice to avoid the pitfalls and create a more secure retirement.
- Wrong level of risk – Finding the balance between security and growth
Having too high or too low a risk in your savings can negatively affect the development of your pension. Many people only look at one part of your pension, such as the premium pension. But your pension consists of several parts, and it is the whole that determines what level of risk you actually have. For example, if you choose high risk in your premium pension but at the same time low risk in your occupational pension, the total risk can still be balanced. Therefore, it is important not to just look at an individual part, but to look at the entire pension as a combined portfolio.
- Insufficient risk diversification – Spread investments globally, not just in Sweden
Sweden accounts for about 1% of the world’s market capitalization, but many have a significantly larger share invested here. Research shows that it is wise to spread investments globally in approximately the same proportion as the markets weigh in the world. - Too high fees – Choose broad index funds with low fees
Fund fees can vary greatly between different options. Actively managed funds often cost 5–10 times more than equivalent index-tracking options. A higher fee may be reasonable if the fund actually performs better, but statistics clearly show that this is rarely the case. For long-term savings, it is therefore usually wise to choose low fees and broad index funds.
- Emotional decisions – Don’t rock the boat when the market swings
Many people sell when the stock market goes down, often too late, and risk missing out on the subsequent recovery. Research shows that the best strategy is often to stick to a long-term plan.
- Trying to time the market or find winning funds – Focus on long-term strategy instead of short-term gains
Trying to beat the market by timing the stock market or betting on individual industries is tempting but very difficult, even for professional investors. Focus instead on the fundamentals: the right level of risk, global diversification and low fees.
The most important factor for a high pension is not trying to beat the market, but keeping fees low and having a long-term strategy.
– Source: Based on Nobel laureate Eugene Fama’s efficient market hypothesis (University of Chicago).
The most important factors influencing your choices
- Risk level – Your age, how much is invested in funds compared to safer assets, and your attitude to risk determine which level is right for you.
- Diversification – Spread your investments across different markets and assets. A balanced portfolio provides better risk-adjusted returns and a more stable pension over time.
- Fees – Choose funds with low fees. Small differences in fees grow large over time thanks to the compound interest effect.
It is easy to get started
1. Information collection
Start by signing an informational power of attorney digitally with your BankID. This power of attorney gives Lifeplan the right to request information about all parts of your pension.
2. Follow-up after 2-3 weeks
After 2-3 weeks, you will receive an email inviting you to log in to Lifeplan. Here you can see a summary of what your pension looks like today, an analysis of how well your pension money is invested and advice on how you can improve your situation by switching funds.
3. You are in control
You can switch funds yourself using Lifeplan. If you need help, you can contact our support for guidance.
4. Continuous monitoring of your pension capital
Lifeplan monitors your investments and contacts you when it is appropriate to make adjustments based on market changes or changes in your personal situation.
