Categories
finland

Independence Day in Finland 2019, Will a Prime Minster Attend the Presidential Party?

Finland’s Independence Day (itsenäisyyspäivä) is on Friday – December 6. It’ll be one of my first Finnish Independence Days in Finland for over a decade. In recent years, I’ve celebrated at Finnish consulates and embassies in places like Istanbul and Abu Dhabi. Now back from living abroad, I admit Independence Day feels especially good. Finland has come far in its 102 years as an independent country.

When did Finland become Independent?

Finland became independent on December 6, 1917 in what could only be described as an anticlimactic political saga full of bureaucratic hurdles. It was a result of good timing and strategic planning by the political elite in Finland, such as Prime Minister Pehr Evind Svinhufvud and Finnish Minister–Secretary of State Carl Enckell. They saw an opportunity when the Bolsheviks overthrew the Russian government in November 1917. Finland had been part of Russia since 1809. Previously, it had been part of Sweden.  

The Finnish senate decided to use the chaos in Russia to their advantage and declared Finland as an independent country. The Finnish government approved the declaration on December 6, 1917. Afterwards, the Chief General Manager of the Kansallis-Osake-Pankki (KOP) bank Juho Kusti Paasikivi travelled to Sweden, Denmark and Norway to request the countries to accept the declaration. He was unsuccessful. The other Nordic countries were unwilling to recognize Finland as an independent nation until Finland had discussed the matter with Russia directly. 

Finland sent a delegation to Russia and Lenin accepted the request for independence. However, the verbal agreement was not followed by action. Finland needed to do some additional convincing by writing letters and sending another delegation to St. Petersburg in late December 1917. This delegation consisted of Enckell and Helsinki University Professor of International Law K. G. Idman. They met with Lenin on December 28 and he requested the Finnish government write yet (you guessed it!) another official letter that would be responded to immediately.

Svinhufvud, Enckell and Idman travelled back to St Petersburg with the new official letters requesting independence on December 30. More bureaucratic issues arose while they handed over the letters: the Secretary-General of the Russian Council of People’s Commissars complained that the letter given to them had been addressed to the Russian government and not to Council of People’s Commissars directly. Therefore, they couldn’t open it. Despite a request by Enckell to just change the address, the Finnish delegates were requested to write a whole new letter with the correct address. 

With yet another new letter and after some more waiting, the Finnish delegation got what they came to Russia for: a letter signed by the Russian Council of People’s Commissars accepting Finland’s request for independence. The Official confirmation for Finland’s independence came on January 4, 1918.

How is Independence Day celebrated in Finland?

Finland’s independence is a quiet celebration unless you get invited to the presidential palace, which organises an exclusive party for the Finnish elite. Good luck with that! Many people stay at home and make Finnish food like karjalanpaisti, light up white and blue candles and watch on TV as the presidential palace celebrates. Some Finns may go out to celebrate dressed in their finest clothing.

Needless to say, the celebrations are usually pretty formal if you go out, and pretty casual if you are at home. Pick your poison.

The Independence Day party at the presidential palace is controversial since it is financed by taxpayers and invitations are mainly sent to those who are rich and powerful. This year 1,700 people have been invited. Usually, the budget for the celebration is between EUR200,000 – 300,000.  

Why is Finland’s independence important?

Many Finns think independence shouldn’t be taken for granted. The older generation still remember the times when Finland’s independence felt like it was under a threat from Russia. Even if Finland initially gained independence without bloodshed, there was plenty of blood spilt later on during the Winter War and Continuation War. Finland lost a lot of its territory-such as Karelia- to Russia as a result of the war. 

Even though losing Karelia was a very bitter pill to swallow, the country managed to keep its independence. Finns learned to appreciate the value of being a sovereign nation from looking to other countries that were less unfortunate at the time, such as the Baltic nations.

Today, Russia is Finland’s Frenemy. You probably know that Finland’s Prime Minister was forced to resign earlier this week. He’s currently a caretaker PM. Many are wondering if he’ll dare show up at the presidential palace independence day party. We shall see.

Sign up to receive sulonorth’s free weekly newsletter

Categories
finland

Helsinki’s Christmas street opens with reindeer, Santa police, & Saara Aalto

  • Opening of the Christmas St in Helsinki
  • Christmas lights in Helsinki
  • Horses are ready for Christmas
  • Women attending Christmas event in Helsinki
  • Crowd listening to Saara Aalto
  • Even dogs were dressed for Christmas

On Sunday, November 24, 2019 sulonorth was there when the Helsinki Christmas St – Aleksanterinkatu – officially opened. This is the 71st time the merry event -which included musical performances and a parade- has been held.

Christmas lights were lit and glögi heated up. Just in time too, since now there are less than seven hours of sunlight per day. Temperatures have dropped to below zero again. If you need extra help coping with the lack of sunlight, make sure you check out our tips for surviving the Nordic winter.

Maybe the weather isn’t pleasant, but there’s nothing to do except dream of a white Christmas here in Finland’s capital. Talking about White Christmas, famed Finnish singer Saara Aalto (yes, known as the runner-up in The X Factor UK 2016) performed Christmas favourites.

Even dogs and police horses were dressed for the merry occasion.

Sign up for a free weekly email of sulonorth’s latest posts

Categories
finland

Finnish Posti (postal workers) strike reflects Finnish values better than anything

The Posti strike is still on. Finnish postal workers have been on strike since Monday, 11 November. Two weeks is a long time for a strike that has some serious effects for mail letter and package deliveries: package deliveries are late for days while delays in mail letter can be much longer. And all that in the midst of high-season, just before Christmas. 

As if the Posti workers’ strike was not enough, other workers’ unions are organizing sympathy strikes to support Posti workers. For example, the Transport Workers’ Union AKT announced a sympathy strike that would stop public transport in Helsinki region for 24 hours if the Posti strike continues without resolution. Other workers’ unions that are supporting the Posti strike with concrete actions are The Finnish Aviation Union, Service Union United, The Finnish Food Workers’ Union and Finnish Seafarers’ Union

Monday, 25 November could see major transport disruptions throughout Helsinki if Posti workers do not have their demands met. A good day to work at home? How many people can really do that?

Finland is the safest country in the world. It’s notable though that the potential action on Monday is being reported by services that warn international business travelers of delays and disruptions. Usually, Helsinki only appears on these services when Donald Trump or Vladimir Putin visits the city.

The Posti office in central Helsinki.

What is the problem? 

Finnish postal workers (PAU union) are fighting against Posti, the government-owned postal monopoly, over a new deal covering wages, terms and conditions in the sector. According to PAU union’s chairman, Heidi Nieminen:

“Posti is seeking such drastic weakening of terms and conditions that there is not really any other option but to answer with industrial action and try to get a reasonable contract on time”.

PAU union asked other unions from blue-collar confederations to support the Posti strike, and that is what threatens to disrupt daily life in Helsinki on 25 November as the strike continues for the second week in a row without an agreement.

Spending and inequality within Posti 

The Posti strike has gathered an increasing amount of sympathy among the Finnish public following media coverage of the huge wage gaps between the blue-collar postal workers and the former head of Posti, Heikki Malinen.

Malinen banked nearly one million euros in 2018. His 2018 salary included a staggering €376,841 bonus which alone is equivalent to an annual average salary of 16 postmen

Malinen resigned at the beginning of October amid rising controversy over Posti’s excessive spending on senior figures, such as himself. For example, the leaders of Posti have enjoyed expensive memberships at Sarfvik Golf Club in Kirkkonummi, west of Helsinki. The membership was proposed by Malinen in 2015 and it cost €30,000 – more than a year’s salary for the average postal worker.

In mid-August, 15 Posti board members and leadership team members travelled to California for a nine-day all-inclusive luxury trip. Posti has refused to specify the exact cost of the trip but it is estimated to be over €100,000.

Only two weeks after this trip, details of the new deal lowering employment benefits and wages were released. According to Helsingin Sanomat, PAU union has estimated that the new proposed employment contract would mean that postal workers earning around €24,000 annually are facing a 30-50% pay decreases.

Amid increasing backlash, Malinen agreed to forgo two months pay but most people felt that this was adding insult to injury considering his high salary and benefits. Following his departure from Posti, Mallinen will still gain four month’s salary.

A Posti truck on the streets of Helsinki.

The strike represents Finnish values

In a country of low income inequality, it is not a big surprise that this kind of industrial action has taken place. In Finland, rich people don’t boast with their money because that is simply against our moral values. In Finland, people get jealous very easily if someone happens to have little bit more money. 

Finnish journalists celebrate a  “National Jealousy Day” with sensational headlines once a year when the government publishes the taxable income of all its citizens. Searching for rich people’s income has been made super easy with specific “tax search engines” that are available in in every major newspaper’s website. Thank god, the tax search engine shows only the information of those who earned more than 100,000 Euros last year. 

At the same time, Finns like to show support for those who don’t have that much. Surprisingly many Finns are happy to pay high taxes in order to get nearly free education, healthcare, low-crime rates and to be just overall happy people.

For most of the 1800s and 1900s, Finland was just a tiny Northern country that nobody knew of. Of course, we had our wars and Olympics and some sports achievements. Nowadays, Finland is a relatively “rich” country, which is great, but at the same time, our moral values have not changed in the past decades. That is why most Finns have some sympathy towards these postal workers who fight for themselves in order to get adequate rights and rewards.

A Posti worker wearing their recognisable orange jackets in central Helsinki.

An end to paper mail?

Ending deliveries of paper mail be a tempting option when confronted with the Posti workers’ strike. There’s been some public discussion of this recently. Finland is a very digital country with medical, tax, and government-related documents also available online, secured by bank codes. Paper mail is still widely used, however, with accessing online documents a slow and cumbersome process, especially for the elderly, the less tech savvy, and those without strong internet connections.

Joonas Saloranta covers Northern Europe investing, macroeconomics and more at the Financial Nordic blog.

Sign up for a free weekly email of sulonorth’s latest posts

Categories
finland

Succeed with your quest to find an affordable rental in Helsinki

An affordable rental in Helsinki? It sounds like an oxymoron to anyone who is familiar with the expensive nature of apartments and houses in this Nordic capital. Does it exist?

The bad news is that rents keep rising in Helsinki. Currently, the average monthly rent in Helsinki is €22.1 per m² meaning that a 30m² studio apartment costs on average €663 per month. If you want to live in a trendy area of the city centre you can end up paying more than €1,000 for a studio when renting through the private market.

Below are recent search results on the popular rental listing site Vuokraovi for studio apartments in Kamppi (city centre):

As you can see, Helsinki is an expensive city. There’s a huge demand for property, and there’s not enough of it.

Here are some options to consider if you want to live in Finland’s capital.

HEKA

Helsinki Council Housing (HEKA) offers the least expensive per square meter price in comparison to any other rental provider. For an apartment in the central Kamppi area you’ll pay around €12.62 per m² per month, less than half the price than that of the private market in that same location.

For people outside of Finland, Council Housing might sound like a curse word since state-provided affordable houses often have a bad reputation. In Helsinki, this is not the case. Council houses are generally well maintained and there are many newly built council houses in the city. Among these is Woodcity, which finished building two council housing apartment buildings in Jätkäsaari in early 2019. 

On the downside, council houses in Helsinki are in huge demand and hard to get. The council housing system is based on the level of urgency. They have three categories listed on their website: Extremely Urgent, Urgent and Not Urgent. You can read more about the categories here

If you are willing to move a bit outside the city centre the likelihood of getting a place through HEKA increases, but these houses are still in high demand. Many people apply for years without luck. However, it is still worth the try. 

So how to apply? If you have Finnish online banking you can fill in an application for council housing here. Apply here if you don’t have online banking yet.  

M2-kodit

Another inexpensive housing provider is M2-kodit. In their own words, they provide “the most generous square meters in the city”. M2-Kodit operates under the Y-Foundation which aims to increase equality by providing affordable housing in big cities around Finland.

The problem with M2-Kodit is the same as with council housing: the demand is huge and getting one of their apartments is difficult. The apartments are given out based on need and the value of applicant’s assets cannot be above a certain threshold.

The application is valid for three months. After that, you need to renew it if you are still searching for a place to live. You can fill in an application here. You will need a Finnish Social Security number to apply. 

Colliers Finland

Some state subsidized housing is rented through Colliers Finland. These apartments have a substantially lower rent than the private market but also different criteria when it comes to selecting tenants.

For example, there is a limit on assets and also your need for housing is evaluated during the application process. If you are interested in applying you can do it here. You will need a Finnish Social Security number to apply. 

HASO or other right-of-occupancy housing

Even cheaper than HEKA are the right-of-occupancy apartments and houses, AKA HASOs. The vastike – basically the equivalent of a rent – varies. For the newly built one bedroom HASO apartments in Kalasatama (very central) that are scheduled to be completed in 2021 the monthly vastike is estimated to be around €550. Amazing!

You will have the right to live in the house for life if you wish, unless you breach the terms of the housing contract.

The challenge with HASO houses and apartments is that you will need to get a loan from a Finnish bank or have about €50k in cash to pay for the right-of-occupancy in a central Helsinki location. You will get the money back once you move out so you won’t lose the money. But still, Finnish banks are very strict when it comes to offering loans for HASO residences despite the nearly non-existing risks.

The other issue is that if you are looking to get a right-of-occupancy inside of Helsinki, the line is huge and the likelihood of getting one depends on your number.

Yes, you’ll have to get in line.

The housing application process is based on a queuing system. You can apply for a number here. For the most popular locations (close to the city centre) you are very unlikely to get any offers unless your number is close to 20 years old! However, if you are willing to move outside the city centre or even, God forbid, to Vantaa or Espoo, you can get offers with a number that is even less than a year old.

Find right-of-occupancy houses and apartments from these websites: Haso, TA and Avainasunnot.

Private market rentals

Private market apartments in Helsinki.

Have some money and need a place to live right now? You can find rental apartments from the private market by searching Vuokraovi, Oikotie and Tori.fi

Receive sulonorth posts for free via email – no spam

Categories
finland Politics

The Finns, a right-wing political party, has gained popularity among educated business people in Finland

Earlier this week, a poll showed that populist Perussuomalaiset (the Finns / True Finns) remained the most popular political party in Finland. 23% of the 3,414 people surveyed over the course of about one-month supported the Finns, while 17.3% backed Kokoomus (the National Coalition Party), the second most popular party.

So soon after the spring parliamentary polls, it’s too early to think about new elections in Finland. However, the popularity of the Finns will be of concern to moderate-minded individuals, given the party’s anti-immigrant stance and critical views of the EU. Along with these factors, the Finns’ policies towards environmentalism, for example downplaying the importance of taking action to prevent climate change, may also be concerning to some. Yet these policies are winning over voters.     

Who are the Finns? 

The Finns became one of the most popular parties in Finnish politics after their election win in 2011. In 2019 parliament elections, they were the second-most popular party (17.5 % of all votes) after the Finnish Social Democratic Party (17.7% of all votes). The SDP’s popularity has since dropped to 13.9%, according to the poll mentioned above, mainly due to frustration with a lack of concrete steps by the government

It definitely looks like the Finns party has established themselves on the Finnish political map. One of the reasons for their success and popularity is their anti-immigrant and Eurosceptic political views. Having shown their popularity during the spring elections, the Finns are now sitting comfortably in the opposition, able to critique the slow-to-perform coalition government.

Who supports the Finns?

The Finns have traditionally been most popular among more nationalist men with lower levels of education.

They’ve also been popular among those who would like to keep ‘Finland for Finnish people,’ individuals who see globalism as a threat, not as an opportunity. According to a survey that was conducted in 2016, 75% of the members of the Finns party were men, and 30% of the members had  a degree in higher education (university or polytechnic). Only 10% of Finns party voters had a degree in higher education.

As in other countries, right-wing populism has gained momentum in Finland in recent years. Perussuomalaiset (ie the Finns party) became famous after their “Jytky” (it’s how they named their election win) in 2011. After the great recession in 2008, right-wing populism has grown in many countries (see the graph below). There has also been more “Jytkys”  in the 2010s than just the Finns’ election win in 2011: the UK’s vote for Brexit and the election of Donald Trump as US president in 2016 for example.

Today, the Finns are increasingly supported by young men under the age of 25 and those who are aged 35-64.  

Business people are also starting to like the Finns party 

According to Helsingin Sanomat, the most popular newspaper in Finland,  people who voted for the Finns party in this year’s parlamentary elections were more right-wing and more educated than in previous elections. According to Suomen Uutiset, engineers, chief financial officers and ITC experts and other educated professionals share more and more of the worldview of the Finns party.

A typical example of a new supporter or member of the Finns could be Veikko Vallin, “The Trump of Tampere”, who joined the Finns party in 2017. He is a Member of Finnish Parliament, an entrepreneur and a millionaire who is against “bad” immigration and who would like to tax corporations and businesses less in Finland. He supports Donald Trump, the US president.

More and more municipal politicians have also become supporters of the Finns party after becoming unhappy with their previous party. The “Trump of Tampere” also claims that “many bankers and CEOs have patted my shoulder”.

Supporters of the Finns party are not only lower income people, at least not anymore. It will be very interesting to see if the Finns can attract more business people to support them in the future.

Joonas Saloranta covers Northern Europe investing, macroeconomics and more at the Financial Nordic blog.

Categories
finland

Want to Live in Finland? Tips From a New Arrival

I moved to Finland in January from Vushtrri, Kosovo. As an international student, I also work in Helsinki and have an internship.

Why do I want to live in Finland? Everyone’s goal is to live the highest quality and most stable life possible. Finland surely offer that to you.

[mapsmarker map=”2″]

What would I tell someone considering a move to Finland?

Finland needs international workers. The Director General of the country’s migration department has said: “The basic premise is that, in addition to the domestic workforce, Finland needs employees also from abroad. There is intense competition in the world for international talents.”

Open Spaces

You’ll probably need to be prepared for some cultural and lifestyle changes. For example, looking at Finland for the first time from an airplane, I noticed the lack of colors. At that moment, Finland seemed only black and white – darkness and light. Of course it was wintertime. Other seasons in Finland are very colorful, though that monotone first impression has stuck with me.

Also, outside of a few urban areas, Finland is very low-density in terms of population. You really see that as you descend. There’s huge expanses of open land. While Finland’s population is only about 5.5 million, it’s land mass is 303,815 km2 – that’s a lot of empty space. There’s a huge distances between buildings in some areas, and the land is filled with forests.

View of Finland from the air during winter.
Wintertime view of Finland from an airplane.

Simple architecture

Get on the ground, exit the airport, and notice the architecture. There’s a fantastic simplicity to the architecture in Finland. Finns are all about efficiency: “If it works perfectly, you don’t have to complicate it. Keep its destiny clear and simple!” That seems to be the unspoken motto.

No small talk 

Did I mention unspoken? The distances between houses seems to help people keep at a distance, in order not to disturb others and to work in silence by themselves. At the least, Finns really do appreciate personal space.

One point is unambiguous. Most Finns are not accustomed to small talk. That doesn’t mean that there’s a fear of small talk. It’s just not a common experience for most people. If you come from a more collectivist society, this aspect of Finland may really shock you. If you want company without priorities or purpose, Finland may not be the right place for you.

Helsinki Sunset Pink
Sunset over Helsinki.

Independent culture 

The stoic independence of Finns created a culture of self-service. Many services – such as buying public transport tickets or paying taxes – are done by individuals themselves, rather than a service provider. Having up to date tech tools is important in order to access the apps and other systems you’ll need. You’ll be helping yourself, and also the overall economy, run more smoothly and transparently.

So, how long will it take to get over the culture shock after moving to Finland? I’d say just two or three months and you’ll appreciate every detail of this wonderful country, which has the most beautiful scenery in the world. You’ll find your peaceful moment here, of a type you won’t ever find anywhere else.

Krenare Bunjaku is a marketing intern at sulonorth. Connect with her on LinkedIn or Facebook.

NOTE: The above post was amended on 31 OCT to clarify that Krenare arrived in Helsinki as an international student.

Categories
finland Investing

Europe is the pioneer in global P2P-lending & Finland is dominating the Nordic markets

Peer-to-peer (P2P) lending or crowdlending/-funding is a new way of borrowing and lending money without any middleman. P2P-platforms operating online connect those who need the money with those who are ready to lend money. No bank is needed in this process. 

Borrowers can be either individuals or companies, and there can be tens or even hundreds of individual lenders contributing to one single loan. Crowdfunding is easier to get than traditional bank loans, which makes it an easy option for startups. P2P-lending is also more flexible, less time-consuming and often a cheaper alternative compared to traditional business loans that banks are offering. 

P2P-lending has become very popular in recent years

The first online P2P-lending platform, the UK’s Zopa, was launched in 2004. However, P2P-lending did not become mainstream investment option until few years ago. As we can see from the graph below, crowdlending has grown steadily during the last 5 years in Finland. At a global scale, P2P-lending did not achieve (early) mainstream adoption until in the 2010s. 

P2P-lending in Europe 

Europe is one of the pioneers in the P2P-sector. The first P2P-platform was launched in UK, which has been the market leader in Europe ever since. In 2017, the UK represented 68% of the overall market volume. In Continental Europe, France and Germany were the two biggest players in P2P lending space. As a small country with a population of only 5.5 million, Finland was doing relatively well compared to the bigger European countries.  

Baltic countries, especially Latvia are growing fast in the European P2P-lending scene: their favourable regulation  and entrepreneurial mindset has produced some decent results.  However, most of the investments in Baltic P2P-platforms come from international investors and loans

In general, there are many platforms in European P2P-markets to choose from. Mintos, a Latvian P2P-platform is the largest and most popular P2P-lending platform in Europe and it’s growing fast. 

P2P-lending in Finland growing

In 2019, there are 4 different P2P-platforms that are operating from Finland: Bondora, Fixura, Fellow Finance and Fundedbyme. Fellow finance provides consumer loans also in Germany, Sweden, Denmark and Poland being the leading P2P-platform in Nordic countries

According to P2PMarketData, Finland was the leading Nordic country in P2P-crowdfunding in 2017. Sweden was pretty close, but Denmark and Norway were far away. When it comes to geographical regions, the Nordics beat Benelux countries, Italy, Baltic countries and other big regions in volume. Rankings have probably changed after 2017, but this gives an idea about the P2P-lending scene in Europe. 

In Finland, P2P-lending has become a popular way to borrow and lend money. According to Finlands Bank, in total of 150,1 million Euros was borrowed in P2P consumer loans in 2018. The number was 40 % higher than year before that (2017), so the growth of P2P consumer loans has been quite strong. 

However, borrowing money via P2P consumer loans is not that popular among Finnish families; P2P consumer loans cover only 1% of the total household consumer credit.

Joonas Saloranta covers Northern Europe investing, macroeconomics and more at the Financial Nordic blog.

Categories
finland Sustainability

Finland makes sustainability easier

A leading Northern European airline emails customers, saying it is moving ‘towards a better climate future’.

Reusable grocery bags are spotted all over hipster neighbourhoods of Helsinki, Stockholm, Oslo, Copenhagen, and Tallinn.

Local Facebook flea market groups are buzzing: buying second hand is a popular move.

In the small neighbourhood of Jätkäsaari in Helsinki, there are two second-hand shops. People can drop off their used clothing and items and have them sold for a small service fee. Both shops have opened up only this year (Jätkäsaari is seeing a lot of development). It looks like business is doing well.

Let’s be honest, doing your part to combat climate change is trendy in Nordic countries. It’s also considered essential for the public relations efforts of companies.

Protecting the climate and being sustainable isn’t a bad move to make – for all kinds of reasons. By 2030, the sustainability industry will create more than USD12 trillion in business opportunities, according to one estimate.

Of course, the interest in preventing climate change and sustainability is real. Those melting glaciers are undeniable from where we sit. Northern Europe also produced Swedish Greta Thunberg, the famed teenage climate activist who is even better than Donald Trump at Twitter.

Given the market demand wide-spread interest, sulonorth is also jumping on the sustainability wagon.

On Tuesday, we began a regular series of posts related to Nordic sustainability efforts. We kicked the series off with an exciting issue close to the heart of every Northern Europe resident: waste management and recycling.

Jokes aside, being able to contribute to the circular economy and focus on living in a more sustainable manner is one of the joys of being a Helsinki resident. The city makes social responsibility more achievable. Sustainability is usually difficult. All too often guilt and a sense of helplessness replaces action. Yet, for many, the only choice Helsinki offers is to live in a more sustainable manner.

The priority Finland gives to sustainability is driven by both a moral responsibility and self-interest. For example, it would be very bad for the Finnish forestry industry if temperatures rise too much. The forestry industry is critical for Finland’s economy.

Watch for more on the circular economy and sustainability in the coming weeks.

Yellow rental bikes make sustainability in Helsinki, Finland easier
Save Finland’s trees, rent a bike!
Categories
finland Investing

If you live in Finland, this new investment account can make you richer

According to the famous scientist, Albert Einstein: “Compound interest is the eighth wonder of the world. He who understands it, earns it… he who doesn’t… pays it”. It looks like the Finnish Parliament has finally understood this, which is good.

In March 2019, Finland’s Parliament made the final decision to approve the new laws that enable Finnish individuals to create their own individual stock savings account up to 50,000 Euros. Finns can open their account on 1.1.2020 and afterwards. 

What are the benefits of the individual stock savings account? 

There are some really favourable benefits for individual investors:

  • Individuals can transfer up to 50K for their individual stock savings account, but there’s no limit of how much the investments can grow inside the account. The earlier in life an individual (or a parent) starts using this account, the more benefits it usually provides.  It really matters how much taxes have to be paid for capital gains and dividends:
  • Let’s take an example: if some parents are wealthy enough to have the money to invest 50,000 Euros when their child is 10 years old (one-time investment in this example), that 50,000 Euros would grow to be 503,132 Euros after 30 years when he/she would be 40 years old. The average stock market return has been somewhere between 710 % depending on how it is measured. I used an 8% annual return in this example. That 503,132 Euros would be worth of around 350,000 after taxes and considering the yearly inflation (2% in this example), that 350,000 would actually be worth of 193,000 Euros on the day when it was first invested (when the kid was 10 years old). Still not bad for an initial 50K investment. 

Who is this not for ? 

The individual stock savings account is good for those who like buying single stocks and keeping them long-term. The account is not suitable for individuals who already have lots of stocks or big sums to invest, because the transfer limit is 50,000 Euros and previously purchased stocks cannot be transferred to the account. Also, it is not a good idea to use the account to buy stocks from other countries, because it’s not tax-efficient.

Most beginner investors start their investment journey by investing in ETFs (Exchange-Traded Funds), because these are good for diversification and usually cost-friendly. However, the new stock savings account is not applicable for ETFs, because it only allows individuals to buy single stocks.

Compared to other Nordic countries, Finns have been very careful with their money in the past when it comes to investing

We Finns are definitely too careful with our money. According to a Danske Bank’s survey, almost 80% of Finns think that investing in stocks is very risky. Only 50 % of Swedes think that way. From the graph below, we can see there is a huge difference when it comes to the ownership of stocks and mutual funds between Swedes and Finns. 

In 2018, the average Swede had 133, 402 Euros invested while the average Finn only had 53,712 Euros invested. Finns have traditionally mainly bought their home and kept the rest of their money in their bank account, avoiding the stock market.

I hope that Finns will be encouraged to invest more and become wealthier with this individual stock savings account. 

Joonas Saloranta covers Northern Europe investing, macroeconomics and more at the Financial Nordic blog.

Categories
finland

Big cities in Finland are growing even as the countryside empties – at least we pay our mortgages (unlike the Swedes)

Finland’s capital city Helsinki attracts more than just tourists. Don’t get me wrong: tourists are great and without them, we would not have anyone to brag to about Finnish sauna or our achievements in ice hockey. Jokes aside. The metropolitan area of Helsinki, which includes Espoo and Vantaa, has around 1.5 million inhabitants. In Helsinki city alone, there are 650,000 people, and the number is growing. Pressure on Finland’s real estate market is mounting.

Helsinki Finland Apartments
Jätkäsaari, Helsinki, Finland.

Real estate market in Finland

Finland’s real estate market is a double-edged sword. Big cities (especially those with universities) are growing as the countryside empties. However, house prices grew in only three major city regions last year: Helsinki, Turku and Tampere. These are all cities located in Finland’s south. House prices in Helsinki are expected to rise by 2% in 2019 and by 1.5% in 2020. At the same time, half of the homes in Finland depreciated in value.

Housing real estate Helsinki Finland
Jätkäsaari, Helsinki, Finland.

Urbanization is a global trend and Finland is no exception. As the country’s fertility rate falls to an all-time low, Finns don’t need that big house with a big yard by the lake anymore.

Instead, nowadays many Finns, especially younger people, appreciate a good location close to the city centre. Owning a car is seen as an unnecessary option for many. Why pay for a car when you can use great public transport or pure muscle energy to commute while at the same time you are saving the planet? That would be a great question to ask of Americans!

Not everyone in Finland is happy with this kind of development. The Centre Party of Finland (in Finnish: Keskusta) supports agrarianism. They would like to “keep the whole Finland alive” by supporting rural areas so that people would have work options and services outside of big cities. However, Keskusta suffered a great loss in Finland’s last parliamentary elections (2019). Urbanization is not the only reason for the loss, but it definitely played a role.

Real estate market in other Nordic Countries

Finland is a Nordic country, and we like to compare ourselves to other Nordic countries, especially Sweden, our brother and great rival. Nordic countries are similar in many ways (Not discussing the Finnish language here…), but there are also some differences.

In Sweden, housing prices have gone through the roof, especially in the capital city, Stockholm. There were definitely signs of a housing bubble: house prices went up by 44% in the past 6 years. However, compared to 2018 Q1, house prices in Sweden went down by 2.09% in 2019 Q1.

From the two-year-old graph above we can see that house prices have stayed stagnant in Finland during the last 5 years. In Denmark, Norway and especially Sweden, house prices have risen a lot. One reason why Finland has not been able to keep up with its Nordic neighbours is that the economic situation in Finland was quite bad after the 2008 global financial crisis and the following European debt crisis. After 2011, Finland recovered very slowly from these crises compared to rest of the world. Finally after 2015, the economy of Finland started to recover.

Punavuori, Helsinki, Finland.

Nordic countries have different mortgage loan policies

There is one big reason why the house prices surged so much in Sweden before 2019. Sweden has a totally different mortgage system compared to Finland. In Finland, the longest mortgage term is now 45 years. However, mortgages longer than 30-years are rare in Finland. In Sweden, the longest mortgage term is 125 years! That is a huge difference and is the biggest reason why house prices are out of control especially in Sweden’s big cities.

Stockholm Sweden Real Estate New Housing
‎⁨Hammarbyhamnen⁩, ⁨Stockholm⁩, ⁨Sweden⁩.

Swedes do not necessarily pay the loan payments of their mortgages, because their mortgage policies and laws allow that. Instead, they might only pay the loan’s interest. This allows them to spend and invest more money, but it can (and probably will) lead to a housing bubble burst some day. Norway and Denmark are in the middle: people in these countries don’t pay their mortgages as fast as in Finland, but definitely faster than in Sweden.

Joonas Saloranta covers Northern Europe investing, macroeconomics and more at the Financial Nordic blog.