December 2, 2021

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The podcast "Money Talk" thinks about saving like an oil chest.  The finance professor thinks there are some things that you should pay special attention to

The podcast “Money Talk” thinks about saving like an oil chest. The finance professor thinks there are some things that you should pay special attention to

Lise Vermelid Kristoffersen (34), known for her Instagram account “Pengesnakk” and podcast of the same name, is one of the profiles participating in this fall’s roundup of the Fantasyfond stock game DN, Where it is still possible to enter the battle for great rewards.

But when the game requires picking individual stocks for a short period of time, her investment philosophy with her own money is just the opposite.

Kristofferson joined the Tomra stake two years ago because she believed it would benefit from EU waste management targets, and there she saw the money double. Tomra is best known for its pawnshops, but today it offers many different sorting solutions.

However, the success didn’t add flavor, and Kristofferson rejected the idea of ​​creating a portfolio of sustainability-related stocks.

The start was not relatively good for Fantasyfond, with its portfolio up 5.9 percent in five weeks, and among the top participants at 30 percent, given the appetite for individual stocks.

I don’t have enough insight, and I’m not greedy enough to go for the batting candidates. I’d rather focus on getting more money to put in the stock market than on where I should put that money, she says.

Mentally predisposed to contraction

So every month Kristofferson invests as much as she can in cheap passive equity funds, and the portfolio has now grown to nearly NOK 1.5 million.

When I was about to learn about stock funds before I started them in 2015, I thought it was too risky to bring my own money, completely different from mine. But I was on the verge of getting out of debt, and I had no desire to increase consumption or increase the cost of housing, so I had to do something reasonable with my money.

When she saw the curve of developments in the stock market from the 1930s until today, she became convinced, and read how longevity and diversification can reduce risk in the stock market.

When stock markets plunged sharply and quickly in February and March of last year, they were already mentally prepared for a downturn sooner or later, and that it would be long-term anyway. So you have not taken any effective choice to beat the market.

Her goal is not to retire, but to become financially independent when she turns 40. So, I started calculating how much you should invest and how much you can expect in return.

This case reminds us of the Petroleum Fund’s working rule of how much money politicians can withdraw from the fund each year.

But where the Petroleum Fund splits its investments between stocks and fixed-income securities, Christophersen currently holds 100 percent of the shares.

– I’m a little late on the road. If I were really living in the back state it would be different, but now I’m building and getting ready. I don’t know much about fixed income funds either, they seem a lot more mysterious than stock funds, which in the end there is a lot of information about. I understand they should be safer, but I want to understand how they work, she says.

Costs, diversification and selection

Finance professor Espen Henriksen at BI thinks it’s a good idea for individuals, pension funds and institutions to take inspiration from the index-oriented petroleum fund strategy.

To achieve success, he believes the most important thing is to focus on costs, ensure broad diversification, and focus on more difficult but crucial financial choices.

At the end of 2020, the Petroleum Fund’s portfolio was divided into 72.8 percent of equity, 24.7 percent of fixed-income securities, and 2.5 percent of unlisted real estate.

Henriksen believes that the exact distribution one should have among the different types of investments is one of the important and difficult questions that private investors should focus on answering, rather than asking which shares one should own.

It is a good idea to ask yourself why and when the money will be used. A young man who is going to use money for the first time at age 70 can keep a high stake in stock, but if the savings are to be used to buy his first apartment in a few years, the time horizon for stock savings is, he says. .

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But why should ordinary people own bonds at all, which Christophersen and others find more difficult to understand than stocks?

Henriksen summarizes by saying that a low-cost bond fund can be seen primarily as a reasonable long-term component to reduce risk, but at the same time get a better return from the bank.

Finance professor Espen Henriksen at BI thinks more people should be inspired by the Petroleum Fund.

Finance professor Espen Henriksen at BI thinks more people should be inspired by the Petroleum Fund. (Photo: Hanna Christine Hajjardar)

Another question that causes a lot of headaches is what is the expected return for the base. The Petroleum Fund’s work rule was cut from four to three percent in 2017, and Henriksen believes most people should be similarly cautious about their return expectations.

It is impossible to quantify precisely, but there are many reasons ahead to expect a lower return in the next ten years than in the previous ten years. He says the market prices are too high after all the complications.

Exceptions can dilute returns

Through the Kron savings service, Kristoffersen has invested 81 percent of its financial portfolio in KLP AksjeGlobal Mer Samfunnsansvar, an index-linked fund that uses a methodology to give weight to companies that score highly on criteria relating to, among other things, the environment, social responsibility and corporate governance.

Henriksen says that when an index fund starts making exclusionary options, the expected risk-adjusted return will be a little lower because diversification is poorer, but if costs are as low as other index funds, discounted diversification doesn’t have to be. very expensive.

He draws the comparison with the Petroleum Fund, which, among other things, excluded nuclear weapons and tobacco manufacturers, an active option that offers a lower expected return according to risk, but the costs of managing the fund are still low.

– What about real estate, should it have a place in the portfolio of Norwegian private investors or should they have a lot of their own homes?

Unlisted real estate is a part of the oil fund strategy that individuals can usefully ignore. There is already a lot of real estate in a wide portfolio of listed joint stock companies. Additionally, most people who own their homes already have significant exposure to real estate, Henriksen says.(Terms)Copyright Dagens Næringsliv AS and/or our suppliers. We want you to share our cases using a link that leads directly to our pages. All or part of the Content may not be copied or otherwise used with written permission or as permitted by law. For additional terms look here.