Investment for beginners: Everything you need to know to make your money grow

A share savings account is a tax scheme for consolidating your equity investments in one place. You can buy and sell shares tax-free within the scheme.

Risk is a measure of value fluctuations. High risk means the possibility of both greater losses and greater gains. Low risk means smaller value fluctuations and therefore lower loss and return potential.

Rate of return is what you earn on the investment after costs have been deducted.

Trading, as opposed to investing, involves quick buying and selling in the hope of making fast money, often within a single day. Trading carries extreme risk and is recommended only for professional investors.

A fund is a 'package' of several securities, such as different shares, put together by a professional manager. All funds have a defined investment profile that the manager must adhere to. You and other savers can buy units in the fund. You receive a gain or loss based on the proportion you own.

A share is an ownership interest in a limited company or public limited company. When you buy a share, you become one of the owners of the company and can vote at the general meeting.

When you have money in your account, we pay you interest as a thank you for the loan. This means your savings increase in value over time, entirely on their own. Would you like to know more about how this works and how you can get the best interest rate?

Read more about deposit interest rates here

A fund is a collection of securities bundled together into one package. You can buy shares in the fund. The money you and other fund investors put into the fund is used by the manager to buy securities on your behalf.

A fund can hold anywhere from 16 to several hundred different securities.

A fund can buy both equities, bonds and other fixed-income securities.

The greater the proportion of equities in a fund, the higher the risk and rate of return you can expect. Due to short-term fluctuations, equity funds are best suited for long-term savings.

Conversely, the risk and return potential are lower the more fixed-income securities there are in a fund.

By long term we mean at least 6 years.

Learn more about funds

An index fund buys the equities that are in a given index (an index is a fixed selection of equities).

The managers of index funds do not analyse and select individual shares. They simply buy and sell in line with the index the fund tracks, with some exceptions*. If you buy DNB Norge Indeks, for example, you receive the shares included in the main index on the Oslo Stock Exchange.

This type of management is less expensive to carry out, and therefore these funds are also cheaper to own.

We offer many different index funds:

• DNB Global Indeks
• DNB Global Emerging Markets
• DNB Europa Indeks
• DNB Norden Indeks
• DNB Norge Indeks
• DNB USA Indeks
• DNB Klima Indeks

*NOTE: Our index funds do not track the indices slavishly; we always exclude shares that are environmentally harmful and unethical.

Learn more about index funds

In an active fund, the managers 'pick' shares based on analyses and examinations.

The managers then buy the shares they believe are most likely to rise in value. The aim is to generate a better rate of return than the index for the fund holders.

You will find active funds in both geographical funds and sector funds. Geographical funds invest only in a specific region, for example in the US. Sector funds invest only in one sector, for example technology.

Active management involves hours of analysis, visits to companies, conversations with company management, and so on. All to find the 'winning shares' that can generate the highest possible rate of return in the fund.

The demanding management makes these funds slightly more expensive to own.

Before you start saving, you must familiarise yourself with the expected risk and charges.

Examples of geographical funds:

• DNB SMB – invests in small and medium-sized enterprises in Norway
• DNB Global Lavkarbon – invests in low-carbon companies globally
• DNB Norge Selektiv – invests in selected companies in Norway
• DNB Grønt Norden – invests in environmentally friendly companies in the Nordic region
• DNB Global Emerging Markets – invests in companies in China, India and South America, amongst others

Examples of sector funds:

• DNB Teknologi – invests in technology companies
• DNB Health Care – invests in pharmaceuticals and other healthcare enterprises
• DNB Telecom – invests in telecommunications
• DNB Bioteknologi – invests in biotechnology
• DNB Finans – invests in banking, insurance and other financial institutions

Learn more about actively managed funds

An equity fund is a fund where at least 80 per cent of the money is invested in shares

The possibilities for combining funds are virtually endless. This has made the range enormous, and it is difficult to choose.

You may have heard of index funds, passive funds, actively managed funds, sector funds and geographical funds?

All of these are equity funds.

The various descriptions of equity funds are designed to indicate how the different funds are managed and what types of companies they invest in.

Many divide equity funds into active and passive funds. We explain the difference below.

Learn more about equity funds.

Fixed-income funds are mutual funds that invest all the money in various fixed-income securities, such as government bonds and other debt instruments.

Learn more about fixed-income funds.

Balanced fund is simply explained as a mixture of both equities and interest rates. The proportion of equities the balanced fund invests in determines how high the risk is.

Learn more about balanced fund.

A share is an ownership interest in a private limited company, and the share price is the price of one ownership interest. Price and price are therefore the same thing!

Someone who owns one or more shares

A cash payout from a private limited company to the owners. Often in the form of a sum per share.

A fixed selection of shares tracked over time to measure value development as an average.

A stock exchange is a trading venue where buyers and sellers meet to buy and sell securities.

Brokerage is the name of the fee you pay to a brokerage firm to execute a purchase or sale of securities.

It is important to check how much it costs, so that potential gains are not eaten up by the costs.

A bull market is a financial market where optimism prevails. A bull market is characterised by confidence amongst investors with expectations that good results will continue for a long time. (Bull, because the bull thrusts upwards).

A bear market is by definition a fall in the stock market of at least 20 per cent, lasting two months or more. This is a pessimistic period with falling share prices and uncertainty. (Bear, because the bear strikes downwards).

Having equity means that you have substantial savings or assets. Home Mortgage RegulationsStipulate how much equity you must have as security before the bank can grant you a mortgage.

Interest is the price, or rent, you pay to borrow money.

A second home is a residential real estate you own in addition to the one you live in. The residence you live in yourself is called a primary residence. The Norwegian Tax Administration uses the term second home, and ownership of a second home is taxed more heavily than a primary residence.

Ability to pay is about how much money you earn, that you have enough coming in each month to service your loan. Even if interest rates go up.

Willingness to pay is your willingness to save and pay your bills. It means that you have your finances in order and do not owe money unnecessarily.