Before reading this post, do checkout my other post about the Swedish deposit guarantee for background and context.
Ok, now that we’re all on the same page, and we know how and in what way your savings are protected, let’s look at what protection there is for your investments (bonds, shares, funds and other financial instruments).
In Sweden, along side the deposit guarantee, there’s also something called investor protection. This protection kicks in if an institution is declared in default and can’t return your assets. It’s worth stressing that it’s illegal for financial institutions to mix their client’s assets with their own. But, as with all things financial companies aren’t allowed to do, there aren’t any guarantees that it won’t happen. Thankfully though, assets like bonds, shares and funds are better protected than your savings. And worst case the investor protection kicks in.
Ok, let’s continue. The protection covers all individuals (incl minors), companies and other legal persons (such as the estate of a deceased person). And just like with the deposit guarantee it’s counted individually if an account is co-owned.
So what type of assets are covered and what’s the maximum compensation? Well, which assets are covered is defined under the Securities Markets Act and some of the most common examples are:
- shares
- bonds
- derivative instruments
And the maximum compensation amounts to 250 000 kr, and your compensation is calculated based on the market value of the relevant securities at the time of the institution’s failure. It’s worth noting that the investor protection does not compensate for any changes in value of shares or other securities.
With this in mind it’s my recommendation to try and spread your investments across more than one financial institution, especially if your investment portfolio is worth more than the investor protection will reimburse you for. This does add complexity to your account setup and you’ll have to weigh the pros and cons. I’d definitely never keep more than the deposit guarantee in one place, with investor protection I’m not as adamant. You do what’s right for you.
And as mentioned before, my top 2 banks for investments in Sweden are Avanza Bank and Nordnet Bank AB. And if I also include robo investors in this category (the company invests on your behalf rather than you choosing what shares or funds to buy) I can also highly recommend Lysa, Opti and Fundler. But more on that in another post.