Is letting your money sit in a checking account while waiting for better days a solution? On World Savings Day, here are five more or less risky ideas for investing and growing your savings.
Between March and July 2020, the French put aside more than 85 billion euros according to the Banque de France. ” The health crisis has only reinforced this propensity to save without investing. In other words: to put aside, especially during the lockdown, while keeping this nest egg under your mattress (or almost) – whether for fear of “blocking” your funds in an uncertain context, or of losing money on risky vehicles “, notes Albert d’Anthoüard, director of private clients at Nalo. And the second lockdown will only encourage the French in this direction. In this context, what do you do with your savings?
1-Classic booklets
Free of charge and guaranteed by the State, the Livret A allows you to deposit or withdraw money at any time. Interest is exempt from income tax and social security contributions. The Sustainable and Solidarity Development Booklet offers the same advantages, but its ceiling is 12,000 euros compared to 22,950 for the Livret A. For its part, the Popular Savings Book, limited to 7,700 euros and reserved for the most modest incomes, offers a return of 1%. For short-term investments, Livrets A and LDDS remain essential, even if their remuneration set at 0.5% is unlikely to increase for a long time.
Due to inflation estimated at 1.1% in 2019 by INSEE, the purchasing power of savings placed in a livret A is decreasing. ” Doubt and fear of tomorrow prevail during this period. The livret A remains the best answer, but we must go further,” says Yves Mazin, vice president of the CNCGP and manager of Vision Patrimoine.
2-Life insurance
Swiss army knife of wealth, and life insurance remains the preferred investment of the French. However, since the start of the health crisis, savers have now withdrawn more than they deposited into their life insurance contracts. Between January and July, the collection stood at -5.2 billion euros, compared to +17.3 billion euros in 2019 over the same period, according to the French Insurance Federation. ” What is plummeting is the return on euro funds. On the other hand, account units follow the stock market weather. Today, the saver who invests in account units will not be a loser, but he must want a long-term investment,” says Yves Mazin.
The advantage of this investment? Varying your savings in a single vehicle. ” It is a liquid investment that can be diversified infinitely with SCPIs, stocks, and bonds,” insists Alain Iteney, manager of the Arthus Conseil firm. Contrary to a widely held idea, savings are not blocked for 8 years, it is only the duration that allows you to benefit from the most favorable taxation.
3-The Retirement Savings Plan
Created by the Pacte law of May 22, 2019, this investment is currently a retirement preparation tool that offers a tax bonus in the form of a deduction from taxable income. For example, a saver whose marginal bracket is 30% and who invests 10,000 euros will obtain a tax reduction of 3,000 euros. ” The tax deduction can be made upstream and the exit can nevertheless be made in capital,” explains Alain Iteney. Just like in life insurance, the level of risk taken in the asset allocation will be determined according to what the investor decides to put in his PER.
Please note that, with some exceptions, such as the purchase of a primary residence, the funds are not available before the retirement date. There is no legal minimum required to access this investment, although some insurance companies do require one.
4-Real Estate
If you have enough reserves to deal with unforeseen events, it is worthwhile to position yourself in less liquid assets. And real estate is one of them to take advantage of interest rates that are still very low. The sector is holding up thanks to sustained demand in major cities and their surroundings and competitive yields that should help maintain asset prices. However, taxes and fees on real estate remain quite heavy. It is essential to include them in the calculation of the yield. ” Purchasing bare ownership allows you to avoid tax burdens throughout its entire period,” suggests Didier Bujon, CEO of Equance. Opting for this solution takes time: bare ownership lasts on average 17 years…
” The first wave of Covid-19 was not long enough to impact the resilience of the real estate market and therefore prices in Q2 2020,” estimate the Notaries of France. But what about the second? Its effect could significantly reduce volumes, with practical problems adding to the lack of confidence and new fears about the solvency of buyers. Which could of course also impact prices. A correction that could generate opportunities for those who know how to be selective.
Concerns are high on the commercial real estate side. Even if property remains a haven, the difficulties in paying rent during the crisis also risk leading to a drop in the valuations of SCI and SCPI funds. ” While rent collection and new investments had almost returned to normal, this possible new lockdown risks halting the sector’s recovery,” says Pierre Garin, director of the Linxea real estate division. Shopping centers and hotels are the assets most impacted, while healthcare, logistics, and residential are holding up. As for offices, they are currently protected by firm leases, but the coming years could be more difficult. ” We must always seek to diversify within the real estate asset class,” recalls Souleymane-Jean Galadima, director of private investor relations at Mata Capital.
4-The Stock Exchange
Some savers discovered their stock market skills during the first lockdown. Perhaps this was an opportunity to explore the world of stocks more seriously, the most profitable investment in the long term. Newbies can start with diversified funds. Investment should be considered for a minimum of 5 years. The tax envelope of the stock savings plan (PEA) eliminates taxation (subject to compliance with this period); the 17.2% social security contributions remain due when the plan is closed.
For the more knowledgeable, the current ups and downs can provide an opportunity to seize opportunities, but ” on the financial markets, it is better to enter gradually over six to twelve months,” warns Didier Bujon. Scheduled payments are also a good method to avoid investing at the wrong time by buying at the highest price and selling at the lowest, which is what novices tend to do.
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