Discover here we answer all the questions you ask yourself about why, where and how (well) to invest your money. Obviously, some advice slips into our copy, for your greatest happiness.
Misconceptions when investing your money
Before even talking to you about financial investments , let’s start by breaking all the stereotypes that may prevent you from investing your money.
Among the most well-known misconceptions:
- You have to be wealthy with a good heritage to invest your money : for a very long time certain investments were indeed offered and accessible only to a certain clientele of investors, in particular that of Private Banking. Thanks to certain services such as Mon Petit Placement, these portfolios of financial products with particularly attractive returns are now within reach of any investor.
- A large capital contribution is necessary : this idea goes hand in hand with the previous one. Via traditional players, the entry ticket to the markets can quickly amount to a few thousand euros (for example, a minimum contribution of €5,000 is required for an investment in Private Equity). Rules that have changed. Today you can invest your money from just €300.
- The most interesting investment is real estate : a real estate purchase is a very good investment which, apart from exceptional causes, should not lose in value. It is one type of investment among others that can also have many advantages, such as life insurance, for example. Remember, a good investor is one who diversifies their investments. A concept that we explain to you a little below.
- There are high risks of losing your money : Unlike a savings account, an investment is indeed more risky. Markets are made of ups and downs but as they say, until you withdraw from the game, you have neither won nor lost! The more you maintain your investment strategy over time, the less risk you take of losing your capital.
- The stock market requires almost daily management : trading is an activity that can take a lot of time when you decide to go it alone. This is why today many services accompany you to make your money work without you even noticing it. A management method that, in addition to saving time, allows you to sleep peacefully on both ears.
Why invest your money?
Let’s start with the basics: investing means placing money on the markets for the development of companies to benefit from their performance over the long term . A win-win approach. Unlike traditional savings, which serve you more as a spare tire in the event of the unexpected, an investment is a means of meeting your life objectives such as making your money grow , building up your assets, carrying out a project , give meaning to your savings or make you an additional income.
If you are still looking for good reasons to invest your money , here are 4 in which you will surely recognize yourself:
Invest to boost your savings
The French are the kings of savings. In 2020, driven by the health crisis, the Livret A account also obtained a record collection score of 325 billion euros.
If these savings vehicles are perfect for putting savings aside, there are still products with very low interest rates (aka the Livret A…) and therefore not very profitable. By leaving your money dormant there, facing inflation, you end up losing purchasing power over the years.
Illustration by a concrete example: Today, with 200 €, you can buy 150 liters of gasoline. If you leave these 200 € on your booklet A, next year, you will only be able to buy 149 liters with the amount you will have on your booklet because the cost of gasoline will have increased, not the amount of your booklet.. .
Invest to take charge of your destiny
By investing your money you can achieve many personal and/or professional goals. With your investment you can realize all your plans: build up your retirement, an asset or a contribution for a real estate purchase or finance the studies of your (future) children.
Clearly defining your objectives is the basic foundation of your investment strategy. Your needs and desires will be essential in determining the investment made for you.
Invest your money to contribute to a cause
Thanks to the thematic portfolios carried by environmental, social and governance criteria, you can give meaning to your investment. With them, you participate on your scale in climate, health, employment, equality or even to technological innovations. In addition to being in line with your aspirations, these funds are also very efficient . One more way to align your interests as an investor with those of a global cause.
Invest because you have the time
In finance, the rule is simple, the more you take your time, the better you enjoy the joys of the market.
A long-term investment horizon gives you many advantages:
- Enjoy good performance;
- Earn more money than if you had let your money sleep in your current account, savings or bank accounts; Making the money you have earned grow is called the snowball effect;
In addition, investing your money also protects your investment from market fluctuations, a good way to smooth out your risk.
A financial investment has many benefits for you. To benefit from it and above all achieve your goals, you must not go headlong! On the contrary, to (well) invest your money on the markets, some essentials are to follow.
Here are the 6 golden rules of the good investor:
- Always have savings on hand : saving is the basis of any investor ! This so-called precautionary savings is a firewall to deal easily and quickly with any unforeseen events (electrical appliances to be changed, car breakdown, etc.). You should never invest the money you need to live or for the short term. So keep a safety cushion on a classic savings account with guaranteed capital in parallel with your investments and above all continue to feed it every month. To get organized, you can follow the famous 50/30/20 rule.
- Define your objectives : There are many types of financial investments, each with its own characteristics in terms of return , taxation , investment horizon or risk taking . The why you want to invest will guide you towards THE investment made for you. To help you qualify your goals, you can rely on the duration for which you want to invest your money. For example, if investing is for you the purpose of financing the studies of your (future) children, this means that you have more than 10 years ahead of you. So you could easily opt for life insurance!
- Draw up your investor profile : in addition to defining your objectives, your investment strategy will be inspired by your investor profile. You may doubt it, however, yes, an investor is sleeping inside you! To find out who he is, reckless, adventurous, cautious or shy, you will have to take into account your professional and financial situation, your degree of financial knowledge and your appetite for risk. And of course your objectives and investment horizon.
- To be accompanied : when you start in finance, you often imagine yourself posting all day in front of your computer in the process of following the stock market price . Fortunately, it doesn’t have to come to that! If you are not a professional in the field, it is better to leave the management of your investments to experts. The advantage: no loss of time, expert advice, zero source of stress.
- Smooth your entry point : There is no right or wrong time to enter the markets. This is why you should not try to “timer the market”. To take advantage of any appreciation in the markets and above all protect yourself as much as possible from its fluctuations, it is essential to smooth your entry point . Concretely, instead of investing your money all at once, you enter gradually by investing an initial “smart” amount and then making regular payments.
- Stay on course with your investment strategy : faced with the vagaries of the market, you could sometimes feel tempted to recover your capital, well before the end of the investment horizon that you had defined. Mistake ! Investing your money in the stock market means accepting its rollercoaster rides up and down. So no matter if the price of your shares is falling or if the CAC 40 has opened in negative, an investment is always reflected on the long term. Before acting in haste, always remember to seek advice from an expert and above all not to panic.
Also note that a financial investment is not like a bank account, you do not need to check it every 4 mornings. On the contrary, consulting it regularly could make you make more bad decisions. Advice from a good investor: take a look at your account once or twice a month maximum.
What to invest your money in?
THE 1 million euro question! The good news is that you have an ocean of possibilities available to you to invest your money. Secure or risky investment solutions, profitable to very efficient (a story of the risk/return pair that we will tell you about below).
Among the different categories, we find: banking, insurance, stock market and real estate investments. Some investments are more traditional than others. A little overview!
Invest in classic levers
You will definitely recognize them. Classic investments are those that your banker can (or not) offer you:
- Savings books and bank accounts. Livret A, LDDS or PEL are banking investments that allow you to invest your money without risk. A practical and useful way to anticipate unforeseen events or prepare a short-term project. Funds are easily and quickly available. On the other hand, these are investments with low interest rates (only a few euros per year) and capped. In summary, with these booklets, you are far from building up your heritage…
- Life insurance. The preferred financial investment of the French! Whether in euro funds or in unit-linked funds, life insurance is a particularly interesting insurance investment, far from the received ideas attributed to it. It offers advantageous taxation and great potential returns over the long term. A chameleon investment that can be either guaranteed (euro funds) or dynamic (in units of account).
- The PEA. The Equity Savings Plan is a stock market financial investment. With it you can invest your money in shares, diversify your portfolio via other products and receive dividends in return. It should be noted that despite these good performances, this investment becomes fiscally advantageous from only 5 years. It is also capped and the withdrawal of your capital closes the investment.
- Securities accounts. This investment is complementary to the PEA and even overcomes some of its restrictions, such as the cap. Through a securities account, you can invest your money in stocks as well as bonds or commodities. An investment with high potential gains but which in return is also quite volatile is therefore risky.
- real estate. Also called paper stone. In the form of an SCPI, with this real estate investment you invest as much in housing as in commercial premises. An attractive investment where you receive a stable and regular part of the rent. Be careful because it is subject to wealth tax and is not fiscally advantageous unless you invest in an SCPI via your life insurance.
In addition, you can also invest your money in other assets such as Private Equity, where you place your euros in companies not listed on the stock exchange.
Invest your money in new levers
Does cryptocurrency speak to you? These new investment products have made their way and are gradually becoming challengers on the financial markets.
What you need to know about this new asset class where you could invest your money:
- Cryptocurrency is a virtual currency that lives outside the scope of central banks and is based on the principle and technology of blockchain. Bitcoin is the best known cryptocurrency.
- On this market, you must have an extremely strong heart, because if its returns can be profitable, it is also and above all very volatile. The upward and downward fluctuations can be dizzying.
- New online services offer great accessibility to this investment, which makes the use totally autonomous for an investor. It requires that we give it a little time and knowledge.
Responsible investments
Are you concerned about the environment, the climate, well-being at work, gender equality, technological innovation or boosting your country’s economy? Are you looking for a plan to commit to it even more? Then responsible investing is definitely for you. Because your money, you can decide to invest it for causes that are close to your heart and that you would like to support on your scale.
To do this, various options are available to you, such as crowdfunding or responsible investment funds:
- With participatory financing (or crowdfunding), you can invest yourself and through dedicated platforms in projects that appeal to you and that you would like to support. In exchange for your contribution, you receive the product first, as well as goodies and other advantages.
- Conversely, investment funds are long-term investments for which you subscribe via an intermediary. They allow you to participate in the transition or projects of a private or public sector company. These funds can be labeled (SRI or Greenfin) and follow defined environmental, social and governance criteria. They also have a very interesting performance, with high potential returns.
Investing your money: thinking about investment diversification
“Don’t put all your eggs in one basket” Have you ever heard this phrase? What you may not know is that behind this expression hides a question of diversification. Diversification is an essential rule for investing your money well . Because when you don’t know what the future holds, you shouldn’t concentrate all the risk on a single financial investment.
Instead, you can diversify your investments to spread the risks of your financial investments. No one can predict the future. It is therefore impossible to know what will happen tomorrow on the financial markets, what will be the fate of a company or the evolution of the real estate market.
In summary, here are 3 good reasons to diversify your investments: – Choose your objectives – Optimize the return/risk ratio – Protect yourself from a fall in the markets
The opinion of Mon Petit Placement: a well-diversified portfolio consists for example of: a savings account, life insurance and a real estate purchase.
What costs to expect when investing your money?
Each type of investment has its own fee schedule . For investment funds, for example, we often find:
- Transaction fees (entry and exit)
- Management fees
- Movement commissions
- Performance fees
Not all investment institutions charge all of these fees. Find out more about the contractual conditions before you start.
How long to invest your money to make a profit?
Time is an essential factor when investing money. Very quickly comes this question of duration versus performance. Should you invest your money for the short or the long term?
Short term profits
Some investors will seek to invest a few weeks, a few days or even for the most daring, a few hours. This buy-sell plan, which is more like stock market trading, seeks to take advantage of all the opportunities for gains that arise on the markets. This technique requires great availability and above all a lot of knowledge. Some beginners try it but it remains reserved for professionals in the trade.
Long term profits
An investment is like wine, it increases in value over time. By investing your money between 5 and 10 years (and more if you like), you benefit from all the appreciation of the markets and good returns without undergoing its upward or downward fluctuations. And if the management is delegated to a third party, you avoid having to watch the stock market all day long and get in knots in your brain. We reassure you, you are no less a financial loser! On the contrary, investing early and over the long term always pays off.
Control investment risks
Investing is risking two things:
- A capital loss : you invest, but you get back less money at the end.
- A fluctuation in your capital: your investments go up and down.
The level of risk of your investment will depend on your appetite for this risk-taking but also on your search for performance, this is what is called the return/risk couple.
In summary, you take significant risks, the better your returns. That’s the game !
How to invest your money in Mon Petit Placement?
Do you dream of a simple investment, with high potential gains without breaking the bank? Welcome to Mon Petit Placement!
With us, investing is easy and accessible. From just €300, we create a tailor-made investment portfolio and give you access to high-end financial products.
Besides, you’re never really alone. Our experts advise you throughout your experience to develop your investments and take them to the skies.
The costs in all this? Both at the entrance and at the exit they are … zero! Mon Petit Placement is only remunerated by the outperformance of your investments. We only win if you win and vice versa. Great no?
Investing your money: the conclusion
What you should take away from all this:
- Real estate is not the only way to invest your money well;
- Investing your money allows you to grow your savings, build your wealth, achieve your life goals, cope with inflation and low savings account rates and contribute to a cause;
- Investing your savings is not something to lower, you must respect the 6 golden rules of the investor : save, define your objectives, know your investor profile, get support and advice, smooth your entry point and stay on track with your investment strategy, no matter what;
- A multitude of active financial investments are available to you. Select the one that best suits your needs and risk appetite;
- Unit-linked life insurance is a good dynamic investment to get you started in investing;
- Always think about diversifying so as not to suffer the roller coaster of the market;
- Keeping a long-term investment horizon is the best way to protect yourself while making a profit;
- Risks are part of the life of financial markets. Agree to take them and learn to control yourself so as not to panic;
- My Little Placement awaits you with open arms!
