Monthly Archives: June 2019

How to get out of debt and start saving

Outstanding debts


Knowing the details of outstanding debts should be the first step. Make a list of them, identifying the financial institution, committed fees, interest rate and outstanding amount. It also includes all small debts with friends or family. The commitment is in all areas.

If you have any questions, or there is a possibility that you have forgotten some of the debts.

This exercise will allow you to establish which debt charges the most interest and you can strive to eliminate it, even if it means making a great temporary sacrifice. At this point you should also stop increasing the debt and start working on a plan.

The perfect plan: family budget

The perfect plan: family budget

If you have already asked yourself how to get out of debt, or you are in Veráz and you need to cancel debts, you should start putting together the master savings plan and execute it, since all the time it takes to start with it will play against you and in of your finances

There are certain tips that we know can help you get your economy on track and start saving, so take paper and pen, we tell you:

  • Start by establishing a personal or family budget.

  • Check your total monthly income, vacation vouchers, professionals and any entry you should consider for the course of that first year.

  • Prepare a list of monthly services that you cannot fail to honor; as well as payments for education, transportation, maintenance, medical treatment, food and any other way out that you can include as a fixed household expense.

  • You can make a list with the superfluous expenses of the last weeks or months, to review what you spend your money on. It includes sweets, alcoholic or sweet drinks, night outings, shows, sports and any item of a non-essential nature.

This preliminary balance will allow you to establish your real repayment capacity and measure your borrowing capacity. If the resulting difference is less than the amount of debts you face monthly: You have to increase your income and control your expenses!

In the process to increase your income


Check your real skills so you can focus on extra activities that facilitate the increase of your monthly income:

– If your art is cooking and you stand out in desserts, you can offer cakes or cookies to friends and acquaintances. Check your options on the web. Many freelance work pages offer you unsuspected opportunities such as writing, translation or online assistance.

– If your art is crafts, take advantage of your social networks to promote your work, seeking to interest acquaintances and establish the possibility of a small personal business. You can offer for sale personal or household items that you do not need, everything is valid.

The final step

When you cancel the debts you will recover your monthly capital and you will have the opportunity to start saving. You can build an emergency fund, if you do not already have it, which will allow you to avoid unnecessary indebtedness in the future.

Stock Market: Investing In Small And Mid Caps? Loans



The essential :

  • Small and mid-cap companies are listed companies with a market capitalization of between 500 million and 10 billion euros;
  • Small and mid caps offer higher yields than big caps at the price of volatility and lower liquidity;
  • Small and mid-cap ETFs provide consistent diversification of small and large caps.

Retrospective analysis has highlighted a profitability gap for small and mid-caps (small & mid caps), compared to the broad multinational caps. If this asset class has, on average, better returns, keep in mind that these assets are inherently riskier. Investing directly in a few small businesses is therefore not recommended. It is better to favor a diversified investment.


What is a small or medium capitalization?


What is a small or medium capitalization?


The concept of small and medium capitalization is relative. Indeed, small and mid-cap companies are not start-ups but are listed companies. Small caps and mid caps are companies whose market capitalization is below a certain amount.

According to the definition of the financial lexicon Les Echos , small caps are companies whose market capitalization is between 500 million and 2 billion euros. As for mid caps , these are companies whose market capitalization is between 2 and 10 billion euros. Thus, 90% of the listed shares are small and mid caps .


Why invest in small and mid caps?

Why invest in small and mid caps?


Ensure better portfolio diversification with small & mid caps


Most French equity funds are geared towards CAC40 shares. Nevertheless, the price of large caps can be very correlated, for two main reasons:

  • these companies are sensitive to the same macroeconomic factors, such as the evolution of key interest rates or international trade tensions;
  • they are in the same stock market indices, as for example the CAC 40, with regard to large French capitalizations.

For their part, medium-sized capitalisations and especially small caps have markets that are often national or at the scale of a limited economic zone. Their valuation depends more on their intrinsic growth, their ability to innovate and gain market share. They do not all react in the same way to macroeconomic news. By integrating small & mid caps into your portfolio, you increase the diversification of your investments.

See also: ensuring better diversification with foreign equities.

More performance thanks to small and mid-caps

Statistical analysis and academic research show that small companies have, on average, better stock market performance.

Eugene Fama , winner of the 2013 Nobel Prize in Economics for his work on the efficiency of the financial markets, has thus completed the methods for valuing financial assets (CAPM) with a so-called ” three-factor ” model. In this analysis, it highlights the existence of a “risk premium” for small and mid-caps. The risk premium is a surplus performance that rewards the investor for holding a riskier asset.

If Eugene Fama had initially validated this result in the US market, the empirical analysis has been extended to all geographic areas since then.

The outperformance of small and mid-caps can also be seen by comparing the evolution of the small caps versus the large caps . For example, since 1990, the average yield of the S & P 500 (the 500 largest US market capitalisations) is 6.6%, where, by adding the following 1,500 companies in order of size (Russel 2000 index), the annual rate reaches 7.14%.


Risks related to small caps and mid caps


Risks related to small caps and mid caps


The higher volatility of mid and small caps


Individually, a small company has a greater risk of default than a larger company. This is due to many factors: a weaker balance sheet, a less diversified activity, a lower financing capacity, a less well-known brand, etc.

In stock prices, this translates into greater volatility for small caps. The volatility of an asset measures the average amplitude of its fluctuations, both up and down. The more volatile an asset is, the greater the risk of loss in the short term.

Take the example of the S & P 500 and Russel 2000: the historical volatility of the first index is 16%, that of the second is 20%.

Small-cap liquidity risk

Small and mid-cap stocks are listed on the stock exchange and normally offer instant liquidity. This is indeed the case for most of these actions. Nevertheless, some listed companies may have a very low capitalization of just a few million euros. The price of their shares rarely exceeding one euro, are called “penny stocks”. These, although publicly traded, may have a very low trading volume and may therefore present a liquidity risk, especially in times of stress. We therefore recommend to avoid them.

How to invest in small and mid caps?


How to invest in small and mid caps?

As we have seen, small and mid cap stocks perform better than large ones, but they have greater volatility. In order to contain this volatility, it is important to diversify your investment. We therefore advise against investing in individual securities or individual actions, but rather to invest via ETFs .

ETFs (or trackers) are index funds that replicate the performance of a stock market index. The benefit of index funds is twofold:

  • stock market indices are broad, these funds will have several hundred underlying, ensuring good diversification;
  • Since replication is automatic, ETF management costs are very low compared to traditional funds: 0.25% per year on average for an equity ETF versus 1.7% for conventional UCITS.

For example, the MSCI Europe Small-Cap iShares ETF allows investors to invest in European small caps, and the Amundi ETF Russell 2000 on US small caps. These funds also provide good sector diversification, as an illustration, the iShares ETF MSCI Europe Small-Cap has the following breakdown:

  • industrial sector (21.42%);
  • financial services (14.81%);
  • technology companies (10.32%);
  • real estate (10.15%).

And that with companies spread throughout Europe.

By multiplying the different ETFs in your portfolio, diversification is maximized and the volatility effects of small and medium-sized ones are partially offset.

You can invest in these ETFs with all your tax envelopes : life insurance, securities account, PEA or retirement savings, provided your bank or insurer makes ETFs available.

Read also: life insurance and ETF , the winning combination.


What Nalo does for you


What Nalo does for you


Nalo is an investment company dedicated to individuals. With Nalo, you can subscribe online to a life insurance policy that we manage financially. We put in place a tailor-made management strategy, adapted to your financial projects and your heritage environment.
In order to reduce management fees, Nalo only uses ETFs, and to maintain good diversification as well as to maximize the earning potential, we integrate ETFs exposed to small and mid caps.


How to Invest When You Are 30? Funds



The essential


The essential


  • At 20, 30 or 40 years, the investment issues are not the same.
  • Maximizing your earning potential during the savings phase and then stabilizing your investment as you approach the goal is the right strategy.
  • Better to invest early, even small amounts.

You want to invest in order to realize your projects or prepare your future, but you do not know how and in what to invest?

At 20, 30 or 40 years, the investment issues are not the same. Firstly because the notion of “short”, “medium”, “long” term is not the same and we generally have a family structure that changes and financial resources that evolve. What are the good habits to have when you are 30?

Learn more about investing at different ages.


What to know before investing


What to know before investing


At 30, it may be your first investment and it is important to know the main investment products, the different media on which you can invest. Mutual products, life insurance, securities account, trackers (ETF), … Here is the essential.

The different financial investment vehicles


The different financial investment vehicles

The actions

Investing in equities (business units) has significant potential for gain in exchange for large fluctuations, both up and down.

The obligations

Investing in bonds (corporate or state loans) has moderate earnings potential and moderate fluctuations.

Investment funds

Investment funds, more specifically collective investment schemes (UCITS), are baskets of stocks or bonds. These funds are managed by professionals who select these stocks and / or bonds. They therefore allow access to diversified investment portfolios, without having to choose even the securities.


An Exchange Traded Fund ( ETF ), also known as a tracker or index fund, is an investment fund composed of stocks or bonds from several hundred companies (or bonds of several states). The management of an index fund is automated: it replicates a stock market index by faithfully following its evolution. The advantage of ETFs is to have lower fees compared to conventional investment funds (5 to 10 times lower). It is this medium that we recommend.

The investment materials mentioned above must be purchased within an account or a contract, we speak of tax envelope. The tax envelopes are differentiated by the tax advantages they offer and the constraints they impose.

The different tax envelopes to make your investments

The different tax envelopes to make your investments

Account title

A title account is an account that allows you to hold highly diversified securities and securities: stocks, bonds, investment funds but also more speculative derivatives such as warrants and options. However, the title account has no tax advantage.


The PEA is a securities account that allows investors to invest only in French and European equities with favorable tax rates. As the PEA is very inflexible, it is intended for long-term investors. Indeed any withdrawal made before 8 years will close the account. Note also that you can only have one PEA and that it is capped at € 150,000.

Life insurance

Life insurance is a tax envelope that allows you to make a variety of investments: investment funds in stocks and bonds, ETFs, and guaranteed capital funds. Life insurance has two tax advantages: a gradual tax exemption for capital gains and a reduced tax on your estate. Lastly, life insurance is a flexible product that allows you to make withdrawals and payments when you want. Life insurance is, in the majority of cases, the most appropriate tax envelope.

For your investments we therefore recommend an allocation of ETFs (index funds) in stocks and bonds, within a life insurance. However risk taking and earning potential can be very different depending on the ETFs chosen. This choice must be made according to your objectives and your investment horizons.

Three goals for your 30 years

Three goals for your 30 years

Investing by objective consists of defining one or more investment projects, each with an investment horizon of their own, and arranging for a suitable investment based on it. Your risk-taking will be optimized.

Here are 3 goals that you can reasonably set yourself at age 30:

Precautionary savings

Sometimes your plan does not go as planned. The loss of a job, an expatriation or the arrival of a child are life events that may occur. Proper precautionary savings can help you make sure that this unexpected does not affect the rest of your projects. Dealing with such an expense without affecting long-term savings, without endangering the financial future of your projects requires a “safety mattress”.

Here, the security and liquidity of your investment outweigh the performance of the product. Even though the amount of the investment varies from one household to another, we advise you to build a precautionary savings with an amount sufficient to cover your basic expenses for a minimum of three to six months. To guarantee your capital, we also recommend an allocation with moderate risk taking, ie 20 to 30% of shares.


Longer contribution periods, lower pensions: planning your retirement is important, and doing it at the age of 30 is essential. Early subscribing smooths his savings effort over time. For example, you can set up monthly payments, even small ones.

For a high earning potential, risk taking must be strong and volatility should not be a drag. At age 30, we therefore recommend a retirement allowance composed of 70 to 100% of shares. When your retirement is approaching, the stocks in your portfolio need to gradually be replaced by less risky corporate and government loans. This maximizes your earning potential during the savings phase and then stabilizes your investment when you need your money: when you retire.

Property purchase

Anticipating a real estate purchase will allow you to make a larger contribution. Your risk taking will depend on the time you give yourself to make your purchase. Indeed, if you want to acquire a good before 5 years, your risk must be low. On the other hand, if you plan for more than 10 years, your risk-taking may be higher. This is due to the length of economic cycles, which last from 7 to 10 years. A recession that occurs over a 10-year horizon will be followed by a growth phase allowing you to avoid losses.

Therefore, focus on riskier vehicles with higher earning potential (equities) over a long time horizon and stabilize your investment as you approach your goal with less risky investments (bonds and guaranteed capital funds) .

How to build your portfolio?
Risk taking according to the time horizon
Deadline for the project 2 years 5 years 10 years
Share of shares <15% ~ 30% ~ 60%

About Nalo


Nalo has set up a unique technology in France that allows you to invest by objectives , allowing you to define as many projects and investment horizons as desired. You determine an investment dedicated to each of these projects within a single life insurance contract (allowing you to take advantage of the tax precedence for all investments). We put in place an investment strategy dedicated to each of your objectives, so that the risk taken is in permanent adequacy with the desired investment horizon.

In addition, your investments are almost exclusively made via ETFs. We strive to automate low value-added tasks to provide you with quality service, with some of the lowest fees on the market.