- 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
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
Investing in equities (business units) has significant potential for gain in exchange for large fluctuations, both up and down.
Investing in bonds (corporate or state loans) has moderate earnings potential and moderate fluctuations.
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
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 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
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:
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.
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%|
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.