If you are planning to invest, it is best to build up a savings reserve first . This money must always remain available and be (practically) risk-free. Many people opt for the savings account because it meets the savings criteria perfectly (even if its return is low). But don’t let your money sleep too long and be especially mindful of inflation ( see above ). If there’s one thing no one wants, it’s losing purchasing power!
Once you have built up your ‘safety reserve’, think carefully about how you will diversify (to limit risk) and boost your investments to make your money grow. The possibilities are numerous:
Life insurance made up of several underlying investments : either directly managed or under mandate. It allows you to combine the distribution of funds for more security (while benefiting from professional management) with the return on stocks, bonds, etc. Such life insurance also offers very interesting tax advantages and is a good tool for preparing the transmission of your assets.
Crowdfunding in real estate : you lend money to a real estate developer against an acceptable remuneration.
The stock market (see above): with a stock market account or a securities account, you can mainly buy stocks and bonds in order to receive dividends or resell them at a profit. The stock market is part of a long-term investment strategy.
Actions of SCPI : you participate in the financing of rental real estate programs and you receive rental income. SCPIs are available directly or via life insurance. It is a practical solution to combine the advantages of two investment products.
Real estate (rental) : ultimately remains a good investment if you have a larger amount.
Investing in (rental) real estate, a wise option?
When the economy is booming, inflation and purchasing power soar. Great news if you are a homeowner. Inflation allows you to increase your rent and collect a higher monthly amount. In addition, there is a good chance that your property (and the land!) will record a strong capital gain after a few years. Investing in (rental) real estate can therefore be a wise choice!
Consider the time of life you are in.
The choice between saving and investing also increasingly depends on the periods of our lives and our different objectives:
At the beginning of one’s professional life , one begins to assume financial responsibility and one saves in order to be able to get a good start in life.
In your thirties , it’s the age when you have children and when you want to settle somewhere. This is also the time when you make your first financial investments. Ideally, you should not borrow to the maximum of your repayment capacity. Thus, we have a margin of maneuver and we can even invest part of our money.
As you approach fifty , you usually benefit from better income, the children are older and you therefore plan to invest so as not to pay too much tax and/or to prepare your pension .
As soon as you reach your sixties, you want to reap the benefits of your existing assets and prepare your succession .
Saving through life insurance .
If you’re buying life insurance today, you’re probably doing it to receive some money at the end of the policy or in the event of your death .
Absolutely, life insurance is a safe and tax-efficient way to put money aside for the day you retire. This is why life insurance is increasingly seen as a way to save for the long term. However, life insurance should not be confused with life insurance . The latter is paid only in the event of death.
For many people, long-term savings are an essential part of the third pillar of the pension system. At the end of the contract, an attractive sum will be available for the policyholder, and perhaps even for his (grand)children. Ideal therefore, for example to finance their studies!
Life insurance offers great flexibility.
At least when it comes to payments. You are free to contribute what you want – however, taking into account the fixed minimum premium. The maximum premium for long-term savings is calculated on the basis of net taxable professional income.
For more information on the flexibility of this system, do not hesitate to consult our blog ‘ Saving regularly, it is possible with life insurance ‘.
Life insurance is not a savings account!
Life insurance is therefore a form of long-term savings with excellent tax advantages. Be aware, however, that your money will only be available at the end of the contract. As for buying back your life insurance, this is not a good idea, because you will have to pay exit fees. Not to mention the tax penalty that awaits you: the capital withdrawn will be taxed at 33%!
A great diversity.
Saving through life insurance? You have the choice between different kinds of life insurance depending on the means at your disposal, your investor profile (see below) and your final objective.
Branch 21 life insurance offers the security of a guaranteed return, allows you to save at your own pace, and can combine pension and long-term savings .
In the case of branch 23 life insurance , there is generally no guaranteed interest rate. The return depends on one or more investment funds, against which the policy is backed.
If these funds are doing well, you have the prospect of a good return. If they underperform, you may lose some of your stake. But this is not always the case, because there are also branch 23 life insurance policies that offer a capital guarantee.
Get help from your broker
In terms of branch 23 life insurance, what is important is to know what you are investing in. It is better to enlist the professional advice of a broker . It is well placed to compare policies from different companies. It is also interesting to know how much the costs of a switch between underlying funds amount to, in order to be able to possibly correct your investment strategy if the results are not there.
Are there still other ways to save?
The road to a well-stocked savings account is long, difficult and full of pitfalls. What’s more: due to low savings rates, it’s more of a marathon than a ‘sprint’. Every little bit counts to get there! Here are some helpful tips. They require little effort, but allow you to lighten the bill in the end.
To save wisely, a good idea is to start by carefully examining your savings habits. Regularly review your income, expenses, and budget . Some banks have a budget calculator built into their app, but you’ll also find lots of handy and useful tools in the App Store, like Spendo and Money Pro .
Think about long-term savings
Obviously, the money in your current account is immediately available to pay in stores or on the internet. If it is placed in your savings account, you must first transfer it to your current account, which is a safeguard against impulse purchases. If you don’t need your money right away, long-term savings offer you a higher return than a traditional savings account.
Apply the ‘cheese grater method’.
This method consists of systematically capping the balance of your current account at a rounded amount. For example, if your account has a balance of €513.84, immediately transfer €0.84 to your savings account. But nothing prevents you from being more ambitious, for example by rounding up to ten or hundred euros (in our example, to €510 or €500). Thus, your savings account will grow slowly, but in a ‘fun’ way.
Do not hesitate to challenge yourself.
Aim to save a fixed amount each month and gradually increase your goal. You can even provide a reward if you succeed, or even if you exceed your goal
There are many who stubbornly remain loyal to their supermarket, their gas supplier, their insurance company, their telephone company, etc. This is a serious mistake, because it is often worth changing. So take out the calculator, go to the comparison sites, check the various contracts and promotions, and discover the substantial savings you can make.
Aim for a higher return.
This advice is in the same order of idea as the previous one. Most major banks stick to the legal minimum interest rate of 0.11% on regulated savings accounts. Nevertheless, the savings market has several challengers whose yield far exceeds the usual rate. So here too, the watchword is to compare.
Pay off your debts.
Do you receive a promotion? Are you leaving a good legacy? Are your shares recording a nice gain? Perhaps you can use this new money to prepay your debts. Indeed, a credit is generally accompanied by interest, which disappears when you repay it. Please note: if you settle a loan, the creditor is likely to claim a reinvestment indemnity from you.