With rising interest rates, solid returns in 2023, and a very promising start to 2024, the sky is clearing for savers. A flexible tool with preferential taxation, life insurance is once again becoming attractive and the safest of banking investments. However, in a context of high inflation, diversification remains the wisest course. Identify your needs, identify the different products available, negotiate your contract, go through a management company, monitor costs, generate long-term performance: L’Express guides you.
Life insurance remains an extremely widespread savings vehicle: almost 1 in 2 French households have at least one. However, the uses and amounts invested vary greatly from one subscriber to another. And for good reason: you can open a contract with a few thousand, or even a few hundred euros. But there is no ceiling on the capital that can be stored there. At the same time, you can place all your savings in a fund in euros or build a very dynamic allocation based on units of account. The offer reflects this diversity of needs. Thus, there are contracts more suited to beginners and others aimed at sophisticated clients or those with large sums to invest.
For those who aim above all for simplicity, the choice of the envelope is therefore an essential first step. It is better to favor those operating a drastic selection of units of account. In particular contracts managed by mutual societies and savings associations, which limit the referenced media to a few dozen. Negative side: you will not access all investment categories. But you will face a coherent offer, limited to the essentials, ideal for getting started.
Opt for simple and readable products
If you have opted for a more elaborate system rich in support, one option is to limit yourself to ETFs (exchange-traded funds or listed index funds), simple and readable products. They have the particularity of faithfully reproducing a market index, such as the CAC 40 for French stocks, the S&P 500 for American stocks or the MSCI World for international markets. Their name also consists of that of the manager attached to that of the replicated index as well as the term ETF. With these supports, you avoid the heavy task of choosing the right managers and the right approaches; However, you will have to select the most suitable indices to expose yourself to a given market. Focus on well-known names whose development you can easily follow. Another advantage: these supports have the advantage of being much less expensive than active management funds, which seek to beat the market. And their performance on the major stock markets has nothing to envy them. ETFs are thus proving to be the best way to capture the rise in American stocks.
One downside, however, is that it is rare to be able to build a properly diversified allocation with these products alone, because the supply remains limited in life insurance. However, more and more companies are agreeing to integrate them. “This is an underlying trend because these media, which particularly appeal to young people, are collecting more and more,” notes Gregory Guermonprez, director of Fortuneo. A few online players (the best known of which are Yomoni and Nalo) are positioning themselves in this niche, offering complete 100% ETF management. Another limitation: they do not allow all markets to be targeted. “There are few ETFs for investing in private equity or real estate,” emphasizes Patrick Thiberge, Managing Director of Meilleurtaux Placement. “They mainly concern stocks, or even, to a lesser extent, bonds.”
If your contract is not equipped, don’t worry. Professionals, aware of the difficulty for their clients to analyze the plethora of offers available to them, have developed different tools. Some thus highlight a “star” or “core portfolio” offer which lists a selection of products that have proven themselves. However, check the criteria for a fund to enter this club and in particular that it is not a commercial partnership with the management company to promote it. Even more useful, many life insurance distributors offer allocation grids. Depending on your risk profile, they recommend a typical portfolio. All you have to do is copy it strictly or adapt it.
Automatic management tools
Most recent contracts also include automatic management options. Used wisely, they will help you manage your contract properly. So use scheduled payments, which allow you to set up a regular transfer (every month or quarter for example) to your envelope. Very useful for saving regularly, this option has the advantage of being freely adjustable. You specify the pace and amount of your choice (the contract may impose a minimum) and you can modify it as much as necessary, and even stop it if necessary. Gradual investing is another interesting setup. It allows, when you pay a large sum at once, to smooth your investment over the units of account. This option can be programmed, for example, over a period of one to two years, providing for automatic arbitrage from the euro fund to one or more units of account of your choice at the rate of one operation per month.
Please note, however, that all this assistance remains one-off and no external monitoring will be offered to you. To do this, you must opt for managed management, sometimes also called profiled management or management under mandate. Behind this vocabulary, one and the same concept: you delegate control of your portfolio to a professional who will monitor it over time and make decisions on your behalf if necessary. This option is now accessible to as many people as possible from 1,000 euros or more depending on the contract. “Management under mandate represents more than 50% of new subscriptions at Fortuneo, reports Gregory Guermonprez. This management method corresponds to clients wishing to invest in the medium term, to diversify their contract and who do not wish to select units themselves.”
Don’t forget to compare management fees
This service has a cost to analyze carefully before subscribing because it is added to the costs of the supports and those of the contract. A combination of layers that can hinder performance potential. It is better not to exceed 0.2% additional management fees, and only on the units of account. “It is crucial to compare fees because management fees under mandate can be higher than 1% in many establishments,” indicates Gregory Guermonprez. Also check that the cumulative annual costs of the contract and the delegation do not exceed 1.2%. Also pay attention to the composition of the portfolio. “Be sure to access well-diversified mandated management because the rotation of asset classes is quite strong from one year to the next, notes Florent Combes, risk and investment director at Garance. Thus, bonds had disappeared from the spectrum then they made their comeback.”
Another important point: which management companies manage the funds used? Favor plurality rather than entrusting everything to a single actor. Finally, certain contracts allow you to combine management methods, an option which can prove very useful. In fact, managed management is most of the time limited to traditional assets: stocks, bonds and monetary assets. With a two-pocket envelope, you can complete this portfolio with selected free management media. Ideal for integrating real estate, investment capital or even structured products.
An article from the special “Placements” section of L’Express, published in the weekly on April 11.
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