With high inflation, the economic context leaves few choices for households wishing to protect their wealth. Indeed, saving part of one’s income to let this surplus lie dormant in a current account or in an unprofitable investment makes little sense. However, the French have nearly 800 billion euros housed in accounts that report nothing, according to the Bank of France. The causes are often psychological. Fear of making a bad decision, of not being able to recover your funds if necessary, of losing your hard-earned savings… It is however possible to make your money grow while remaining calm.
In financial theory, performance and risk do not go together; the more you will go on offensive investments, the more you will be able to obtain a high gain. However, nothing forces you to opt for a binary approach. On the contrary, it is preferable to proceed by stratum. “You have to start by building up comfortable precautionary savings before planning for the longer term”, recommends Bertrand Merveille, director of Echiquier Gestion Privée. Do not neglect the livret A (or the popular savings account for modest households), even if its rate does not completely cover the rise in prices. Leaving the equivalent of six months’ salary on this product, or even more, allows you to be reassured about your ability to meet unforeseen expenses. This well-stocked pocket, you can begin to consider more dynamic supports, which will have to be immobilized longer.
Also consider your risk appetite. Some can’t stand to see the value of their investments go down, others can. This is why financial advisors reason in terms of profile: prudent, balanced, dynamic… “We ask clients about their projects, their knowledge of the markets and their behavior in the face of a possible loss in order to offer them an appropriate allocation”, explains Stefan de Quelen, Managing Director of Meilleurtaux Placement. No asset class is prohibited, it is the percentages that will vary. Let’s take an insurance contract -life composed of 80% funds in euros yielding 2% and 20% equities, with random returns.If the latter fall by 30%, the insured will only bear a drop of 4.40% on his contract, a lesser evil for a crash of such magnitude.
Another tip: diversify! By investing partly in real estate, in shares, in euro funds, etc., you will obtain a combination which will allow you to step over the troughs of this or that market. One will take over when the other is less efficient. This will prevent you from impulsive, potentially harmful reactions.