The French are the European champions of savings, indeed 87% of the French put money aside, against 81% for Spaniards and 75% for the English.
However, the French are also the ones who invest the least in financial markets, often at the expense of the performance of their savings.
Overview of the performance of financial investments over the last 10 years.
Nearly 9 out of 10 French households have at least one savings book, according to INSEE. The total amount of outstanding booklets in 2016 amounted to 592 billion euros, equivalent to 13% of the portfolio of French people who favor security.
The yield of Livret A, savings account long acclaimed by the French continues to fall in recent years. Since 2007 his remuneration has decreased by 75% and now stands at 0.75% per year. When the Housing Savings Plan, its performance was halved over the same period. Indeed, economically, Livret A is expensive for the State. Today, France borrows with interest rates close to zero or even negative rates on certain products.
Although it is always interesting to have an A passbook, for savings of availability, this investment is no longer a creator of wealth in the long run.
The euro fund is a proposed investment vehicle within a life insurance and capitalization contract. This support consists mainly of bond investments, most often government bonds that guarantee the investor’s capital.
The decline in the yield of euro funds has accelerated since 2007. The average rate in 2016 was only 2%, while for the first time in its history it should pass this year, below this bar. And this fall of more than 50% does not seem to stop in a context where German and French interest rates should remain permanently at the bottom. For comparison, on the same asset class, it is possible to invest in bond funds, which contrario euros funds do not guarantee the capital.
Evolution of the performance of the euro fund and European government bonds since 2007
There is therefore a greater dispersion of performance in the short term. Only, for 10 years the average yield of European government bonds is 10.90% per year. Life insurance allows, in particular within the same contract, to associate the euro fund with bond or equity funds.
Only 4% of the total savings of the French is invested in equities, the lowest proportion in the world. This may seem surprising knowing that this asset class is proving to be among the most successful in the long run.
Here is a comparison of stock performance across three major global zones.
Indices used: MSCI Emerging Markets, S & P 500 and STXE 600
Since 2007, the average annual performance of these 3 stock indexes is 7%. Over the last 5 years, the S & P 500 (stock index based on 500 large companies listed on US stock exchanges) has posted an average return of 27.17% per year. It should be noted that despite a period of subprime crisis and 2008, which will remain one of the worst stock markets in history, the performance of equities over this period remains very attractive.
It is important to note that, in addition to an excellent long-term average return, by buying shares, you participate in the real economy. You invest in a company by becoming the owner of a part of its capital and because of this, you will allow it to grow by financing its investments.
“Real estate investment is a solid investment”, “A safe haven”, “It’s much safer than investing in the stock market”, “Stone is concrete”. It is not the glowing terms that are missing to accompany the preferred investment of the French. Even if it is true that in a context of low interest rates, the purchase of real estate can indeed be attractive, in particular by taking advantage of the leverage made possible by the loan.
Evolution of property prices in Paris and Marseille
Despite the many advantages attributed to real estate investment, considering the “stone” as an asset in its own right, an overview of the evolution of real estate prices in the 2 largest French cities shows a moderate performance .
As we could imagine, it is in Paris that the evolution of the prices is the most important, 3,89% per year on average over the last 10 years. For Marseille the situation is different with an average evolution of negative prices: -1.12%. By way of comparison, for the other 3 major cities, Lyon, Toulouse and Nice, the average annual change is between 1.79% and -1.38%.
In addition, it remains important to specify that real estate investment requires additional costs that inevitably entails the transaction, directly or indirectly related to it (notary fees, agency fees, taxes, works, etc.). .
Commodities are a safe haven for many savers or a way to protect themselves from inflation.
Evolution of the price of oil and the price of gold since 2007
During this period, oil yielded on average only 0.89% per year, while gold has performed better over the last 10 years: 10.13% per year but has collapsed since 2013. However, the investing in oil or gold remains too speculative, in addition to its high volatility, this market can be influenced by many factors such as geopolitical or geographical risk.
Moreover, there is no real value creation to own and keep a barrel of oil or a kilo of gold. As a result, we do not recommend that individuals invest this asset class in their investments. Despite this, the proponents of commodities continue to think that they are a good way to diversify its portfolio, because very little correlated with other assets (oil is side dollar, this detail leads to a negative correlation with the foreign currency … ).
For more information on investing in commodities, feel free to read our article: Why not invest in commodities .
With the widespread decline in savings books and euro funds, savers looking for performance have no choice, they must change their habits and accept some form of risk in their investments. By the way, the glorious hour of real estate seems behind us. The sharp rise of the previous decades, due to the slow demographic pressure of the baby boomers has eased.
Attention also, with the spread of investments available on the internet, savings scams have multiplied. These sites offer unusual investments with extraordinary profitability. stay suspicious
Taking risks therefore seems to be a necessity, but it is important to adjust them according to one’s projects and their investment horizon. Life insurance remains the Swiss army knife of investment, it allows to achieve very diversified investments (funds in euros, stocks, bonds) while taking advantage of a favorable tax framework.
To learn more about portfolio diversification, we invite you to read our article: diversification, what you need to know
Nalo is a company specializing in financial investments for individuals.
We know that your financial situation and your projects change over time.
That’s why we allow you to organize all your projects within a single contract. Each of them benefits from a completely personalized investment strategy: appropriate risk-taking and optimized investment for maximum expected return. Over time, your investment portfolio is secure: the nearer the maturity of your project, the lower the risky portion (equities), and the lower risk (bonds) or collateral (euro funds) increases. Please note that we adapt our investment choices based on economic and financial conditions.
Take the example of a project for your retirement: at the approach of this one, we gradually reduce the proportion of shares within your allocation to make room for bonds, less risky. This maximizes your earning potential during the savings phase and then stabilizes your wealth when you need your money.