Before investing in real estate or in listed shares, it is important to get information and advice from experts. The good news is that in the 21st century, the French have access to all the necessary information on the Internet. This does not prevent aspiring investors from asking questions about the many existing financial investments. How to invest in youth? Which investments will provide the best return in 2021? Tacotax gives you its advice to invest with peace of mind!
Set your goals
Why do you want to invest in the stock market or in real estate? Any investment must meet a specific expectation or need:
- To raise capital quickly,
- To build up a capital that will complete your retirement pension,
- To ensure that your heirs receive a substantial inheritance,
- Protect your family financially,
- Build up a lasting legacy...
Take stock of the situation
Before launching into any investment, it is imperative that you are perfectly aware of your financial health! Buying shares on the stock market or purchasing a home is expensive, and it would be shooting yourself in the foot to rush headlong into the first financial product you come across.
In order to have a global view of your financial health, it could be interesting to carry out an asset assessment. This can be done by a wealth management consulting firm, but also by yourself, provided you have a minimum of information about this practice.
In reality, it will be a question of listing all the assets that make up your personal wealth:
- Real estate,
- Professional assets,
- Movable assets (works of art, vintage cars, bottles of wine)
- Soil (forest, vineyard, etc.)
- Natural resources (water, air)
- Financial investments,
- Savings,
- Precious metals,
- Usufruct rights...
In addition to these, there are your liabilities: these are generally real estate loans, consumer loans or personal loans. A wealth assessment is the best way for you to realize the state of your finances, and to determine whether investing now will be a good idea or not, and to take into consideration the degree of risk.
Laying the groundwork
A wealth assessment will also allow you to make an estimate of your cash inflow and outflow. The difference between these two values will determine the amount of money you can invest, but also your lifestyle: are your expenses exceeding your income? You are simply living beyond your means!
Think broadly and include all your sources of income (salary, property income, etc.), as well as your annual expenses (tax payments, leisure activities, and vacations, etc.).
Of course, you will have to target your main objective: creating a source of passive income quickly does not require the same investments as the desire to create an asset that will increase in value over the long term.
Starting to invest: our advice
Which investments should I choose when I'm just starting out? Young investors are likely to have a different risk appetite than those who own four or five properties. However, several products and other investments in the financial and real estate markets allow beginners to get a foot in the investment world with minimal risk... and convincing results!
Rental real estate
How can I do it? But, an investment in rental property requires substantial capital, you need to obtain a loan from a bank and find a tenant! Well, yes, but on different scales...
For beginners or investors who don't want to take out a loan or who don't have an investment envelope thick enough to purchase a T3 in the city, one of the most profitable solutions is... parking lots!
And yes, a parking lot can be paid for almost on the nose in certain towns, and many owners have only spent 5,000 € to acquire several spaces... to rent them to drivers.
Why is investing in a parking lot the ideal way to start? Mainly because the process of setting up a "classic" rental property investment will be the same as that of a parking lot. It's a great opportunity to learn how to buy, who to buy from, and how to find tenants.
Buying a parking lot and then renting it out also has the advantage of being much less risky than investing in a home, as it is logically less expensive. This ensures you a source of passive income very quickly but will be much more effective in the short term than in the long term. Of course, you should choose areas where there is a high demand for rental properties.
Our advice for
investing in rental real estate
for the first time? Buy a parking lot close to your home, to ensure visibility in an area where people are struggling to find a place to park, and to receive additional income!
The stock market
If you don't understand anything about the stock market, it will obviously be difficult to find the best investment. To invest in 2021 in high-yielding shares on the stock market, it is important to be informed and to ask for advice: the stock market is capricious, and the slightest mistake can lead to a loss in value of all your shares!
On the other hand, if you understand the principle of investing in the stock market, you can quickly buy shares after opening a PEA (Plan Epargne Actions) with a bank. Each company share purchased will give rise to an annual dividend payment according to its rate of return.
While a Livret A savings account today only offers a return of about 0.8%, shares listed on the stock exchange can sometimes reach an 8 or 10% return! However, be careful, it is not advisable to rush into the first company that shows an interesting return.
As Warren Buffet said so well, you don't invest in a company you don't understand... So take the time to learn more about these stock market players: their financial health and the regularity of their dividend payments are clues to determine which stock will be the most interesting.
Many websites and online videos offer the best free stock market advice: don't hesitate to ask.
The creation of a company
When you are young, it is also the opportunity to create your own company! More than a simple investment, it is a choice of life towards which many investors of less than thirty years turn. There are few financial burdens during the first years of your company's existence, while banks facilitate access to credit for young entrepreneurs.
But, in the end, you must remember that your best asset is yourself! Educating yourself by reading and discussing remains the most effective way to give yourself the best chance of making a successful investment. As our Anglo-Saxon neighbors say: The more you learn, the more you earn!
The most popular investments
Rental real estate
With an interesting yield, a significant leverage effect, and the possibility of taking out a loan under optimal conditions, real estate remains one of the favorite values of French investors. Regarding rental investment, and the real estate market throughout France in general, our advice is as follows:
- Leave emotion aside: your choice of a property to acquire should only take into account profitability!
- Choose carefully the area of the city where you buy: from the presence of public transport to the rate of vacant dwellings, try to know the location of your future property at your fingertips to ensure a quick rental.
- Invest intelligently: there are many schemes that offer a tax reduction when investing in new or old real estate (Pinel law, Denormandie law, etc.).
- Obtaining the LMNP status (Loueur en Meublé Non-Professionnel) allows you to reduce your taxes by 50%: a godsend for an optimal rental!
Also noteworthy is the rise of paper-based investments: SCPIs (Sociétés Civiles de Placements Immobiliers) buy real estate assets that they then rent out. When an investor buys shares of this real estate (generally in the tertiary sector), the SCPI pays him a percentage of the rent received.
The main advantage? The disadvantages of property management are over: the company takes care of everything, and all you have to do is collect your additional income. The profitability of this type of investment is generally around 5% net per year.
Investing in the stock market
There is a multitude of tips for investing in the stock market, which obviously varies according to your long, medium, or short-term objectives: the stock market presents many opportunities. Here are our tips:
- Choose your intermediary carefully: opening a PEA within a banking institution will allow you to invest in the stock market by buying shares of a company.
- Take an interest in the different companies: in addition to the CAC 40, Euronext Paris has more than 875 companies! Plenty to choose from...
- Favor limit orders: setting a maximum amount for a purchase and a minimum amount for a sale allows you to avoid spending too much money and unprofitable sales.
- Be on the lookout! The very principle of investing in the stock market requires constant monitoring of the value of the shares, in order to be able to buy and sell at the right time.
- Remember to recuperate your profits regularly: to protect yourself against a reversal of fortune, you need to recuperate your profits by selling a part of your so-called winning shares.
- Look at hedge funds: investing in hedge funds reduces risk because they are not correlated to the rest of the market.
Want to know what stock to buy today? Many magazines and websites specialized in the stock market or finance, such as Les Echos, help you invest by providing daily tips, explanations of value changes, and other investment advice. Their section "Investir 10 grades valeurs" allows you to see the most popular French stocks.
Pension savings plan
Thinking about your retirement as soon as possible allows you to invest in a Plan Epargne Retraite (PER). Like a life insurance policy, an investor can pay cash into his or her PER throughout his or her working life, before releasing all of this capital at retirement. The result is a comfortable security cushion for retirement, but also a definite advantage: voluntary payments into a PER are tax-deductible! Go to this link to find out more.
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