Matthias Baccino, director of brokerage Trade Republic in France, gives advice on making the most of the stock markets.
He is Taboo topic par excellence: money. But in a global context marked by a major economic crisis, it’s important to remind as many people as possible of a few tips on how to increase your savings to protect yourself from life’s unforeseen events and also prepare for retirement. Now is the time collectively regain power over our money.
To do this, we must fight the industrial interests of banks and insurers who protect their sources of income by charging huge fees on French savings without making them efficient. Given the sharp increase in inflation last year, they are close to 50 billion euros of purchasing power that flew away their current accounts and other savings books or funds denominated in euros, which return well below inflation. We also have to fight our own habits and our conservatism, fight the psychological brakes we face in money, investments and finances.
Old-age pensions will melt by 40%
Specifically, if we take a step back and look objectively at the socio-economic context, what do we see? By 2040, more than one in four people will be over the age of 65. Mechanically, old-age pensions will fall by 40%, according to the Pensions Orientation Board, which is chaired by economist Mark Tuati. The current welfare state is dead, reform of the pension system is not enough to correct this state of affairs. As INSEE reminds us, livery A remains the preferred location for the French. This one bites off a little more every month of their savings. It brings them nothing. Worse, with inflation, 81% of households lose money and real gains are around -4%.
For decades, only 15% of French people of sufficient noble birth have received a financial education, according to an Ifop survey conducted by the Ministry of Economy and Finance. This social determinism is unacceptable. Everyone must have access to knowledge in order to invest effectively. The problem is to create a generation of citizen investors collectively move towards a more open and just society. A society in which citizens have more influence. Because when I invest, I finance projects, companies that I understand. Because as a shareholder, I can exercise my right to vote and influence the environmental behavior of companies, the remuneration of managers, the working conditions of employees …
3 basic rules for investing in the stock market
You also need to be able to invest efficiently and with the least risk for everyone! There are 3 basic rules you need to know to start investing in the stock market.
Invest for the long term, as soon as possible
In the long term, the stock market has historically been a bull market. Those who invested in CAC40 in the 1990s, on average growth 7% per yeardespite the shocks. FROM the magic of compound interest which consist of systematically reinvesting earned interest to increase your capital, time is your main ally. Even when investing small amounts, it’s always best to start as early as possible to get the most out of the compound interest snowball effect.
Retirement : save money by paying less taxes. 11 contracts in comparison
There is no infallible business. Large companies, leaders in their market, went bankrupt. Nobody expected the fall of BlackBerry, Kodak or Nokia. These are statistics: in order to reduce the risk, you need to diversify your investments. ETFs are collections of stocks that greatly limit the risk associated with investing in hundreds of companies at once. Just.
How to choose the right ETF to invest in the stock market?
Finally, contrary to what is often thought, it is not always beneficial to try to invest at the bottom in order to sell at the top. Preferablyinvest small amounts each monthto drastically reduce risk exposure. The Frenchman, who 10 years ago would have started investing €50 a month in several hundred European shares through the MSCI Euro ETF, which brings together major European companies, now has €11,600 capital, for a total share of €6,000, i.e. overall yield 93.2%.
Lodge of passivity
I add a fourth and final rule: Praise passivity. Don’t Watch Your Investment Grow Every Day. Evaluate them once a year, not more often …. You will reduce your mental load, you will not be tempted to make wrong decisions on the blow of emotions, you will not betray your beliefs and your money will continue to work for you. . walk!
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Matthias Baccino is the director in France of the German broker 100% mobile Trade Republic.