Invest 100,000 euros? Discover (very attractive) real estate investment opportunities
In the current economic climate, it is especially difficult to know where to invest your savings. Indeed, financial benchmarks that we could have had for several years have faltered in recent months: a boom in long-term interest rates and spreads between countries, a return to runaway inflation that we have not known for forty years, new geopolitical risks generating great uncertainty about the future development of stock markets. markets… there are so many new parameters that today require a comprehensive understanding before distributing your savings.
The Right Questions to Ask Yourself Before Investing €100,000
What risk are you willing to take?
Before talking about a return, it is worth considering the risk. In any financial investment, the balance between the expected return and the risk of loss that one is willing to accept is at the heart of the investor’s decision. Each investor has his own risk profile, which in practice depends on his financial and family situation, his personal character and his investment horizon. The question to ask in the preamble of any decision-making is: “Of this amount invested at the start, how much am I willing to lose? For example, if we take as a practical case an investment of 100,000 euros, the fact that we calculate the maximum loss that we can take in euros, and not as a percentage of the original amount, allows us to have a much clearer idea. : am I ready to lose 10,000 euros, 20,000 euros, 50,000 euros? The answer to this question, of course, is related to the importance of this amount in the overall wealth of the depositor. In any case, it takes precedence over the following one: “What is my return purpose? »
Do you have a short, medium or long term vision?
Time perspective is an important aspect of investing. This temporality, of course, determines the risk taking as well as the liquidity of the investment. Blocking the amount of money over a long investment horizon gives access to less liquid types of assets, which, as a rule, provide additional income (premium for illiquidity). Conversely, if the investment horizon is short, only very liquid cars will be eligible to participate. Depending on his personal plans, his age and his health, the depositor will inevitably have to consider the investment period that he provides for his savings. For larger amounts, such as the amount in our previous example of €100,000, the issue is even more important because it will be difficult to mobilize such an amount with a bridging loan in the event of a premature liquidity need.
Is your goal profitability or tax exemption?
What the investor is interested in, after the issues of the level of risk taken and the investment horizon are resolved, is, of course, the expected net return on investment. However, this is the result of a combination of two complementary components: the gross financial return and the level of taxation supported by the investment. In some cases, so-called “tax-exempt” products have a negative tax component that improves the gross financial performance. This can then become a significant reason in an investment decision. Thus, in most cases, the saver will have to prioritize in advance one of the two components that make up net-of-tax investment results (financial results or the level of taxation), because the types of products offered are radically different from each other and rarely be able to optimize these at the same time. two options.
How to grow €100,000?
How to value 100,000 euros in the medium and long term?
The presence of a large amount, for example, 100,000 euros, allows the investor to significantly expand the range of available investments and / or create a much more diversified portfolio. In the second case, the result is a lower level of risk for an identical expected return, as Markowitz portfolio theory teaches us. Contrary to a more portfolio diversification approach, one could also pursue the goal of accessing investments with a higher entry ticket – typically €100,000 – such as funds reserved for qualified investors (FCPR, professional OPCIs, etc.). The more flexible the investment horizon (and therefore potentially long-term), the greater the range of investments available. Another possibility, with a ticket of 100,000 euros or more, will be to directly search for real estate, which will be a “tailor-made” investment, tailored to each contributor, either for rental income or for use. . . .
How to get additional income with 100,000 euros?
For generating a relatively stable additional income over time, there is nothing better than investing in real estate. Either through a favorable tax system such as life insurance (UC Real Estate), or through unlisted real estate funds (SCPI, OPCI), or even by looking at listed real estate companies. Direct investment in investment property can also be considered from EUR 100,000.
Where to invest 10,000 euros?
Invest in SCPI to free yourself from management anxiety
SCPI investments are available from several hundred euros. Therefore, the €10,000 down payment is ideal for investing in these non-listed properties. Investors have a wide choice: about thirty management companies offer more than a hundred profitable SCPI, mainly investing in commercial real estate. The annual distributed returns, net of fees, range from 4% to over 6% with a quarterly allocation rate. One of the main advantages of SCPI, besides their high profitability, is that the saver is freed from any managerial restrictions: no property tax to pay, no joint ownership vote to vote, no tenant to choose, no outstanding bills. … These administrative tasks, typical of any property owner, are in fact delegated to SCPI management companies, which provide these companies with significant legal and accounting resources, thereby optimizing the financial return on these investments.
Choose real estate crowdfunding to earn over 9% returns
The concept of crowdfunding comes from the United States, it literally means “crowdfunding”, which means that a complete exemption from intermediaries has been introduced in the relationship between the creditor and the debtor (or the investor and the entrepreneur). Thus, it is a small revolution as the bilateral relationship between the borrower and his banker (or between the business creator and his circle of “business angels”) is giving way to a form of bundling or collectivization of investments. Real estate crowdfunding has been very successful in France for about a decade. Thus, several platforms have been launched to finance renovation projects, residential or tertiary real estate, giving rise to the concept of “crowdbuilding”. Be careful not to confuse this new generation of savings products with traditional rental investments because it is primarily a matter of investing in a real estate program through financial securities: debt or equity securities. Thus, the investor is not the owner of the property, as in the case of a rental investment directly or through SCI, but is a holder of debt securities or shares of the company (SAS, SA, SARL, etc.). Platforms offering crowdfunding, in fact equated to financial investments, are mandatory regulated by the AMF and cannot operate without first obtaining the legal status of CIP (joint investment consultant), with registration in ORIAS (organization of a single register of intermediaries in the field of insurance, banking and finance).
Real estate crowdfunding ROIs tend to be much higher than traditional rental investments, with an average return of 9.31% in 2020 and 9.23% in 2021, for example. Default rates are historically low, with only one program defaulting since 2012, with the Terlat Group taking over in 2017. According to project aggregator HelloCrowdfunding, only 165 projects in progress will be overdue with refunds out of a total of 1,358 refunded projects.
Bet on life insurance to take advantage of attractive taxation
Life insurance has a very attractive tax exemption compared to common law taxable investments, with income tax exemption after an 8-year holding period (up to €4,600 for a single person or €9,200 for a couple subject to joint taxation). . Real estate units of account offer a wide range of funds in the form of SCPI, OPCI or SCI. A programmed reinvestment of dividends distributed on the support of the fund in euros is usually included, which allows you to further increase profitability.
Whatever amount an investor wants to invest, be it a few thousand euros or more than 100,000 euros, there are solutions that allow him to optimize the risk/return ratio and adapt the liquidity of his investments to his investment horizon. In many configurations, real estate and in particular unregistered funds such as SCPI, OPCI or SCI offer an interesting balance between financial profitability, risk pooling and taxation tailored to each saver profile. In a general context of high uncertainty, these investment decisions allow for regular returns with relatively stable valuations, even though it must be remembered that neither capital nor profitability can be guaranteed.
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