How to invest 50,000 euros? The best investments according to your profile

Inflation is expected to remain high in 2023 (+5.8% expected by the Banque de France as an annual average). If you have the ability to put money away, it’s in your best interest to find an investment that will return at least as much as the increase in price so that your purchasing power doesn’t evaporate. However, in addition to the yield itself, other criteria, specific to each saver, must be taken into account before making a decision.

First, your time horizon. Do you want to invest for the long term or have the possibility to release your money quickly? This criterion partially overlaps with the age criterion, as we do not invest with the same goals at age 30 or 60. Everyone also has their own risk appetite: to what extent are you prepared to lose all or part of your stake? It is therefore only possible to choose a destination for your savings based on your risk profile and your projects.

Regulated books, life insurance, real estate… A range of solutions for the most cautious

Regardless of the amount of your savings, you must always first allocate part of them to a preventive envelope. In general, it is recommended to keep at least €5,000 or three to six months’ salary in a regulated booklet: for example Livret A or the Sustainable and Solidary Development (LDDS) booklet. The idea is that you can easily draw on this reserve in case of unexpected expenses. The advantage of these regulated savings accounts is that you can easily transfer the required amount to your current account, without fees or delays.

Regulated savings accounts, which in recent years have been limited to a simple emergency pocket function due to minimal rates, are increasingly popular as investments in their own right. When indexed for inflation, their yield actually increased significantly as prices rose. Livret A and LDDS will thus display a rate of 3% net until January 31, 2025. And with an investment of 50,000 euros, it is possible to fill these brochures to the ceiling. “This is a solution for very prudent profiles who want to be sure to recover their initial investment while taking advantage of the current good interest rates,” comments Gauthier Maës, Communications Director at Meilleurtaux Placement.

With Livret A – whose payment ceiling reaches 22,950 euros – and LDDS – whose ceiling is 12,000 euros – it is possible to invest 34,950 euros at 3% at the stop. In one year, this represents an interest of 1,048.50 euros. Not to mention that it is also possible to fill additional supports without the risk of losing capital at similar rates, but with much higher caps. For example, with a fixed-term account (up to 4% with a ceiling of 100,000 euros, or none depending on the establishment), life insurance in euro funds (2.50% on average expected for 2023, without a ceiling) or, again, superbank accounts that offer rates up to 5% for several months and again with much higher ceilings. However, “an interest rate of 2% or 3% may seem insufficient to build long-term assets”, reminds Gauthier Maës, especially when inflation is higher than 4%! Especially since these bank books, as well as term accounts, are subject to a flat rate of 30% (flat tax made up of tax of 12.8% and social security contributions of 17.2%). Finally, super brochure rates should decline in the coming years as price growth recedes. Going all-in on guaranteed support can be profitable for the most cautious during periods of inflation, but not later!

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Another investment that appeals to the most cautious: real estate to buy your main residence. “With a savings capacity of €50,000, you can also consider building a contribution towards the purchase of your main residence,” points out Thomas Ducorps, Director of Corporate Pension Savings at Verspieren. For a property worth 200,000 euros, you need a personal contribution of 20%, i.e. 40,000 euros.

Diversified life insurance and PER for balanced profiles

For a longer-term investment that can yield between 4% and 5%, “balanced” profiles – with no risk appetite – are encouraged to turn to life insurance and pension savings (PER). These two investments actually retain some liquidity if you wish to recover your investment: it is possible to withdraw part or all of your life insurance. However, depending on the age of your contract, you will be taxed more or less when canceling or redeeming. On the PER side, whether individual or group, six early dismissals allow you to recover your equity before retirement (purchase of principal residence, death of spouse, over-indebtedness, etc.).

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That’s enough to calm your wary side! And for your search for yield, these two products offer great diversification opportunities by choosing between 20% and 30% of the units of account (UA) within your contract. These funds invested in stocks, bonds or real estate are not guaranteed, but can potentially be more profitable. For savers who don’t have the time or ability to choose, managed management is an option that allows you to entrust the management of your portfolio to your insurance company according to your desired level of risk-taking.

To earn returns, it is possible to invest directly or through life insurance or your PER in SCPI. Shares in property investment companies, available from €1,000, have returned an average of 4.5% to 5% over 10 years. For Laetitia Bernier, sales and marketing director at Perial, “it’s also a way to get a foothold in real estate without having to invest €40,000 or €50,000 at once”.

For the young and the bravest, riskier assets

The most dynamic or young profiles who want to get more than 6% return also have several bowstrings with 50,000 euros. First, they can increase UC’s share of their life insurance or their PER up to 40% or 50% and invest in the stock markets or in private equity (venture capital), which consists of taking a stake in an unlisted company. These assets are the most volatile, but also potentially the most profitable. Indeed, over a 40-year period (1982-2022), these are the stocks that show levels of performance, but also volatility, “the highest,” as determined by the Institute for Real Estate and Land Savings (IEIF). In these riskier investments, two elements are necessary to avoid excessive losses: diversification and a long-term horizon.

Indeed, “statistically, the longer the time horizon, the less likely you are to lose money,” recalls Marc Braun, French director of Scalable Capital. Therefore, you need to start early if you want to start this type of investment. And to avoid putting all your eggs in one basket, you also need to diversify your positions. To do this, it is recommended to invest in different asset classes: bonds, shares, SCPI, etc. For each investment, look carefully at the Key Information Document (DIC), which collects all the information you need to know about the investment, as recommended by the Financial Markets Authority (AMF ).

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