2023-08-23 08:35:00
The banks may well have increased, under duress, their savings rates. These remain crumbs next to the returns that can be obtained by investing your money. Yes but how?
Before getting started, a few caveats are in order. Make sure you have savings in your savings account so you can react quickly to the unexpected. In general, we recommend 3 to 6 months’ salary. Diversify your investments and don’t be too greedy.
Risk profile
You should never forget that as soon as you withdraw your money from your savings account to invest it, it is no longer guaranteed. The risk of losing it always exists. To make the right choices, you must first assess your risk profile.
He can be defensive. In this case, you opt for relatively safe products but with limited performance. He can be dynamic. That is to say, you are aiming for significant returns by betting on more volatile assets. Or it can be balance. You are looking for the balance between risk and return.
Online tests can determine this, but the most effective is to go through your banker. It will make you answer questions like this: How would you react if the value of your investment dropped significantly? A) It keeps you up at night and you sell. B) you wait for it to come back up. C) You invest more.
Bonds, stocks or both?
Depending on your profile, you can opt for bonds. In fact, you are lending money to a company or a State which undertakes to return it to you with interest on the due date. Except in an absolute crisis, this investment is relatively safe.
You can buy a specific stock. This means that you are buying a share of a company that you like. There it is very risky, because if this company is in the red, you risk losing everything.
Or you can invest in several stocks and bonds, or choose an Investment Fund. A Fund is made up of bonds or shares in varying proportions. It depends on the risk. Basically, a manager makes the choices for you.
Traditionally, it is considered that for an investor with a balanced risk profile, the 60/40 distribution is ideal. So out of your 500 euros, you invest 300 in stocks and 200 in bonds. The ideal is to find a Fund that offers this distribution key. Thus, you can expect a return of 3 to 7% per year. This is much more than the current 1% of deposit books!
There is also the option of State Bonds, bonds produced by Belgium for individuals. There are small new ones which land in September and which are less taxed than the others. We tell you regarding it in the magazine of the week.
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