Matthias Baccino, director of brokerage Trade Republic in France, offers advice on how to get the most out 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 to increase your savings to protect yourself from life’s unexpected accidents and prepare for retirement. It’s time to collectively regain control over our money.
To do this, we must fight against the industrial interests of banks and insurers who protect their sources of income by charging huge fees on French savings without making them efficient. Taking into account the explosive inflation last year, these indicators are close to 50 billion euros of purchasing power that has run away their current accounts and other bank books or funds in euros, which have a return well below the rate of inflation. We also have to fight our own habits and our conservatism, fight the psychological inhibitions we face with money, investments and finances.
Age pensions will melt by 40%
Specifically, if we take a step back and objectively look at the socio-economic context, what do we see? By 2040, every fourth person will be over 65 years old. According to data from the Council on Pensions, headed by economist Mark Tuaty, old age pensions will automatically fall by 40%. The current welfare state is dead, the reform of the pension system is not enough to correct this state of affairs. Livret A remains the preferred location for the French, as INSEE reminds us. This one bites off a little more of their savings every month. It does them no good. Worse, in inflation conditions, 81% of households lose money, and real income is about -4%.
According to an Ifop survey for the Ministry of the Economy and Finance, for decades only 15% of the French, of fairly well-off birth, received a financial education. This social determinism is unacceptable. Everyone should have access to knowledge to invest effectively. The question is that to create a generation of citizen-investors to collectively move towards a more just and shared society. A society where citizens have more influence. Because when I invest, I fund projects, companies that make sense to me. Because as a shareholder, I can use my right to vote and influence the environmental behavior of companies, the remuneration of managers, the working conditions of employees…
3 basic rules of investing in the stock market
It is still necessary to know how to invest in an efficient way and with the least possible risk for everyone! To start investing in the stock market, you need to know 3 basic rules.
Invest for the long term, as soon as possible
Over the long term, the stock market is historically a bull market. Those who invested in the CAC40 in the 1990s experienced an average of a growth of 7% per year, despite the upheaval. with the magic of compound interest which consist of systematically reinvesting earned interest to grow your capital, time is your best ally. Even when investing small amounts, it’s always best to start as early as possible to maximize the snowball effect of compound interest.
Invest in a diversified way
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No business is foolproof. Large companies, leaders in their market, went bankrupt. No one expected the fall of BlackBerry, Kodak or Nokia. It’s a statistic: to reduce your risk, you must vary your investments. ETFs are actually baskets of stocks that significantly limit the risks taken by investing in hundreds of companies at once. Simply.
How to choose the right ETF for investing in the stock market?
Finally, contrary to popular belief, it is not necessarily beneficial to try to invest at the bottom in order to sell at the top. Mainlyinvest small amounts every month, to drastically reduce your risk. A Frenchman who would have started investing 10 years ago with 50 euros per month in several hundred European shares through the ETF MSCI Euro, which combines the main European companies, now has a capital of 11,600 euros and a total share of 6,000 euros, i.e. total yield 93.2%.
Lodge of passivity
I add a fourth and final rule: praise passivity. Don’t watch your investments every day. Evaluate them once a year, no more…. You will reduce your mental load, you will not be tempted to make bad decisions based on emotions, you will not betray your convictions, and your money will continue to work for you. walk!
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Matthias Bacchino is the director in France of the German broker 100% mobile Trade Republic