The Best Investments in an Inflationary Period

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To grow your capital and see your nest egg increase over time, it is essential to invest your money. The offer of investments intended for individual investors is very broad and it is not necessarily obvious to find there. Our team offers you a selection of the best investments to earn money according to your investor profile. Discover the best investments according to your risk profile, your investment objectives, and your investment horizon.

In this guide, we will discuss the different ways to make money by investing, but also the best bank investments, the best real estate investments, the best innovative investments, the best short-term investments, and the best long-term investments. We will also share with you our convictions on the best investments for a senior citizen, the best investments for a young person, the best investments for tax exemption, and our selection of the best investments.

How to earn money by placing it?

To earn money with capital, it is essential to invest it. Saving is not enough. By putting money aside each month in a current account, you build up capital but you do not earn money because this envelope is not remunerated. It is not an investment. Moreover, taking into account inflation, you will even lose money. It is therefore essential to invest your money to see your initial capital growth over time.

But how is this made possible? How do you earn money by investing? How to invest your money and make a profit?

There are two main ways to make money through investing. First, many investments provide income. Indeed, you will be able to get the interests of a bank booklet but also of a regulated savings investment such as PEL or CEL or the interests of the euro fund of a life insurance contract, or the interests that you bring back a bond. Shares also sometimes allow you to receive recurring income thanks to dividends. The rental investment allows you to invest money that pays monthly. SCPI s is also a real estate investment that allows you to receive income.

Finally, for a certain number of investments, it will be possible, by reselling them, to pocket a capital gain. This is for example the case with shares. Investors seek to resell their securities at a higher price than they acquired them. They then earn the difference between the resale price and the purchase price. Other investments allow you to earn money through capital gains, such as real estate.

Top 5 best investments

What is the best investment? You may be wondering what to invest in to make money. First of all, you should know that there is no such thing as the best investment of the moment. The best investment is certainly the one that pays you, but the best investment is also the one that is perfectly adapted to your investor profile and your financial situation. Under these conditions, it is difficult to present you with the best investment. However, we offer you a selection of 5 investments to consider for those who want to invest and earn money. It is then up to you to identify which one is most likely to suit you according to your risk profile, your investment horizon, your return expectations, the current composition of your assets, and your asset issues (tax, inheritance, etc.). Furthermore, we remind you that it is absolutely essential to diversify your assets to reduce risk. We don’t put all our eggs in the same basket, according to popular wisdom. The same is true for investments.

Thematic SCPIs and European SCPIs

The health crisis has brought about many changes in our societies and brought to the forefront sectors that have benefited from the situation and in which it is possible to position oneself via thematic SCPIs. For example, the health sector was invested very early on by SCPIs holding real estate assets such as clinics, nursing homes, EHPADs, maternity wards, etc., such as Pierval Santé for example. But we can also bet on SCPIs specialized in logistics and especially the logistics of the famous “last mile”, made so important by the boom in e-commerce and home delivery. These SCPIs, such as the SCPI Activimmo, are invested in warehouses and business premises located on the outskirts of large cities.

European SCPIs are also worth considering. These SCPIs, whose assets are located in all the countries of the European Economic Area, offer a relatively high return and allow a good geographical diversification of their real estate assets.

SCPIs deliver a relatively attractive return. The average yield in 2020 was 4.18% and the average yield in 2022 will be around 4.3% (and even around 5% if we take into account the revaluation of the price of the units). But beware: there are many different SCPIs and out of the hundreds of existing SCPIs, not all are equal and do not deliver the same performance.

Also, note that SCPIs are real estate investments that present a risk of capital loss and can only be considered over the medium to long term.

SRI

Sustainable finance has become a concern for individuals who want to give more meaning to their savings and therefore prefer investment funds (traditional UCITS but also ETFs) which, in addition to traditional financial criteria, apply ESG criteria (Environment, Social, Governance) to their selection, aimed at building more sustainable growth models and therefore have the SRI (Socially Responsible Investment) label. It is also possible to invest in structured products with an underlying SRI index. Please note that taking these extra-financial criteria into account does not in any way disadvantage these investments in terms of return. On the contrary, socially responsible investments even tend to outperform their benchmark!

Investing in the stock market must be part of a long-term investment logic, given the volatility of the markets. Obviously, this type of investment presents a risk of capital loss.

Stocks with the best fundamentals in the market

In the current context of persistent inflation and fear of recession, it seems essential to favor stocks with the strongest fundamentals. For example, you can make a stock picking focused on large capitalizations with little or no debt and which record a regular growth of their turnover and their results in the long term over 5 or 10 years.

At present, we should focus on companies with a solid business model, competitive advantages, and robust financial results. This is the case for Coca-Cola stock, for example, which seems to be a real bulwark against the prevailing economic uncertainty. In times of inflation, Coca-Cola’s pricing power and dividend payout also make it a wise option for investors looking for stable returns.

Again, there is a risk of capital loss with this type of investment. You may not get back your original investment.

Private Equity

It may also be wise to turn to private equity this year. Investing in unlisted companies is potentially much more profitable than investing in the stock market. But also much riskier! So be careful to diversify your investments. It is better to invest in a dozen projects than in one. Moreover, this investment must be considered in the medium-long term. Don’t invest in unlisted securities that you might need immediately.

It is possible to invest in unlisted companies directly, or through specialized funds such as FCPR, FIP, and FCPI, which offer tax advantages.

Stock market ETFs

It also seems judicious to us to invest in the stock market by turning to ETFs or trackers. These listed index funds that replicate the performance of an index allow you to position yourself with a relatively small amount of money on a large number of assets and securities. Indeed, ETFs can replicate a stock market index but also a basket of stocks according to their geographical sector or their business sector, as well as commodities, bonds, or even the evolution of one or several cryptocurrencies. The low fees associated with trackers as well as the accessibility of these funds which are traded very simply like a stock on the stock market have greatly contributed to their success. Note also that depending on the replication mode, some ETFs can allow you to invest in all the world markets from your PEA while benefiting from the tax advantages of this investment. All ETFs without restriction can be held in a securities account and some even allow you to implement sophisticated investment strategies such as hedging your portfolio with Short ETFs.

Best short-term investment

Do you have a short investment horizon and are looking for the best short-term investment? Even if there is no such thing as a high-yield short-term investment since short-term investments are generally guaranteed in capital and pay little interest, not all short-term investments are equal and you will have to find the best short-term investment rate for your situation.

Bankbooks

To be able to recover your money at any time and still see your deposit paid, it is advisable to turn to bank passbooks: regulated savings bank passbooks, which have seen their interest rate revalued on August 1, 2022, for the Livret A at 2%, the LDDS at 2% or the LEP at 4.6%, or to the taxed bank passbooks that are the “house bank passbooks” of your bank.

We will come back to the characteristics, advantages, and disadvantages of bank passbooks in more detail later in our section on bank investments.

The euro fund of life insurance

The euro fund of the life insurance, mostly invested in bonds, is guaranteed in capital and available at any time. The average yield of the euro fund was 1.30% for the years 2020 and 2021. But this is only an average and you can select a better-performing euro fund. The best-performing euro funds in 2022 were around 2%! And, given the increase in the central bank’s key interest rates which lead to an increase in the rate of government bonds, the yield of the euro fund should rise again in 2022. While some experts predict a doubling of the average return on the euro fund, it seems more likely to us that there will be a latency period before policyholders benefit fully from the rise in bond yields. The return on the euro fund could therefore remain stable or increase slightly in 2022 before jumping from 2023.

The best medium to long-term investment

Stock market shares, the most profitable asset class over the long term
Without a doubt, the best long-term investment for individuals with low-risk aversion is the stock market. Indeed, the most profitable investment over the long term is the stock market. As soon as you have a significant time horizon, the stock market is without a doubt the best investment, as many studies have shown.
The magic of compound interest plays an important role in the attractiveness of the stock market over the long term. When reinvested, the interest generated (any dividends) creates an impressive return dynamic. The snowball effect, over a very long period of time, considerably accelerates the potential gain of your initial investment.

Be careful though, the risk of capital loss does exist. This is why the recommended investment horizon is long.

The different envelopes to invest in the stock market

To invest in the stock market, you can hold your securities in different vehicles. The PEA is an envelope that offers a particularly advantageous tax framework with a total exemption of the tax on the capital gains at the end of 5 years of detention of the plan (only the social levies remain due). But there is a restriction on the number of eligible securities in the PEA. One can only hold on this envelope securities of companies whose head office is located in the European Economic Area. However, traditional investment funds and ETFs make it possible to bypass this provision and position oneself on all the major world stock markets. On the other hand, it will not be possible to invest via a PEA in derivatives or to use the deferred settlement system (SRD).

The different investments and sectors to invest in the stock market

Depending on your degree of risk aversion, your knowledge of financial markets, and the time you have to devote to your investments, several types of products and securities can be considered.

For the most risk-averse, structured products are a suitable solution. In exchange for a capped performance, they allow limiting the risk with partial protection of the assets. Be careful, however, as these products are not guaranteed in capital.

For balanced profiles, equities, traditional UCITS, ETFs, or trackers, allow one to position oneself on the stock markets, with a dividend strategy for example, and/or with a buy&hold perspective to obtain a return and increase the value of one’s capital over time.

What are the best bank investments?

The French are very attached to investments with guaranteed capital, without risks, which allows them to recover their capital at any time. This is why their main concern, when investing money, is to identify the best bank investments. Looking for the best bank investments? Find out the advantages and limitations of the different products offered by banks to determine which one is best for you.

Listed real estate companies

Finally, it is also possible to position oneself in the real estate market through an investment in listed real estate companies. SIICs (Sociétés d’Investissement Immobilier Cotée) and REITs (Real Estate Investment Trusts) are real estate investments listed on the stock exchange, with all the advantages in terms of liquidity that this entails. As with SCPIs, the entry ticket is much lower than a direct investment, diversification is the order of the day and the investor has no management worries. On the other hand, listed real estate companies, like stocks on the stock market, are more subject to volatility than a direct investment or via an SCPI. Note also that it is not possible to use the leverage effect of credit for investments in listed real estate companies.

Real estate crowdfunding

Another original way to position yourself in the real estate market: is real estate crowdfunding. With real estate crowdfunding, individuals can, via specialized platforms, lend money to real estate developers, in exchange for a fee, and thus participate in the financing of a real estate program. However, the investor does not own the property financed.

The best innovative investments
Cryptocurrencies

It’s hard to talk about investing in 2022 without mentioning cryptocurrencies, these virtual currencies that have been getting a lot of media attention, with insane gains, hyper volatile, have shown notable progress, even extraordinary increases for some of them. For example, in 2021, Bitcoin increased by around 45%, while Ethereum rose by almost 405%, and emerging cryptos such as Solana can even record a performance of 9,050% over the year. Since the end of 2021, we have been witnessing a spectacular fall in the price of cryptocurrencies, but it seems unlikely that this tumble will signal the end of the best-known cryptocurrencies, such as Bitcoin or Ethereum for example, which have nevertheless lost nearly 80% of their capitalization in 2022. This massive correction that has panicked the crypto sphere and led to the withdrawal of many small investors could, however, for the less risk-averse profiles serve as an entry point to long-term investments in crypto assets.

NFTs

The other digital assets that have been in the news in the last few months are the NFT, these non-fungible tokens, issued on a blockchain and exchangeable between two people. Very present in the world of art or video games, this type of digital asset can guarantee its authenticity. It can take the form of a product that only its owner owns or a service that only its owner can benefit from.

NFTs have experienced a very strong craze and record prices in 2021. The “Bored Ape Yacht Club” virtual monkeys that traded for several million dollars at their highs show the madness that has gripped the NFT market. The fall of 2022 cryptos has been accompanied by a noticeable drop in interest in NFTs and thus their prices. Bored monkey images were now priced around the hundred thousand euro mark. The market seems to have come to its senses and found valuation levels more in line with its fundamentals.

The Metaverse

The Metaverse, the virtual universe that symbolizes Web 3, is becoming a major investment theme. This parallel world could indeed disrupt our leisure activities (concerts are already held there) as well as our work (job interviews and meetings are already held there) and our way of consuming (via the purchase of virtual products such as NFTs, or real products introducing new practices for e-commerce).

It is possible to invest in this theme via cryptocurrencies such as Ethereum whose blockchain is the basis of many decentralized applications on the Metaverse (Voxels, Axie Infinity, etc.), but also via shares of listed companies that create a Metaverse (such as Meta, owner of Facebook and Instagram) or via companies that issue NFTs that can be used in the Metaverse, such as Decentralant or The Sandbox.

Data centers

With the development of Internet uses, crypto-currencies, the metaverse, etc., data centers are also becoming a hot investment topic. These infrastructures composed of computers and servers that are used to store digital data are becoming more and more numerous and indispensable.

It is possible to invest in data centers via the shares of data center companies that manage and host the software and hardware to store data or via the shares of real estate companies (REITs) that host these data centers.

Vertical farms

Finally, another innovative investment: vertical and automated farms, located as close as possible to major urban centers, which aim to reshape the agricultural model to make it more ecological and productive in order to meet the major challenges of humanity regarding food.

One example is the Finnish start-up iFarm, which is raising funds with the aim of operating 1 million square meters of these new types of farms by 2026.

 

 

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