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Our economic environment has changed radically in a matter of months. In this context, savers must find new benchmarks to make the right investment choices. Life insurance is still a savings solution that offers many options, but what are the right reflexes to use?
After years of low interest rates, the economic environment has changed radically in a matter of months. In one year, 12-month inflation rose from 2.2% to 5.6% (1), the 10-year French government bond rate from 0% to 2.80%, the CAC 40 from 6,700 points to 6,250 points, the Livret A rate from 0.50% to 2.00%. In this context, savers must find new benchmarks to make the right investment choices. Life insurance is still a savings solution that offers many options, but what are the right reflexes to use?
Diversifying your savings is more important than ever
Life insurance funds in euros allow the capital to be guaranteed and the interest produced is finally acquired, but these funds gave only 1.28% on average in 2021 (2). For the 2022 rates, the experts expect a slight increase, but in the best case the average return should not exceed Livret A’s (before tax).
In order to hope for a better return, it is more than ever necessary to diversify your savings by turning to the many units of account available on life insurance contracts, investment instruments with higher potential returns than for a unit in euros, but where the capital is not guaranteed . Many savers have already adopted this strategy, as unit-linked accounts represented 41% of life insurance inflows last July(3)compared to just 15% 10 years ago.
However, it is not always easy to choose the units of account to invest in. This is why life insurance contracts offer turnkey solutions such as managed management or profiled management. The insurance company distributes the savings between different vehicles, taking into account the saver’s risk appetite: the part to be boosted is placed on a selection of units of account and the part to be secured on the fund in euros.
Read also: Life insurance: what assessment 3 years after the contract law comes into force?
Save regularly and in the medium term
The stock markets can experience more or less significant variations. It is also necessary to keep two basic fundamentals in mind before investing. First of all, you need to have the reflex to save regularly either by making additional payments or by scheduling monthly payments on your contract. Regular savings make it possible to enter the financial markets at different times and at different prices, thus smoothing out the variations. It is then important to clearly define your investment horizon and stay the course.
Choose investment instruments adapted to the context
Finally, savers who are seasoned or accompanied by an adviser will be able to choose investment instruments themselves. Property grant (especially SCPI) is particularly well suited to the current inflationary context because rents are indexed to inflation. Bond funds provide respectable performance with moderate risk-taking, provided one avoids an excessive proportion of “high yield” bonds (ie with a high risk of default). Stocks are to be favored on the condition that they select “pricing power” companies, that is, companies that are able to withstand the rise in commodity prices.
(1) Source INSEE
(2) Source ACPR
(3) Source France Insurers