Are you looking to invest regularly, even for small amounts? In this case, an investment plan can be a good solution.
What is periodic investing?
Often, saving for a specific purpose, such as securing your old age or the financial future of your (grand)child, involves making a transfer to a savings account monthly or quarterly. You could replace these periodic payments with investments at the same rate in one or more investment funds or in a branch 23 insurance product , with the aim of obtaining a higher return.
You therefore invest at regular times and for a fixed amount, whether stock market prices are high or low. By investing at different times, you obtain an average purchase price over time and you reduce the risk of buying everything at the wrong time.
The longer you hold onto your investment, the more likely this strategy will pay off. A period of 10 years or more is already very long. The longer the period, the greater the probability that fluctuations can be absorbed.
Be aware, however, that zero risk does not exist on the financial markets and that you have no guarantee of recovering all of the capital invested. Also pay attention to costs : they reduce the effective return on your investments.
Periodic investment in funds that allow investment diversification should generate a positive return over the long term.
How to compose your investment plan?
Before you start, your bank or the distributor of insurance products you are talking to must determine your investor profile .
Your risk profile will need to be reassessed regularly. Do not hesitate to remind your banker or your distributor of insurance products. Your life goals change over time and so does your risk profile.
Ask, as with any investment, all the information about the investments that can be made by your plan and their risks as well as the conditions of the investment plan. All this information is detailed in the prospectuses and information sheets of the investment products.
How to compare investment plans?
Annual management fees. Entry and exit charges are often low or even zero. However, the annual management fees for these products can vary greatly. Compare them as they can impact your performance. Also pay attention to the cost of advice sometimes charged.
The cost of the securities account. You must open a securities account to keep your investment products and be able to manage them. Sometimes an updated statement of your investments is linked to this account. While some banks offer this service for free, others may charge you a fee.
The conditions and costs if you wish to withdraw funds before the scheduled maturity or if you wish to transfer these products to a securities account opened with another bank.
The amount of the periodic payment. Often it is possible to already start an investment plan with a periodic payment of 25 euros. But sometimes the entry threshold is higher. Above all, do not lock yourself into periodic payments that are too high for you.
The flexibility of the periodic payment. Investment plans generally allow you to opt for a monthly or quarterly payment, and even to vary this frequency. Some banks offer the possibility of suspending payments or making additional payments whenever you wish. The degree of flexibility of the formulas varies from one bank to another. As it is not obvious today how your financial means will evolve in the next 10 or 20 years, we advise you not to confine yourself to an overly rigid formula. Also check how long you are committing to.
The extent of the range of investment funds that may constitute your investment plan and the possibility of having access to funds that are not issued by your bank. A wide choice of investment funds can allow you to better diversify your investments to better meet your investor profile and your investment preferences.
