Obtaining additional income for retirement, protecting your spouse and children, investing in real estate or the financial markets, facilitating transmission or inheritance… All this is possible thanks to effective personal wealth management.
Whether it’s €1,000 or €100,000, wealth management isn’t always as straightforward as you might think. To minimize the risks and increase your chances of making your savings grow, here are 5 essential tips:
1 – Risk awareness
The key to effective wealth management is understanding investment risk:
- Only regulated savings passbooks (Livret A, LDDS, LEP and Livret Jeune) offer a return fixed by law and guaranteed capital.
- Euro funds, term accounts and bank savings books have guaranteed capital, but variable returns.
- Other investments, in particular SCPIs, unit-linked life insurance policies and investments in financial markets represent a risk of capital loss and offer no guarantee of performance.
To manage your assets properly, you need to accept the principle of the risk/return trade-off: a high rate of return is accompanied by a high level of risk, while a safe investment generally yields a low return.
2 – Determine your personal goals
Good wealth management should be personalized, adapted to your possibilities, your needs and, above all, your objectives. In general, these are divided into 4 main categories:
- Build and develop your assets: you want to build up your assets and improve their profitability.
- Protect your loved ones : you want to organize your estate to protect your loved ones in the event that something happens to you (illness, death, disability, etc.).
- Preparing for retirement: you want to build up capital or an annuity to ensure your standard of living in retirement.
- Anticipating succession: you want to pass on your assets in the best possible conditions
⚠ tax optimization should not be an end in itself, and may in some cases be considered anabuse of rights by the tax authorities.
While it’s of course possible to have several objectives, you need to be able to prioritize them. In fact, the investments you should consider differ greatly depending on whether you want to prepare for retirement or optimize the profitability of your investments!
3 – Know your investor profile
Just as important as your objectives, your risk tolerance is the key to determining your investor profile, a notion that will guide the management of your wealth. There are 3 different investor profiles:
- Prudent: You prefer the security of your investment, and don’t dream of exceptional returns.
- Balanced: You seek to control the risk of your investments, but accept that it is impossible to achieve a good performance with a secure investment.
- Dynamic: You want a high return on your investments, and are willing to risk your capital to achieve a better performance.
The investor profile is linked to several factors, including :
- Age: people in their thirties will take greater risks with their capital than those in their sixties.
- Personal situation: people in a couple or with children prefer to secure their assets.
- Risk aversion: some people have a “taste for risk”, others much less so
4 – Choosing the right CGP
Just as you entrust the management of your health to a medical professional, for effective wealth management you need a trained, experienced and competent professional: the Wealth Management Advisor.
Internet research and the “sound advice” of friends are useful for obtaining information and forming an initial idea, but the complexity of taxation and civil law, and the diversity of products on the market, mean that you need to consult a trusted professional.
💡Consult our article on choosing a good wealth management advisor !
5 – Focus on diversification
Whatever your investor profile, investment diversification is always a winning strategy in the medium and long term. The concept, which has been simple and well-known for a long time, can be summed up in the famous proverb: “Don’t put all your eggs in one basket”.
By investing all your savings in a single investment, you become totally dependent on it. This is advantageous on the upside, but can be disastrous on the downside.
On the contrary, by diversifying, you detach your assets from occasional market trends. This greatly reduces the risk, while increasing the chances of seeing a significant overall increase in the medium and long term.
⚠ :: Contrary to popular belief, diversification does not eliminate risk, only reduces it!
As part of effective wealth management, we therefore recommend investing in different asset classes:
- Real estate
- Savings books
- Stock market
- Government bonds
- Raw materials
Similarly, within an asset class, it’s worth diversifying again. For example:
- Real estate investment: residential, office, retail, healthcare… but also in various regions, even in several countries.
- Stock market investments: companies in the IT, energy, food and industrial sectors… but also a wide range of company sizes.
All this may seem complicated at first, and requires knowledge not only of financial products, but also of the various business sectors. The advice of a professional will help you to see things more clearly and make informed decisions.
Altermès Patrimoine is a wealth management firm backed by an accounting firm. This strengthens our expertise and independence, and gives us a global, objective approach to your situation . We support you over the long term, with an advisory approach that treatsthe product as an accessory to wealth management advice.
📞 If you have a question, a project or would like to carry out a wealth assessment, don’t hesitate to get in touch with our experts!
👆 Find out more about our wealth management expertise!