Forex Currency Trading: Detailed Review

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Problem: according to the INSEE, inflation was 1.8% in 2018. In other words, Guillaume did not really make money last year, because the profitability of his investments did not cover the ‘inflation. So in reality, Guillaume lost money in real value net of inflation. It should be noted that this kind of situation is exacerbated by the current economic context: the drop in bond yields is accompanied by a fall in yields on secure investments (booklets, PELs, euro funds, etc.), which puts savers to a severe test. To cope in this difficult environment, the saver has no choice but to sharpen his strategy and seek the best investments.

Forex Currency Trading : Tips and Advices

Before optimization

Before optimization, Guillaume had 75% (30,000 euros) of his savings on an ELP and 25% (10,000 euros) on his livret A. As we said before, the performance of his investments did not cover inflation . Guillaume received about 675 euros in interest each year.

After optimization: diversification and better investments to improve long-term performance.

Although he owns an ELP, Guillaume already owns his home and has no real estate project in sight. Even so, the ELP is in any case no longer interesting given the small amount it allows to borrow (proportional to the interest earned) and the rates offered compared to those of the market. He therefore decides to close his ELP and open a life insurance and a PEA (savings plan in shares) to re-allocate his savings.

Guillaume keeps only 5,000 euros on his A booklet, which is more than enough to finance his next vacation and possible unforeseen. Then, Guillaume places 30,000 euros on a fund in euros within a life insurance policy without payment fees. Finally, the remaining 5,000 euros are transferred to the PEA and invested in an index fund (tracker) whose principle is to monitor the performance of a global stock market index, including dividends. Although Guillaume has a long-term investment horizon, he has a strong aversion to volatility and risk of capital loss and decides not to be more exposed to financial markets (less than 10% of his financial wealth, off real estate).

Forex Currency Trading : Information

We have previously presented the tax benefit of life insurance (beyond 8 years). Guillaume has also opened a PEA to take advantage of tax benefits specific to this envelope (exemption from income taxes if released after the 5 years of the PEA). Be aware that payments on the PEA are capped at 150,000 euros. Guillaume is still far away.

From now on, Guillaume will supply his life insurance and his PEA regularly. Guillaume does not rule out strengthening his equity allocation if he sees that markets are falling. Intuitively, it gives him the impression of taking less risk by buying cheaper. He has assimilated best practices to invest in the stock market.

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