Like in Aesop's fable, there are two types of investors: some like to prepare for the future - ants - while others are more focused on the present and rapid returns - grasshoppers. In this article, Birdee will take a look at the second category of investors.
the investment horizon: the only criterion ?
The grasshopper saver's credo is to make the most of their money day to day. After all, you only live once, right? Grasshopper savers also apply this principle in their attitude to money: They prefer retaining as much liquidity as possible so they can finance projects (holidays, purchases, etc.).
As you may know (especially if you have read our previous articles) there are many solutions that make it possible to invest while keeping your money secure, including the famous regulated savings accounts. But going down that route means giving up on profitability. High yields and short-term yields are generally mutually exclusive, as interest rates are low in both France and Belgium (respectively 0.5% and 0.11%).
With inflation on the rise, you will only be able to obtain high yields if you are willing to take some risk.
what is a short-term investment?
Let's start at the beginning! If a medium-term investment generally lasts between about two and five years, a short-term investment shouldn't be longer than two years and therefore falls within the 12 to 24 month range. It's practically over before you know it. The challenge is therefore to find investments that will generate juicy earnings in a limited amount of time.
As far as remunerated accounts go, nobody is adopting a Martingale strategy. There are no two ways about it: leaving money to languish in an account that does not generate any revenue is clearly to be avoided. Our advice is therefore as follows: leave a few months of wages in your regulated accounts for unexpected expenses (travel, works, repairs, etc.) and invest in the products below instead.
Life insurance, a better savings product ?
For the French, life insurance has cemented its status as the Swiss army knife of savings. If you are seeking to spice up your precautionary savings somewhat, you will obtain better yields opting for life insurance that combines euro time deposits with bonds. This solution also offers liquidity, as investments can be with cashed in whenever you like (you'll need to wait two or three days for the transfer to come through, but availability is guaranteed).
It's always good to remember: up to eight years, withdrawals are allowed and are not penalised! And yields will be at least double those of regulated accounts, at worst. Since 2020, Birdee has offered life insurance portfolios for French customers. The dynamism of these portfolios is well suited to the "grasshopper" risk profile. Click here to find out more.
THE RISE OF CROWDFUNDING
Crowdfunding, which emerged in the early 2000s, is now all the rage. You can see why, as it generates higher yields (from 3 to 15%) than regulated accounts. There are several sorts of crowdfunding, including:
- Crowdlending. Crowdlending, which is a subcategory of crowdfunding, lets individuals invest in companies in exchange for regular interest every month or quarter. However, risk still exists: if the company goes bankrupt, you are not guaranteed to get your money back.
- Real Estate Crowdlending. This involves investing in real estate operations. As a way of simplifying things: if a building was a cake, you would own a slice! Once construction is complete (between 12 and 24 months), the capital invested is paid back, with interest.
So yes, yields are higher than savings accounts, but there is a catch: reduced liquidity. Indeed, you will not be able to withdraw the money you invested at will (this is normal - can you imagine a developer giving money back when they are using it to build a building?). These investments should therefore be reserved for funds that you are not likely to need in the event of an emergency.
the stock exchange: try an equity savings plan
Equity Savings Plans (PEAs for their acronym in French) offer access to fully managed accounts that take into consideration your risk profile and investment horizon. Out of all possible investments, the Stock Exchange produces the highest yield. Of course, the longer your investment, the more it will make, but good earnings are possible in the short term.
By way of example, the Birdee Trading Account Envelope made up, like for life insurance, of responsible, ISR-approved ETFs, returned a yield of 2.42% in the first half of 2021 for the defensive portfolio. This performance is much better than that of regulated accounts and with a low level of exposure to risk. For those looking for higher yields (with higher exposure to risk too), the dynamic portfolio generated interest at 11.31%!
And the other piece of good news is that you can withdraw your money at any time. You therefore retain your liquidity! Simply make the request and your funds will be released within six to seven days, to the bank account that you specified when signing up with us.
Dear grasshoppers, making the most of life while investing in assets that generate income responsibly is now within reach. Follow this link to discover our responsible investment solutions and start making money fast!