Are your investments in your insurance contract earning you little? Worse, are you losing money? If the situation seems critical, do not act in haste. Here are three tips for how to react better.
You hold a life insurance policy and you have invested part of your capital in units of account (UC), in the hope of receiving more attractive returns than on your fund in euros. Unfortunately, you discover that you are currently depreciated. A more than likely situation at the moment if we look at the performance of the CAC 40 since the start of the year (-20.74%). Be careful, there is no point in giving in to panic too quickly.
Your insurer, when it suggested that you invest in these units of account, must have told you: these potentially more profitable assets also present risk of capital loss unlike the euro fund. However, these investments are considered for the medium to long term. It is therefore normal to suffer some losses from time to time. Over the past 10 years, the average performance of unit-linked accounts has been up and down, as illustrated by a recent report by France Assureurs. After a year of +10.2% in 2012, performance waned little by little until it fell in 2018, a year that ended with an average annual return of -8.9%. On the other hand, the year 2021 was better with a +9.1%. Here is three tips to make the best decisions… keeping a cool head!
Tip number 1: do not resell in a panic
We can never repeat it enough. In case of loss, do not panic. It is not advisable to resell your units invested in the various units of account. Why keep them? Quite simply because as long as you still hold them, the capital loss is not concrete. You haven’t really lost that money yet. If you resell at this time, your capital is really lost. If this asset no longer suits you, do not sell everything on a whim: wait as long as possible for it to be back in the green before withdrawing your marbles. If the fall is confirmed week after week, resell little by little, just to give yourself a chance to take advantage of a hypothetical rise.
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Tip number 2: invest gradually
Another piece of advice: don’t stop saving and invest as you go. Whether you have 100 or 50,000 euros to invest, it is not necessary to risk everything at once, especially if you have just suffered a capital loss. Invest your savings gradually, via scheduled payments for example, will make it possible to accompany the fluctuations of the financial markets. Lose little and above all win much faster in the event of a recovery.
If the markets continue to fall, the saver will buy more shares with the same amount of money.
We must favor a defensive method. If my risk appetite profile is fairly balanced (50% in the fund in euros and 50% in unit-linked units), I invest 50% in these units of account, over 12 to 18 months. If the market goes up, we will take three quarters of the rise. On the other hand, if the market falls more than expected, we will have supported the decline. As soon as the economy recovers, the saver finds himself immediately in capital gain, explains Yves Conan, CEO of Linxea. And this regardless of the chosen asset class.
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An opinion shared by other experts. Stefan de Quelen, Managing Director of Meilleurtaux Placement, also believes that this technique is particularly suitable for equity investments. Given the market levels, we can very gradually start taking shares in riskier assets. Imagine that you have 100euros to invest. It is better to invest this sum over several months. If the markets continue to fall, the saver will buy more shares with the same amount of money. And when the markets go up, there will be an elevator effect. It’s a simple technique that allows you to enter risky markets without taking too many risks.
Why not pilot management?
For those who wish to invest gradually but who are not very comfortable with the financial markets, pilot management can be a good solution. It consists of entrusting an external manager (different from your insurer or the distributor of your contract) with the distribution and arbitration between the various supports of a life insurance contract. Pilot management has the advantage of making your life easier. However, the choice of pilot management often leads to an increase in management fees unit-linked funds.
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Tip number 3: Opt for securing capital gains
The options for securing capital gains, another option. Some life insurance contracts offer you an option to secure your interests. When the winnings reach a certain amount, they are automatically placed in a security fund, generally a fund in euros. Your earnings are thus protected from market fluctuations. Among the contracts that offer this option, we can mention Mes-placements Libert, Evolution Vie, Darjeeling, Digital Vie or Multivie de Mutavie.
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Each contract applies its own criteria: amount placed, threshold and amount of capital gains necessary to trigger the option, frequency of updating the net asset value of the support in units of account… You must therefore be well informed before subscribing.
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