The 3 essential rules for investing in the stock market without getting tired

Matthias Baccino, director of the broker Trade Republic in France, shares his advice for making the most of the stock markets.

He is a taboo subject par excellence: money. But in a global context marked by a major economic crisis, it is essential to remind as many people as possible of a few tips for making your savings grow in order to protect yourself against the unexpected, accidents of life and also to prepare for retirement. The time has come to collectively regain power over our money.

To do this, we must fight against the industrial interests of banks and insurers who defend their sources of income by levying massive fees on French savings without making them effective. With inflation exploding last year, these are close to 50 billion euros of purchasing power that have flown away their current accounts and other passbooks or euro funds whose yield is well below inflation. We must also fight against our own habits and our conservatism, fight against the psychological brakes that we face with money, investment and finance.

Retirement pensions will melt by 40%

Concretely, if we take a step back and look objectively at the socio-economic context, what do we see? By 2040, more than one in four people will be over 65. Mechanically, retirement pensions will melt by 40% according to the Pensions Orientation Council taken over by the economist Marc Touati. The current welfare state is dead, the reform of the pension system will not suffice to correct this state of affairs. As INSEE reminds us, the livret A remains the preferred placement for the French. This one nibbles a little more each month their savings. It brings them nothing. Worse, with inflation, 81% of households lose money and have a real return of around -4%.

For decades, only 15% of French people, sufficiently well born, have received a financial education, according to an Ifop survey for the Ministry of Economy and Finance. This social determinism is not acceptable. Everyone must be able to access knowledge in order to invest effectively. The issue is to create a generation of citizen-investors to move, collectively, towards a more participative and just society. A society where citizens have more impact. Because when I invest, I finance projects, companies that make sense to me. Because as a shareholder, I can exercise my right to vote and have an impact on the ecological behavior of companies, on the remuneration of managers, on the working conditions of employees…

3 basic rules for investing in the stock market

It is still necessary to know how to invest in an effective way and the least possible risk, for all! There are 3 basic rules to know to start investing in the stock market.

Invest for the long term, as soon as possible

Over the long term, the stock market is historically a bull market. Those who invested in the CAC40 in the 1990s experienced, on average, a growth of 7% per year, despite the upheavals. With the magic of compound interest which consist of systematically reinvesting the interest earned to grow your capital, time is your main ally. Even when investing small amounts, it is always best to start as early as possible to get the most from the snowball effect of compound interest.

Invest in a diversified way

No business is infallible. Large companies, leaders in their market, have gone bankrupt. Nobody had anticipated the fall of BlackBerry, Kodak or Nokia. It’s a statistic: to reduce risk, you have to vary your investments. ETFs are precisely baskets of shares that greatly limit the risk taken by investing in hundreds of companies at once. Merely.

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Invest gradually

Finally, contrary to what is often imagined, it is not necessarily useful to try to invest at the bottom in order to sell at the top. It is preferable toinvest small amounts each month, in order to drastically reduce its exposure to risk. A Frenchman who would have started investing 10 years ago, 50 euros per month in several hundred European shares through an ETF MSCI Euro bringing together the main European companies, now has a capital of 11,600 euros, for a total stake of 6,000 euros , that is a total yield of 93.2%.

The lodge of passivity

I add a fourth and final rule: praise passivity. Do not watch every day how your investments evolve. Evaluate them once a year, no more…. You will reduce your mental load, you will not be tempted to make bad decisions on the blow of emotion, you will not betray your convictions and your money will continue to work. for you. walk!

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