Where to Invest Your Money: Options & Strategies

Deciding where to invest money often starts with the stock market: this way of investing means putting money into financial instruments listed on the exchanges. It is an opportunity given to traders to grow their stake by taking part in a company’s capital. That said, can stock market investing be guaranteed to be profitable? Where to invest money, and does investing involve risks? How to invest money in shares profitably? You will find the answers to all these questions in this complete guide to stock market investing.

Stock Market Investing & Investment Options: What Are They?

A stock market investment is the commitment of capital to tradable products on the exchange. Companies looking for funding issue securities — financial assets — on the stock markets.

Investors can therefore grow their capital by buying listed shares. The investor’s potential gain comes from the dividends on the securities acquired or from the capital gains on those securities. The investor can then resell the appreciated securities for more than the purchase price.

Ouvrir un compte Vantage →

Where to Invest Money: The Complete Guide to Getting It Right

Stock market investing does not require any particular skills. However, it is essential to know a number of things, which is why trading training is indispensable. What financial instruments can an investor buy? Which tax wrappers can you use to invest in the stock market? How do you achieve a high return on a stock market investment?

Financial Investments: The Main Stock Market Products

There are several investment options on the stock market:

• Stocks: they represent ownership shares in a company. They are the most sought-after asset. Shareholders are entitled to dividends and have a say in how the company is run through their voting rights at the general meeting. The company must also publish its financial results reports to shareholders;
• Bonds: bonds are debt securities. An investor holding bonds therefore has a claim on the institution that issued them. The investor is entitled to fixed interest until the debt capital is repaid;
• Investment funds: these are pools of capital managed on behalf of a third party by OPCVMs (Organismes de Placement Collectif en Valeurs Mobilières, the French collective investment schemes known as UCITS). Holders of investment fund units therefore own a varied portfolio of securities. There are two types of OPCVM: SICAVs (Société d’Investissement à Capital Variable, open-ended funds) and FCPs (Fonds Communs de Placement, pooled contractual funds);
• ETFs (Exchange Traded Funds), also known as trackers: open-ended investment funds that aim to replicate the performance of a basket of stocks;
• Derivative products: these rely on underlying assets to protect the investor against negative market fluctuations through leverage. The value of a derivative depends on the underlying asset it is linked to. There are several derivatives, such as CFDs, warrants, swaps and options.

Managing Stock Market Investments & French Tax Wrappers

Every stock market investment requires opening an account. The account must be able to hold the various financial instruments acquired by the investor. The tax wrapper — the French enveloppe fiscale — is therefore the investment account used to trade on the stock market. The investor can open this account with an online broker, a bank, an insurance company or a mutual insurer. There are several types of tax wrappers, and each one carries its own specific tax treatment. They can be distinguished as follows:

Investing Your Money in Stocks: The Ordinary Securities Account (CTO)

The compte-titre ordinaire (CTO), France’s standard brokerage account, is a flexible vehicle for buying and selling financial instruments. It accepts every product traded on the exchange, including bonds, stocks and derivatives. A CTO works like a bank account, and many stock market websites offer one. There is no cap on deposits into a CTO. Withdrawing money is easy too: a simple transfer from the CTO to your bank account.

The CTO is taxed on income (dividends or bond interest) and on capital gains from securities. The investor can choose between:

• The progressive scale: made up of income tax at the applicable bracket rate plus social contributions of 17.2%;
• The flat tax, or PFU (Prélèvement Forfaitaire Unique), a single flat-rate levy of 30%.

Dividends are thus taxed twice: once when the investor receives them, and adjusted the following year.

There are several categories of CTO:

• Individual CTOs for private individuals
• Joint CTOs: opened by several people. Each co-holder of the account can transact with their own signature;
• CTOs in indivision (joint ownership): opened by several people, but every transaction requires the signatures of all co-holders;
• CTOs for minors: opened by a legal representative on behalf of a minor;
• Finally, CTOs for protected adults: opened by a legal representative on behalf of a person with the legal status of an incapacitated adult.

Buying Stocks Directly: The Share Savings Plan (Plan d’Épargne en Actions, PEA)

The PEA — France’s tax-advantaged share savings plan — makes it possible to trade shares of European companies. Thanks to the PEA, you can buy and sell shares in companies from the European Union, Norway, Iceland and Liechtenstein. PEAs are opened by an adult and can only be opened once. One person therefore cannot hold several PEAs.

Deposits into a PEA are capped at 150,000 euros. PEAs also come with an advantageous tax treatment for investors: income and capital gains are exempt from tax for any withdrawal made after a period of 5 years. Only social contributions of 17.2% apply.

The Different Types of PEA for Investing in Stocks

• Classic bank PEA: the classic bank PEA is linked to a securities account for the shares and a cash account for the money;
• Classic insurance PEA: this is a form of capitalization contract between the investor and the insurance company. The funds in an insurance PEA are used to buy the securities available in a bank PEA;
• SME PEA (PEA-PME): it funds small and medium-sized enterprises and mid-sized companies (ETI). The deposit cap on a PEA-PME can reach 225,000 euros.

Investing in Stocks by Level: CTO vs PEA

Unlike the CTO, the PEA only applies to certain securities, notably stocks, OPCVMs (collective investment funds), investment certificates and shares in SARLs (French limited liability companies). Derivatives are not available in a PEA. Moreover, short selling and leverage are not possible in a PEA.

The PEA also has a minimum life of 8 years. Any withdrawal made before that period effectively closes the PEA and forces the sale of the securities.

Life Insurance (Assurance Vie): A Flexible Way to Invest in Stocks Yourself

Assurance vie, the French life insurance wrapper, is an attractive vehicle for many investors. It has no deposit limit and lets you manage multiple financial instruments: ETFs, investment funds and euro funds (fonds euros, capital-guaranteed funds) are all available inside an assurance vie.

On the tax side, a flat tax of 30% applies to the assurance vie for the first 8 years. After the 8-year mark, the assurance vie is subject to the progressive scale as follows:

• Income tax and social contributions at a combined rate of 24.7% for amounts up to 150,000 euros, and 30% for higher amounts;
• An allowance of 4,600 euros applies for a single person, and for a couple the allowance is 9,200 euros.

Withdrawals are subject only to the social contributions of around 17.2%.

Stock Market for Beginners: Which Wrapper for Your Stock Market Investment?

Stock market investments generate fees that pay all the intermediaries in the market. Owning a portfolio of assets or executing a transaction both incur fees that must be paid. They break down as follows:

• Brokerage fees: these are charged on every purchase or sale of assets. Brokerage fees vary by institution, whether a bank or an online broker. Generally speaking, they are either flat fees or proportional to the size of the transaction;
• Custody fees (droits de garde): charges taken by the institution in charge of holding the investor’s financial products. They are deducted from taxable income and depend on the number of different assets in the investor’s portfolio;
• The financial transaction tax: this tax applies to purchases of shares in companies established in France with a market capitalization of one billion euros. The rate is 0.30%.

Why Put Your Money in the Stock Market?

The stock market holds many attractions for investors. If you were still hesitating to start trading, this stock market review could convince you to put money into stocks. We urge you to follow our stock market investment advice.

• High Long-Term Returns – Investing in the stock market means investing online in a security issued by a company to finance its activities. Depending on their profits, companies can distribute dividends to security holders. Capital gains on securities are another source of profit for investors: a stock bought cheaply can appreciate, and selling it at a higher price generates profits for the investor. Stock market investing offers returns of 8 to 10%. The returns when you invest 1,000 euros in stocks are less substantial than when you invest 5,000 euros in stocks.
• Successful Diversification of Your Investments – It cannot be said often enough: diversifying your investments matters. On top of the investments already made, stock market investing becomes another source of income for you. It also lets you invest in several companies across different fields of activity — technology, hydrocarbons, cryptocurrency. You can buy shares in companies from different sectors of activity to capture the potential each one offers.
• Guarantee for Obtaining a Bank Loan – Holding high-performing securities is a way for an investor or individual to obtain a bank loan. These securities can be pledged as collateral when applying for loans from a banking institution.
• Opportunity to invest in a promising sector – If a sector of activity looks promising to you, stock market investing gives you the chance to back it. You can buy shares in the company that shows all the signs of profitability and growth in the field that interests you: you can go for American stocks or biotechs.

Where to Invest Money: Which Financial Products Show the Most Promise?

Many companies display interesting profit potential for the year. They span several sectors of activity. For the year, the high-potential areas are:

Technology companies: technology is a revolutionary sector. Because technologies are increasingly used in our daily lives, the sector keeps showing solid growth. Technology companies therefore offer strong returns. Amazon, Apple and Microsoft are the best growth stocks in the technology field for the year;

• Energy companies: energy is a promising field, since energy resources sit at the center of so many activities. The value stocks of the energy sector are Total, ExxonMobil and ConocoPhilips; it is a stock market investment that pays.
• Healthcare companies: the health crisis brought healthcare companies into the spotlight. The leading value stock in the healthcare sector is Johnson & Johnson. With their vaccine production, Moderna and AstraZeneca are the top-ranked growth stocks in the healthcare field;
• Finance companies: the main value stocks in finance are Visa, PayPal, MasterCard, etc.
• Cannabis companies: the cannabis sector is one of the most promising on the stock market for the year. With more than convincing growth arguments, investors can put money into Aphria, Canopy Growth or Aurora Cannabis.

Stock Market Investing: What Is the Best Place to Put Your Money?

Among the best places for your money, we can highlight first: safe investments, the best real estate investments, and above all the best stock market investments.

The Best Stock Market Investments

1. Bonds: their yield averages 2 to 4%, with low taxes and a long investment life as a bonus. The recommended investment horizon is the medium term, i.e. from 3 years, and savings are available instantly.
2. Stocks: they carry low taxes, especially inside an assurance vie or a share savings plan (PEA). Returns are attractive, ranging from 6 to 10%. Long term investments are the ones to favor, and your savings stay available immediately.

The Best Real Estate Investments

1. SIIC (Sociétés d’Investissement Immobilières Cotées, France’s listed real estate companies, similar to REITs): their return is attractive, averaging 6 to 8%. Taxes are low through a PEA and an assurance vie, less so through a securities account.
2. SCPI (Société Civile d’Investissement Immobilier, French property investment funds): the return on this investment is below 5% per year. The advantage of this type of investment is its low volatility.
3. LMNP (furnished rental investment): this profitable investment can earn you 2 to 6%. Fluctuations are low, taxes are flexible and fees are high.

Among the real estate investments to forget about: properties sold under the Pinel law (a French tax incentive scheme), mobile homes and OPCI funds.

Safe Investments: The Best Options with No Risk

1. Livret A accounts: this is regulated savings — France’s state-regulated savings account — with a yield generally of 0.5%.
2. Euro funds inside an assurance vie: your capital is guaranteed, but returns keep declining, averaging 1.5%.

Among the safe investments you should forget about at all costs, first come bank passbooks, the PEL and the CEL (France’s housing savings plans).

Stock Market Investing: Why Investing This Year Makes Sense

According to figures published by the Autorité des Marchés Financiers (AMF), France’s financial markets regulator, Covid brought waves of new investors into the stock market. Online brokers report the same trend and speak of a massive influx of investors. These are novices discovering trading who took advantage of the 2020 market crash to position themselves in securities.

That strategy has paid off, because prices have been rising from late 2020 to this day. In two years, roughly 800,000 investors bought or sold stocks. These newcomers made the right call in putting money into promising securities, especially French stocks.

Investing in Stocks: The Essential Questions to Start Trading Like a Pro

Before you start trading, it is essential to have your ideas clear. To do so, you should either read a book about the stock market or watch a film about stock market investing. You should also ask yourself a number of questions, including:

• What does it take to build a trader’s mindset?
• What environment are the stock markets currently evolving in?
• How do you avoid being trapped by your own psychology?
• What are the chances a stock market investment turns a profit?
• Ordinary securities account (CTO) or share savings plan (PEA)?
• What is money management and how do you apply it?
• What are the best asset classes on the stock market for beginners?
• The perfect trading platform and broker
• What trading capital should you start with?
• What type of profile should you trade for?
• How the financial markets work
• Bearer shares or registered shares?
• Investing with derivatives or with ETFs

Once you have found answers to all these questions, you are already ready to succeed in your first steps in stock market investing. Keep in mind that nothing is set in stone on the stock market: you will need to update your data daily to adopt the best investment strategies.

Investing in Promising Stocks: What Are the Risks of Stock Market Investing?

Like any investment, the stock market carries certain risks to take into consideration:

• First, liquidity risk: this is the difficulty an investor might face when trying to resell a security at a given moment. It can stem from the absence of a market for that security;
• Next, market risk: this risk results from market fluctuations. It can cause the investor to lose capital when supply exceeds demand, or when an event or context favors selling the security;
• Then, currency risk: this risk arises when buying an asset in a currency different from that of the investor’s country. The investor runs the risk of the exchange rate moving at the time of purchase in a foreign currency;
• Finally, bankruptcy risk: if the company goes bankrupt, the investor faces the loss of all their assets.

How to Invest Money: Tips for a Profitable Stock Market Investment

Far from being an exact science, stock market investing follows rules that can help your capital grow. It would therefore be prudent to:

• Define your risk share: the recommendation is to invest only what you are prepared to lose. Stock market investing can involve risks. It is best to use surplus savings to invest in the stock market. As part of defining your risk share, it is also important to know how to protect your portfolio in its absence.
• Build an investor profile: which vehicles and tools should you use to invest in the stock market? Before getting started, the investor must be able to determine which financial products they will use. A novice will opt for stocks for greater safety, while more experienced investors can use more complex products such as warrants.
• Diversify your positions and assets: to limit the risks of a crash or a market correction. The investor must diversify positions and know how to invest in the stock market in times of crisis. They should therefore invest in several types of stocks to give themselves more chances of maximizing gains.
• Invest in the stock market on a small budget: watch out for the various fees that eat into your gains. Take care to choose the intermediaries with the most advantageous offers.
• Follow financial news to know when to invest in the stock market: the investor must stay informed about all the news related to the market and to the companies in which they make their stock market investments.

Stock Market Investing: Which Assets Should You Invest Through?

To launch your investment properly, you first need to open your tax wrapper. It is important to know that there are several categories of online investment vehicles you can use.

• Trackers and index funds: their purpose is to replicate stock market indices. They also serve to limit the risk of losing money through asset diversification.
• OPCVM: these are known for their role in managing collective investment.
• Individual stocks: you can make this kind of investment in listed companies — think Alibaba, Amazon, Nokia, Sony, etc.

Investing Your Money: The Different Types of Stock Market Orders

It is best to turn to a trading expert to access the best stock market rankings. Placing an order is the process that lets the trader sell or buy stocks. Orders are distinguished by their guarantees, both of execution and of transaction:

• The limit order: probably the best option, since it lets you set the maximum purchase price and the minimum sale price of securities online.
• The best limit order: as its name suggests, there is no limit guarantee; you buy or sell through your intermediary at the best current price.
• The market order: with this order you can easily find traders to sell to or buy stocks from as soon as they show up.
• Trigger orders and stop orders: this order sets the trading threshold, whether for selling or buying.

Stock Market Investing: The Best Cheap Stocks with Strong Potential

In this category you have several types of stocks. You can choose 5G stocks, biotech stocks, German stocks or French stocks.

Buying the Best Cheap Stocks Under 20 Euros

• AXA shares: one of the most sought-after stocks thanks to its attractive price, averaging between 18 and 25 euros. The company also pays good dividends to investors.
• EDF shares: one of the cheap stocks with strong potential in France, with a value oscillating between 10 and 15 euros on average since January, and offering growing dividends.
• Coface shares: this French stock is currently worth , making it one of the most accessible stocks right now.
• Eutelsat shares: one of the best dividend stocks, trading at .

Investing in the Best Cheap CAC 40 Stocks

• Carrefour: Carrefour shares are far from their glory days between 2013 and 2017, but they have lost none of their potential. They trade below 20 euros and pay attractive dividends of .
• Engie: probably one of the best energy stocks, even though its dividends remain variable. Its price has fallen over the past ten years and now sells for between 11 and 15 euros on average.
• The Peugeot group: probably one of the most volatile stocks. You can invest in Peugeot shares right now for .
• Société Générale: in 2020, after the crisis, Société Générale shares were worth 0.20 euro. But since the start of this year, the stock has traded at .

Financial Investments: The Best Low-Priced Next 20 Stocks

• The Air France group: expect to pay about per Air France share. The group does not yet pay dividends to its shareholders.
• Suez: this group’s stock went through many fluctuations before stabilizing at the start of the year. Each Suez share is worth about 20 euros today.
• Natixis: the Natixis group has one of the cheapest stocks with strong potential in France.

Stock Market for Beginners: The Essential Vocabulary for a Successful Investment

As you start out on the stock market, you need to master a number of things. This is really the vocabulary of profitable stock market investing. Here are some notions you will absolutely need to learn:

• The stock market
• Stocks
• The initial public offering (IPO)
• Stock market dividends
• The Exchange Traded Fund (ETF)
• Bonds
• Stock market indices
• DAX 30
• Nasdaq 100
• CAC 40
• S&P 500
• Day Trading
• Forex Trading
• Stock splits
• Leverage
• Derivatives
• OPCVM
• Fundamental analysis and technical analysis
• The value or price of a stock

Buying Stocks: How to Manage Your Stock Market Investments

The best way to manage your stock market investments effectively is to put a few pillars in place. You need to define an investor profile and choose an excellent investment strategy. If you feel this task is difficult, you can choose to delegate your stock market investments to a professional.

Delegating Management of Your Investments to a Competent Stock Broker

Many investors use this method to put money into stocks with complete peace of mind. This technique suits people who have little time to devote to the various financial mechanisms.

To save time, it is recommended to delegate to a financial investment broker for the management of your trading. Do not worry: you will receive full reports on changes, losses, volatility and gains.

Getting Support from a Professional Stock Market Investor

To trade like a professional, sometimes you need to lean on experienced people. Stock market brokerage professionals have unique trading experience. They know exactly when and how to invest, and on which market.

They will run the analysis in your place and keep you away from beginner traps. With these professionals, you no longer need to do copy trading: your trades will reflect your own strategy and investment plan.

Conclusion: What Should You Remember About Stock Market Investing?

All things considered, stock market investing is a profitable investment over the long term. It offers returns of 8 to 10% per year — indeed, it is the most profitable long-term investment. Many investors commit to stock market investing because of the opportunities it offers. What is more, stock market investing for beginners requires no specific skills.

To get there, the investor simply needs to choose their tax wrapper, pick the financial products they want to invest in, then place the stock order. Stock market investing that pays certainly carries risks, but a few practical tips can help investors make maximum profits.

This article is for educational purposes only and does not constitute investment advice. The investments mentioned carry a risk of capital loss.