Best investments for young people in 2023: building wealth
When we are young, our priorities are different and often less focused on the future, let alone on investment. Many young working people want to invest. However, few of them take the plunge. Risk-taking, lack of time, money or financial education can be a barrier to investing. Don't panic! You don't need money to invest when you're young! Whether it is the purchase of a principal residence or a property intended for the hiring, your real estate agency in Collioure explains why it is in your interest to invest early.
The advantages of investing when you are young
According to an IFOP survey, only 34% of young people between the ages of 25 and 35 claim to be actively building up their assets. assets . Despite this low percentage, it is true that investing young is one of the fastest and easiest ways to grow your capital, with or without an initial investment. Investing when you are young is :
- Take advantage of a long-term investment horizon and see your investment income become more important. A way to buy with peace of mind.
- Enjoying the right moment of working life without family or financial responsibilities.
- To ensure a sustainable retirement, or even an early retirement.
- Take advantage of a low loan insurance rate.
- When you invest, the interest earned is added to the initial capital, which in turn earns interest. Investing early allows you to take advantage of this financial mechanism and reach significant amounts.
- Anticipate market fluctuations as well as possible and thus bear the risks.
- Do not pay taxes on the capital gain on resale after 30 years
- Anticipate a future project that could have an impact on the financial situation: purchase of a car, vacation, arrival of a baby, creation of a business, etc.
- Benefit from a better knowledge of the market and a good management of the investment strategy to better develop your assets and prepare your future.
What are the different investments?
Inflation and economic fluctuations encourage people to secure their savings. A good investment strategy will help you better manage your money so you can face the future with confidence and avoid difficult financial situations. Students and young workers are wondering about the various investment solutions that can be used to build assets or generate additional income. But where to put your money when you are a young worker in 2023?
Although they have a low return, bankbooks are an effective investment to secure your capital. Offered by banks, bankbooks do not require any fees for opening, closing or management and are completely free. An interesting solution without risk, even with little income. Among the bankbooks, we find :
→ The Livret A is a regulated savings product whose interest rate is set at 0.75% by the State, taking into account inflation, and is capped at 22,950 euros.
→ The Livret Jeune is also a regulated savings account. Dedicated to young people aged 12 to 25, it is an excellent introduction to saving. Its rate varies between 0.75 and 2% with a ceiling of 1,600 euros.
- PEL investment
The Plan d'Epargne Logement (PEL) is a regulated investment with a ceiling of 61,200€ and is eligible for a real estate loan. This solution allows young workers to save over a period of 4 to 15 years for a future real estate project. The amount of the loan is proportional to the interest earned over the term of the investment, which is why it's a good idea to look into it when you're young! The disadvantage of this solution is that the loan is obtained only after 4 years of savings. However, the PEL allows you to benefit from a preferential real estate loan rate of 2% since January 1, 2023.
- PEA investment
The Stock Savings Plan (PEA) allows you to buy shares on the stock market while benefiting from an advantageous tax system after 5 years of contract, namely a tax exemption of 12.8%. There is also a youth PEA dedicated to 18-25 year olds. However, it carries a high risk of capital investment.
- Life insurance
Life insurance is an essential tool for building up short-, medium- or long-term savings or for supplementing your income. This investment allows you to benefit from preferential taxation (gains are exempt from income tax if no withdrawals have been made) and a higher return than those of the PEL and bank passbooks. Life insurance is also characterized by its flexibility: you can make a payment or a withdrawal by redemption. However, life insurance is still recommended for people wishing to organize their estate.
- Real estate investment
Real estate investment is one of the most effective ways for a young active person in terms of return. You will find below a non-exhaustive list of the different types of real estate investments that you can make:
→ The primary residence is the first interesting solution because it allows to benefit from a less expensive real estate credit insurance, due to the age and tax advantages. However, it is not an investment.
→ Sociétés Civiles de Placement Immobilier ( SCPI ) consists of buying the shares of a real estate asset and not the property itself. As a result, you're relieved of the burden of managing, maintaining and paying for buying a house or apartment in Collioure . A good risk/return balance thanks to a 5.5% rate of return, but little capital guarantee.
→ The rental investment in 2023 is the best solution for young working people without great financial means. Unlike a primary residence, it allows you to build up a portfolio financed by rental income and not by your own income.
It's best to start with a small project, such as a studio, a car park, etc. parking or garage. These purchases are less expensive, which decreases the bank's risk in granting you a loan and are easily resold. Ideal to constitute a more substantial contribution for a future project.
Although many young people feel uninformed and unaccompanied in the real estate investment market, there are many tools and real estate training courses available to young professionals wishing to get into real estate investing.
Can we borrow to invest?
Borrowing to invest can be complex for young working people. Indeed, the investment is often made with savings. When you are young, your financial resources are limited, which can be a major obstacle. In addition, banks require a contribution of between 10 and 20% of the project to agree to a loan.
However, being a young, healthy working person and having a stable income allows you to take advantage of favorable borrowing conditions. Indeed, banks will be more inclined to grant you a loan or an advantageous insurance rate.