How to invest your savings wisely?
Today, the quest for performance involves exposure to dynamic assets, particularly in the equity markets, but dynamic assets mean price volatility.
What will determine the performance of our investment? Our entry point and our exit point.
Let's take the example of a saver who:
Let's focus on the entry point. When is the right time to invest?
It is difficult, if not impossible, to answer this question.
Could regular payments be a suitable solution? You invest the same amount of money on a regular basis regardless of market conditions.
Let's imagine that we invest in the apple market. The price per kilo of apples varies according to the season and supply and demand, ranging from €1.50 to €4.50.
We are unable to accurately predict how the price per kilo will change, so we buy the same amount of apples each season for $300 without worrying about their price. This amounts to:
This is what is known as a "countercyclical approach."
At the end of the year, this strategy enabled us to smooth out our purchase price.
Let's imagine that we had bought the same 1,200 euros worth of apples in a single purchase at the worst time of the year. We would have only been able to buy 267 kg of apples at 4.5 euros per kilo.
This approach applies beyond the apple market and particularly to financial markets, especially stock markets.
How to invest your savings wisely?
Regular payments: a solution for building long-term capital without worrying about market fluctuations!
Today, the search for performance involves exposure to dynamic assets, particularly in equity markets, but dynamic assets mean price volatility.
What will the performance of our investment depend on? Our entry point and our exit point.
Let's take the example of a saver who:
Let's focus on the point of entry. When is the right time to invest?
It is difficult, if not impossible, to answer this question.
Could regular payments be a relevant solution? You regularly invest the same amount of money regardless of market conditions.
Let's imagine that we invest in the apple market. The price per kilo of apples varies according to the season and supply and demand, ranging from €1.50 to €4.50.
We are unable to accurately predict how the price per kilo will change, so we buy the same amount of apples each season for $300 without worrying about their price. This amounts to:
This is what is known as a "countercyclical approach."
At the end of the year, this strategy enabled us to smooth out our purchase price.
Let's imagine that we had bought the same 1,200 euros worth of apples in a single purchase at the worst time of the year. We would have only been able to buy 267 kg of apples at 4.5 euros per kilo.
This approach applies beyond the apple market and particularly to financial markets, especially stock markets.
By investing regularly throughout the year, we optimize our entry point into the markets without having to worry about price fluctuations.
We are thus able to counteract the negative effects of poor investment timing by smoothing out the average purchase price of our shares over time.
Please note that regular payments are not a magic solution. They allow you to optimize your entry point, but they do not eliminate all the risks associated with investing, particularly the risk associated with the price at which the investor will sell, which could be lower than the average purchase price.
And when I am satisfied with the performance achieved, what should I do?
There is nothing to stop you from partially securing your capital gains, or completely if your investment horizon has been reached, by arbitraging the corresponding sums and thus protecting them from the vagaries of the financial markets.
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