What is a profitable investment?
Before I introduce you to the various investments and the most popular sectors of investment at the moment, let's take a few moments to redefine what a profitable investment is. What we mean by "profitable investment" is above all an investment or medium that is considered interesting in that it provides greater value than what the market currently offers. This positive differentiation may concern the composition of the investment, the management method or the risk/return ratio.
The various traditional investments and stock market investments :
The investment vehicles and types of investment most frequently used by private individuals are, of course, the investment products offered by banks. Here are some of the most popular examples:
- SCPI: Sociétés Civiles de Placement Immobilier or SCPI are collective investment companies whose purpose is to acquire a property portfolio with a portion of professional property. The advantages of SCPIs are diverse. In particular, it is known that a SCPI will allow access to the real estate markets without having to commit large sums of money. It also allows an interesting spread of risks on the nature and location of the properties with a simplified subscription. It should also be noted that the SCPI is managed by a company that takes care of all administrative aspects. Finally, the average profitability observed with these SCPIs is 5 to 6% net.
- Life insurance: Another investment contract, often favoured by investors with a strong aversion to risk, is of course life insurance. This type of investment is often used to pass on capital to relatives, to build up capital or to diversify investment vehicles with tax advantages. One of the advantages of life insurance is the fact that part of the capital can be invested in a fund in euros, which guarantees it. Beyond 8 years of ownership, taxation is also reduced on capital gains. It should also be noted that the offer proposed by life insurance is very varied with UCITS, shares, bonds or even SICAVs and that cash remains available at all times.
Online investment opportunities :
With the development of technology and digital technology in particular, banks are no longer the only organisations to offer investments accessible to individuals. Indeed, in recent years, we have seen the emergence of online CFD brokers who offer investments in a variety of assets such as currencies, commodities, equities, bonds and even crypto-currencies. We will come back to the specificities and advantages of each of these securities below.
Online investing therefore works through trading platforms and with CFDs or contracts for difference which allow speculation on the rise or fall in the price of an asset. In contrast to traditional stock market investment products, this is no longer a question of buying stocks or shares in companies but of trading on the trend in the price of an asset.
In concrete terms, you can open a buy or sell position here according to your expectations and close this position when the asset you are investing in has reached the objective you have set or the maximum level of losses you can sustain. The gain or loss for each position is the difference between the opening and closing price of your position.
Online trading platforms have developed strongly over the last few years and are now innovative with tools for technical and fundamental analysis of different markets and functionalities allowing for example the placement of automated trading orders. Although access to them is authorised to all, it is nevertheless advisable to have a good knowledge of the financial markets and investment in order to use them wisely.
The ranges of assets you can currently invest in:
As we have just seen, whether through a traditional investment product or through online trading, there are different types of assets in which you will be able to invest, with returns that will of course vary to a greater or lesser extent. Here is a quick presentation of these assets which are nowadays very popular with investors:
- Gold and other precious metals: Gold has always been a popular investment for both institutional and individual investors. Indeed, this raw material, as well as other precious metals, is considered a safe haven in that it has a reputation for evolving favourably in the event of a collapse of other financial markets.
- Oil and energy commodities: The energy sector is also an sector of investment considered interesting by many traders because it meets a significant global demand. It is therefore possible to speculate on the price of a barrel of oil or natural gas or to choose to speculate on the shares of companies specialising in this sector.
- Shares on the stock market: The stock market is of course the best known when it comes to investment. But buying shares in listed companies to build a portfolio and receive dividends is not the only way to speculate on these securities. CFDs on online trading platforms also provide access to the shares of companies included in the major international stock market indices.
- The crypto-currencies : This is a type of investment that has been booming in recent years. These dematerialised currencies, considered by some to be the currencies of the future, are in fact of interest to many investors. However, they require a good knowledge of this very specific field.
- Currency: The foreign exchange market is also a known investment opportunity. It is indeed possible to speculate on the rise or fall of an exchange rate of one currency in relation to another through the offer of Forex brokers that you will find online with a similar operation to that of CFDs.
- Stock market indices: Finally, if you wish to invest in the financial markets, you should always be aware that shares on the stock market are not the only assets on which to speculate. Indeed, you can take a more global approach by investing on the price of stock market indices, whether rising or falling.
Investing in rental property to generate income :
If you have a lot of capital to invest, the choice of rental property can be interesting. Indeed, investment in stone and particularly in furnished rental property is also considered a safe haven by many investors.
There are 4 different types of service residences which have specific interests but also constraints to be known, namely student, tourism, business and senior citizen residences. It is often a good idea to choose the type of residence that offers the greatest choice in the city in which you wish to invest. But you will also need to delegate the management of your residence to a manager through a commercial lease so that you do not have to deal with management problems. It is also this manager who will be responsible for guaranteeing the payment of the rents.
Of course, this type of investment can be profitable in the long term, but most often also requires long-term debt if you take out a property loan for this purpose.
Finally, it should be noted that another investment that is currently very popular with individual investors is investment in art. Indeed, acquiring works of art from artists who are in full progress and who will undoubtedly gain in value is a wise choice, but here again, this requires an excellent knowledge of this field and a relatively large amount of investment capital.
If you are always looking for a profitable investment, you must first of all define what profitability means to you. Any investment presents a risk of which you should be aware and there are very few investment products or instruments that can guarantee you a profit.
On the other hand, if you choose to invest in the markets on your own, you must first ensure that you have sufficient knowledge to understand the uncertainties and be able to carry out complete and relevant analyses of the stocks you trade.