Life insurance is still considered the preferred investment of the French. But this term is abusive, as we know: life insurance is not an investment, but an investment package, which defines the tax and succession rules that will be applied, but does not indicate anything about the nature of the investments that ‘it contains.
Unit-linked life insurance: too many choices?
Let’s talk about investment vehicles. Funds in euros, the safe compartment of a life insurance policy, are making less and less money, savers having long understood that they have to turn to unit-linked units, which are riskier but have potential higher pay.
But you still have to navigate the wide range of units of account offered by insurers! Because there are plenty to choose from. Some contracts show hundreds ‒ if not thousands ‒ of account units available.
In the 21st century, it’s no longer a matter of selecting stocks: it has been proven time and again that the best way to select securities to put in your portfolio is to buy them all without thinking. Paradoxical but realistic, and above all less expensive, which increases the performance potential by the same amount: let’s not forget that the selection has a cost, in time (if you invest alone) or in management costs (if the we delegate this part).
Among the thousands of units of account available, it is therefore necessary to choose ETFs, these index funds with compressed costs which only follow indices in complete transparency. The universe is then considerably restricted and entirely composed of financially efficient products.
Asset allocation: key to performance in life insurance
The work is not yet finished. It is now a matter of concentrating on what is essential to the performance of a portfolio: asset allocation. How to find the right allocation between equities and bonds, and how to properly diversify your exposure in the world? 90% of the stakes are here.
This is Yomoni’s approach: to use ETFs exclusively, but to work hard on their selection, their distribution, and above all on their adequacy with the profile of the clients (investment horizon, risk tolerance, market experience, etc.), the all within the framework of a management mandate that requires minimal work from the client.
Thus, it is not a question of proposing a very risky allowance to a person who is likely to buy his principal residence in 2 years, for example. On the other hand, one should not be excessively conservative either for a long horizon such as retirement: the main risk on this deadline is to see one’s capital devalued by inflation if it is paid too little.
This is, moreover, one of the prejudices that dies hard: if we sometimes consider that life insurance no longer pays anything, it is when we consider that an investment in the fund in euros, completely avoiding the issue of asset allocation.
A recipe that works for Yomoni customers
And does it work?
Pretty good ! Yomoni affirms, based on a study of the fund market, that it performs better than 95% of diversified managements offering an equivalent level of risk. The latter, which mainly use investment vehicles other than ETFs, suffer from a headwind which naturally penalizes their performance, and forces them to make more efforts for an equivalent result.
With a 2021 performance of +22.7% for the riskiest profile (an exceptional year, even if the annualized average over 5 years has nothing to be ashamed of with +9.5% per year), Yomoni’s Profile 10 is an ideal solution for dynamic placement. The 10 profiles of the range make it possible to find a solution to all heritage needs, in a readable and transparent way.
Fintech is distinguished by the breadth of its range, since the management mandates are applicable to the four major financial envelopes available to savers: the securities account, the PEA, the pension savings plan and life insurance.
The ideal solution to invest your savings?
Customers seem convinced of this, and outstandings have more than doubled in one year, all envelopes in the range combined. And it’s probably not over.
Past performance is not indicative of future performance. ETFs are financial instruments with a risk of capital loss.
Content provided by Yomoni