Investing in the stock market arouses the admiration and curiosity of amateurs. But for the most seasoned, it’s only a game against which you have to take precautions. So, in view of the lack of knowledge or skills in the field, the lack of time and training, we have written this brief article to guide you depending on whether you want to opt for a OPC or an ETF when investing.
Passive management: why should ETFs be preferred?
It is possible to invest in the stock market either by active management or by passive management. The second, lesser-known management method is less restrictive and remains the best way to better invest your money in the stock market. It is even more so if you prefer ETFs (Exchange Traded Funds) or stock market trackers. The latter are hybrid financial products that combine aspects of traditional stocks and funds that have a lower or even weak performance. ETFs are not only transparent, they are also inexpensive in terms of entry and/or management fees. With an ETF, you know what you are doing and Edouard Petit’s blog on ETFs will enlighten you on the stock market.
ETFs are housed in a fiscal envelope (life insurance, securities account and Equity Savings Plan) and can be sold or bought at any time. In order to fully benefit from your investment in passive management in an ETF, a minimum duration of between 3 and 5 years is recommended. They have very advantageous taxation, especially if you opt for life insurance. Because passive management follows the index (indicator following the evolution of several assets according to the sector, the size of the company, etc.), you must determine the one in which you intend to invest: the securities included, its weighting method, the investment scenario and your position. Passive management is certainly better, but you have to choose your ETF carefully.
The different types of mutual funds and their respective advantages.
OPCs ( Undertakings for Collective Investments ) are investment funds that are available in shares, bonds, or real estate; open to the general public and controlled by the AMF (Financial Markets Authority). Considered a form of active management, mutual funds offer many advantages. Among these are: risk reduction by investing all at once in a financial portfolio with several options; the saver with the possibility of delegating the management relating to his assets and finally the professional in finance (the manager) who has in-depth knowledge in the matter has a high probability of making fewer errors than a simple lambda saver taken in the audience.
This form of active management is very widespread in the stock market environment insofar as it is the investment funds that will be responsible for buying a given batch of assets and managing them to charge you the management costs.