How to properly manage my assets

How to properly manage my assets

How can I manage my assets properly? Optimizing the management of your assets is essential to secure your financial future and carry out personal projects. Whether you have few or many assets, it is essential to organize them well, make them grow and anticipate their future transmission.

However, between complex financial products, changing taxes and the ups and downs of life, it is not always easy to navigate. Many feel helpless and therefore put off this work, which is nevertheless crucial for their overall financial situation.

Through this article written with heritage consulting professionals, I want to give you practical keys to see things more clearly. Together we will discuss how to calmly analyze your current situation, define your medium and long-term objectives, as well as implement appropriate strategies to achieve them.

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My objective is to allow you to approach the management of your assets more calmly, so that it can be a real lever to realize your projects. Follow the guide to finally become the informed actor in your financial future!

🥀 Protect your assets against health risks

The occurrence of a serious health problem, an accident or a premature death in a family can jeopardize the financial balance with heavy repercussions on the heritage. Between the loss of income linked to sick leave and healthcare expenses, the impact is considerable if we have not been able to protect ourselves.

Here are the different contracts allowing you to protect your assets against health hazards.

✔️ Long-term care insurance

Long-term care insurance is a type of private insurance that protects against the risk of loss of autonomy. It operates on the principle of an annuity paid to the dependent person to enable them to finance the assistance necessary to maintain them at home or in a specialized establishment.

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Long-term care insurance helps protect against the financial consequences of loss of autonomy. If you become dependent, the insurer covers all or part of the necessary expenses: home help costs, placement in a specialized establishment, adaptation of housing, etc.

Daily allowances are also provided. This contract covers the rest to be paid for once the public aid has been deducted.

In addition to the level of guaranteed dependency, carefully study the specifications of the long-term care insurance: amount of capital or annuity provided for, possible deductible, conditions for revaluation, terms and conditions for bringing guarantees into play, etc.

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Some contracts offer assistance to coordinate stakeholders. Also compare your current coverage to that of your spouse and ascendants. Long-term care insurance must be chosen carefully to full protection.

✔️Death insurance

The death insurance contract, also called death life insurance, guarantees the payment of a predefined capital to the beneficiaries in the event of the death of the insured. This capital allows loved ones to cover funeral and inheritance costs, and to compensate for loss of income. The amount must be set according to the real needs of the beneficiaries and the existing assets.

The designation of beneficiaries is crucial in the death insurance contract. Remember to update it regularly in the event of a change in family situation. You can opt for a single beneficiary or divide the capital between several people. A reversibility clause allows the capital to be redistributed on the death of the spouse, for example.

It is recommended to finely articulate the death insurance with a funeral contract. The latter will make it possible to directly finance the funeral expenses, the death capital then returning to the relatives to compensate for the loss of income without encumbering the estate.

Designate a close to trust as beneficiary of the funeral contract to manage the funeral as you wish. An optimal strategy consists of covering the funeral via a dedicated contract, then guaranteeing the surplus for the heirs.

✔️ Funeral guarantee

The funeral contract or funeral insurance allows you to build up capital which will be paid at the time of death to directly finance the funeral according to your wishes. This prevents the family from having to advance funds in an emergency. The amounts saved also generally grow into a secure euro fund. This funeral contract therefore provides real peace of mind.

There are two formulas: the funeral fund which pays a lump sum to the beneficiaries to freely organize the funeral. Or the funeral contract which guarantees coverage of the cost of the funeral up to a ceiling with a partner.

In both cases, pre-financing secures this aspect. To choose the amount, accurately estimate the budget needed for your ideal funeral.

Addressing the issue of funerals is never easy. However, it is wise to prepare this in advance to avoid making decisions in an emotional emergency. Let your family know your specific wishes: type of ceremony, place of burial, funeral notice, flowers, etc.

✔️ Supplementary health insurance

Health insurance is a social protection system that allows total or partial coverage of health expenses. It can be supplemented by private or mutual health insurance. However, it constitutes the pillar of coverage of health expenses.

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Supplementary health insurance covers health care and expenses not reimbursed by the Social Security : fee overruns, hospital daily rate, dental prostheses, osteopathy, etc.

It allows to avoid the advance of costs. Carefully analyze the table of guarantees: reimbursement rate according to the items, possible ceilings, deductibles, etc. Choose extended guarantees for complete coverage.

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Favor formulas including the reimbursement of excess fees in non-contracted sectors, the management of the private room, the maternity package or even specific pool guarantees.

✔️ Loss of income guarantee

The loss of income guarantee provides you with a replacement income in the event of sick leave or accident. It compensates for the drop in salary due to incapacity or invalidity.

Check the waiting periods, guaranteed income, types of stoppage covered, and non-forfeiture in the event of permanent disability in particular. This financial safety net is essential in the event of a prolonged shutdown.

It is possible to maintain this guarantee after retirement. The accidents of life spare no one! The disability pension will be a welcome supplement to income in the event of a serious problem occurring at advanced age.

Contributions are minimal in relation to the protection provided. Don't cancel too much quickly your loss of income insurance in anticipation of retirement. Health hazards have no age.

✔️ Borrower insurance

Borrower insurance is an insurance contract that guarantees the repayment of a mortgage or consumer loan in the event of the occurrence of certain events.

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Compulsory for all mortgages, borrower insurance reimburses the loan in the event of the death or disability of the insured. This guarantee prevents the debt from weighing on relatives. Analyze the TEG well with and without insurance to compare offers.

The health questionnaire is based on the individualized rate. Revise upward loan coverage for stronger protection. Take the time to compare the contracts offered by the bank and by insurance companies. Prices differ significantly depending on the guarantees and options included.

Study in detail the general conditions of the borrower insurance. In addition to death, make sure invalidity, incapacity and loss of employment are also covered. Check the relapse and recidivism clauses which avoid the forfeiture of the contract.

🥀 Protect my assets against inflation

With inflation, the prices of goods and services increase, which can have a impact on your savings and your purchasing power. If you don't take steps to protect your assets, you risk lose value over time. This can make it harder to achieve your long-term financial goals.

✔️ The deleterious effects of inflation on savings

A high inflation rate like the one we are currently experiencing has a very negative impact on savings if no measures are taken to protect against it. Indeed, with the general rise in prices, our purchasing power decreases year after year if our cash in the bank account brings in nothing or very little.

With an inflation rate of 5% as currently, €100 placed without yield in an account would be equivalent to only €95 in purchasing power the following year. The real value of our available savings is thus inexorably eroded.

It is for this reason that it is crucial to grow your savings via investments offering at least a return equal to the level of inflation. Otherwise, we become a little poorer each year even though we build up a pot of current euros in our accounts. A real paradox that must be put to rest quickly!

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Inflation acts like a parasite that feeds on the value of our savings. This is why solutions exist to counter this scourge, which we will detail in a second step.

✔️ Rental real estate, a proven safe haven

You will have to learn to manage real estate property. Faced with the threat of inflation, rental property is a proven safe haven to protect purchasing power. Indeed, this investment presents several significant advantages in the current situation.

First of all, rents are inherently indexed to inflation. Each year, they are reevaluated on the basis of the Rent Reference Index which tracks the increase in consumer prices. Your rental income therefore naturally increases at the same rate as inflation, protecting your purchasing power.

Furthermore, the real estate market is structurally in deficit. Demand is much higher than supply, particularly in certain tight markets such as large metropolises. Your property will be easily resold and re-rented, providing long-term security.

Finally, real estate loan rates still remain moderate and constitute an interesting leverage effect for building assets. Reasonable indebtedness remains a winning strategy in times of inflation.

✔️ Gold, effective protection against crises

Gold has long been considered a financial refuge and an effective protection against economic crises, notably inflation. During times of inflation, the value of currencies tends to decline, which can erode investors' purchasing power. However, gold generally maintains its intrinsic value over time, making it an attractive asset for wealth protection.

The main reason behind gold's resilience to inflation is its tangible and limited nature. Unlike fiat currencies, which can be printed in unlimited quantities by monetary authorities, gold is a precious metal that cannot be artificially reproduced in large quantities. Its scarcity and constant demand make it a tangible asset that retains its value through economic cycles.

Additionally, gold is often seen as a form of universal currency, meaning it retains its value on a global scale. Investors often seek to allocate a portion of their portfolio to gold as a diversification strategy, providing potential protection against inflation and financial market fluctuations. In times of economic uncertainty, gold often acts as a safe haven, attracting investors looking to preserve their wealth.

✔️ Stay invested for the long term

In the event of an inflationary surge, the mistake would be to panic and sell all your holdings. On the contrary, it is recommended to remain invested over the long term to take advantage of the market recovery.

The main pitfall is to leave your investments at the worst moment, under the influence of emotion. Keep your assets, the situation will eventually stabilize. With these adapted solutions, you will be able to get through this turbulent period more serenely. Your wealth will come out consolidated.

🥀 Protect my assets in the event of divorce

What becomes my estate in case of divorce ? Divorce is always emotionally traumatic. But it can also have complex material and financial repercussions depending on the matrimonial regime.

You will thus be better equipped to calmly tackle this ordeal which is also delicate on a material level.

✔️Division of real estate after divorce

In the event of divorce, the first question often concerns the future of the family home and other common real estate. In reality, everything depends on the matrimonial regime chosen at the time of the marriage.

In the community regime, property purchased during the marriage is legally considered as common possessions of the couple, half owned by each spouse.

So in the event of divorce under this regime, the real estate acquired jointly during the union is divided in strictly equal parts. Each ex-spouse receives 50% the value of the property or properties concerned.

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Conversely, in the separation of property regime, no partition takes place in case of divorce. Each spouse remains the exclusive owner of the real estate acquired before and during the marriage.

Thus, if the family home was purchased by one of the spouses before the marriage, this property reverts to him in full in the event of divorce. There is no distinction between pre and post union possessions.

✔️ Sharing savings and financial investments

Beyond real estate, divorce also raises the question of the sharing of savings placed in bank accounts as well as various financial investments such as life insurance. And there again, everything depends on the initial matrimonial regime.

In the context of a community of property, the sums placed in joint accounts and the life insurance contracts taken out in the name of the two members of the couple are considered as common heritage.

Thus, in the event of divorce, the balances of joint bank accounts are shared in strictly equal parts, regardless of which of the spouses actually contributed to these accounts. Everyone receives 50% of the available amounts.

Under the regime of separation of property, point of sharing regarding savings and investments: each spouse remains the exclusive owner of the bank accounts and contracts they hold, whether they were established before or during the marriage.

Everyone therefore keeps all of their personal savings, the balances of their individual accounts, their life insurance contracts, their PEA, its stock market investments... Il there is no distinction between assets before and after the marriage.

✔️ The complex question of pension sharing after divorce

Divorce also has significant repercussions on the pensions and retirement annuities of the ex-spouses. The rules are quite complex, but it is essential to know them well to defend your interests.

Under certain conditions, a former spouse may in fact be entitled to part of his former partner's retirement pension if he is in a more fragile financial situation. It's not systematic : several criteria must be met and expressly requested.

To be able to receive part of the pension of your ex-spouse, you must meet all of the following conditions:

  • Have been married for at less than 2 years before the divorce;
  • Not having remarried after the divorce;
  • Be at least minimum 62 years old or 60 years old in the event of incapacity for work;
  • Justify personal resources below a ceiling set at €21 per year. This ceiling is increased in the case of dependent children.

If all these conditions are met, you can apply for your survivor's share during the lifetime of your ex-spouse. After his death, you will also be able to claim the classic survivor's pension for widows and widowers.

✔️ The essential role of the compensatory benefit

During a divorce, the judges can decide to grant a compensatory allowance to one of the ex-spouses, to compensate for an excessive disparity in the respective living conditions after the break-up.

This compensation is granted by the judge to the spouse considered to be the most financially fragile following the divorce, to avoid excessive insecurity. The conditions for obtaining are:

  • A judicially pronounced divorce (therefore excluding divorce by mutual consent);
  • A significant difference in standard of living after divorce;
  • A contributory capacity of the other spouse to finance it.

It is not an automatic due: it must be expressly claimed from the family court judge.

✔️ Alimony for the couple’s children

In addition to the compensatory allowance, divorce also involves the payment of alimony to provide for the needs of the children, regardless of the marital regime.

This obligation continues as long as the child is not fully independent. The amount is set according to the resources of each parent and the needs of the child. It is possible to provide a direct payment between the parents or support by the CAF, especially if the debtor does not pay.

Exceptional expenses (medical expenses, tuition…) are shared in proportion to the income of each parent. Here again, in the event of a conflict situation, the judge will decide based on the interests of the child and the previous standard of living of the household.

✔️ Optimize your wealth tax after divorce

Divorce sometimes results in a transfer of assets from one ex-spouse to the other as part of division. From a tax point of view, it is possible to optimize these transfers. If joint real estate is transferred as part of the divorce, each spouse will be able to benefit from tax deductions for the duration of ownership on their share.

An advantage not to be overlooked in the event of the resale of a property following a divorce, especially if its value has increased a lot.

If the divorce involves the repurchase of financial securities held jointly, it is possible to spread your taxable capital gain over several years. Concretely, the capital gain realized during the transfer of the securities to the ex-spouse is frozen for tax purposes. It will only be taxed in the year in which the funds are actually withdrawn.

This technique makes it possible to reduce the amount to be report every year. To be studied on a case-by-case basis depending on the amounts involved.

✔️ Optimize your budget after divorce

Once the divorce has been finalized and property has been divided, it is essential to rebalance your personal budget to maintain your standard of living. After years of living together, divorce automatically implies a drop in income. You have to adapt your lifestyle so as not to be taken by surprise:

  • Reduce certain constrained expenses (housing, car, subscriptions, etc.)
  • Find additional income if possible
  • Dip into your savings in a measured way

Anticipate the main expenditure items to be revised. And get help from a financial advisor if needed. If the divorce awarded you capital from the sale of joint property, invest it intelligently. Favor prudent investments, available at any time to supplement your income.

🥀 Asset management mistakes to avoid

Optimizing the management of one's personal wealth is a demanding exercise. Between the many possible investments, the erratic evolution of the markets and complex taxation, it is not always easy to make the right choices. However, some wealth management mistakes come up frequently and affect performance or increase the risk of your portfolio.

✔️ Focusing excessively on short-term returns

When one is interested in an investment, the return displayed is of course an essential criterion. However, a common mistake is to focus only on performance immediate or in 1-2 years.

However, to grow your assets over the long term, it is much better to focus on the profitability in 5, 10 or 20 years. Investments with the best initial returns are also often the riskiest over the long term. They expose them to a high risk of loss of capital in the event of a market downturn.

It is therefore necessary to adopt a long-term vision and to favor more sustainable assets, even if their initial profitability is lower. The main thing is to aim for the best possible balance between return and risk over time.

✔️ Only look at the gross yield without taking into account fees

The yield or the annual performance put forward in the communication designates the gross yield, before fees and before taxes.

However, to correctly estimate the real profitability of an investment, it is essential to consider the net return, after deduction of all costs related to this investment. These fees may crop from 1 to 4% return each year depending on the investments.

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These include annual management fees for an investment fund, entry or arbitrage fees for life insurance, transaction fees for rental property...

These recurring costs eat away at a significant part of the performance. It is therefore imperative to take them into account in your comparative analysis of the various investments considered.

✔️ Placing all your eggs in one basket due to lack of diversification

This is a basic principle in wealth management: diversification of investments is fundamental to optimize the return/risk couple. By concentrating all your investments on a single asset class (shares, bonds, real estate, etc.), you expose yourself to increased risk in the event of poor performance of this market.

Conversely, by taking care to distribute your assets well over different types of investments with little correlation between them, the overall risk is considerably reduced.

Thus, holding shares, real estate funds, unit-linked life insurance, interest rate products, and cash is essential to diversify risks and pool returns.

✔️ Ignore recurring costs that impact profitability

As mentioned above, the costs generated by investments (management fees, entry fees, arbitration fees, transaction fees…) reduce their net return to the saver by the same amount.

However, these costs are too often overlooked or underestimated by individuals when making investment decisions. They focus on gross return or past performance, obscuring this impact of fees.

However, in the long term, these recurring costs can significantly reduce the profitability of an investment. It is therefore essential to fully integrate this dimension into the comparative analysis of the return/risk pair. To optimize its heritage, look closely at the costs is as important as performance.

Thus, low-cost equity ETFs will become much more profitable than a high-cost equity fund, even if their gross performance is similar before costs.

✔️ Placing too much importance on past performance

"Past performance is no guarantee of future performance“. This ritual phrase in business documents contains great truth.

In wealth management, it is tempting to prioritize investments that show the best returns spent over 5 or 10 years. Those who have performed best in the past seem to be the most likely to continue their momentum.

However, the financial markets are constantly evolving and the changing contexts make any forecast risky. Who would have predicted 10 years ago the collapse bonds or the real estate boom?

Rather than relying solely on a flattering track record, it is better to study the fundamentals and future prospects of an investment in more depth before deciding to invest. Its solidity and future potential take precedence over its performance already achieved.

✔️ Make decisions driven by emotion

Wealth investment requires perspective and rationality to make the right decisions. Unfortunately, emotion can also play bad tricks on individuals. You will therefore need to have a emotional intelligence solid.

For example, some are tempted to sell all their investments in panic during a violent stock market crash. Conversely, others are led to overinvest in highly speculative assets riding a bubble, for fear of missing an opportunity.

Making emotional decisions in the face of high market volatility most often leads to costly mistakes. It is much better to maintain composure and discernment in all contexts.

✔️ Trading too much without a real long-term strategy

Some individuals addicted to the markets end up multiplying the back and forth between investments in an irrational and emotional way.

However, this instability generates high transaction costs that significantly affect returns. Moreover, this “trading” compulsive is done most of the time without a real long-term asset strategy.

On the contrary, an asset allocation is optimal when it is defined rationally according to its objectives, then gradually adjusted according to changes in the markets and its situation.

✔️ Not taking into account the impact of inflation

Inflation, even moderate, eats away every year little of the value of your uninvested assets. In the long term, its impact is far from negligible.

Let's take an example : with only 2% annual inflation, €100 placed in your current account will lose 000% of its value in purchasing power over the after 10 years.

It is therefore essential to regularly factor in the effect of inflation in the valuation of your investments. Certain classes of assets precisely make it possible to protect against inflation.

✔️ Neglecting tax optimizations

Even with an equivalent gross return, the taxation applicable to two investments can vary greatly and impact the net return received.

Know how to optimize the taxation of your assets by using dedicated envelopes (PEA, life insurance...) is therefore essential. This can earn you several net return points each year through taxes and reduced social contributions.

A wealth approach that takes the tax dimension into account in depth becomes essential beyond a certain amount of assets. Professional advice is often necessary.

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