Terrorized at the idea of losing money, French savers are cold on the stock markets, even if it means giving up on making their savings grow. Unlike banking products designed to accumulate precautionary savings , mainly made up of passbooks A and bankbooks, the Equity Savings Plan (PEA) meets a completely different objective.
A PEA to wake up your savings without taking reckless risks
Savers are massively reluctant to own listed shares, paralyzed by the fear of seeing their savings melt away. A terrible mistake when reviewing equity market returns over the long term.
The Plan d’Epargne en Actions or PEA, an essential instrument in the panoply of savers who have decided to invest in the stock market , will allow them to hold and manage stock market assets without tax confiscating their earnings. However, are stocks and the stock market for the average person and what are they missing out on?
Listed shares: almost unmatched performance over the long term
Numerous studies demonstrate the performance potential of equities. They are inevitably in a good position on the podium of the most profitable assets. According to a study by the Institute for Real Estate and Land Savings (IEIF**), which can hardly be accused of proselytizing in favor of the stock markets, at the end of 2020, equities returned on average each year 7.9% over ten years and 9% over thirty years.
The holding of shares and UCIT Sactions must nevertheless be carried out with the aim of building or enhancing diversified capital in shares over the long term or even the very long term. Imagining getting rich after a few months by playing the stock market generally leads to a great disappointment.
Time at the service of its equity investments
Market surges should not make us forget that crashes and jolts are inherent in the stock market and that investing in the stock markets can cause real cold sweats. Investing over the long term makes it possible to reduce fluctuations in the equity markets. In an attempt to overcome the ups and downs of the markets, investors are advised to act gradually by investing regularly and spread over time. Believing yourself to be smarter than the others and wanting to “timer” the market at all costs turns out to be a dangerous game in which even the most seasoned investors have burned their wings, betting on their ability to predict market highs and lows. Smoothing out investments is the most appropriate course of action and allows
Similarly, the reasonable investor will make sure to hold a diversified portfolio. This is one of the golden rules of investing in the stock market. This search for diversification can go through the holding of UCITS. These funds managed by professionals, whose investment strategy and philosophy are known in advance, and who seek to provide their clients with a performance superior to that of a benchmark index (which is referred to as active) meet the need for portfolio diversification. It is also possible to put ETFs in the portfolio. These passive management instruments replicate the evolution of an index or an asset and are known to be less expensive than active management. Finally, the investor, if he must have a long-term vision, cannot ignore the follow-up of his portfolio. To take full advantage of the performance of the equity markets, the investor will have to monitor the market and make sure to arbitrate, if necessary. Anyone who has neither the taste nor the time to do so should know that many companies offer management mandates to take over the management of a portfolio on behalf of an individual.
In the light of these elements and subject to these few usual precautions – ¬ is not a trader who wants to – ¬, savers can without firing a shot access the stock markets through a tool expressly cut for this purpose.
PEA: one of the last tax havens
To prevent hard-earned gains on the stock market from ending up in the hands of the tax authorities, savers have the ideal tool. The Plan d’Epargne en Actions (PEA) is aimed at all savers wishing to awaken their savings and operate an active management on the French and European equity markets without sharing the fruits of their investments with the tax authorities.
One of the great strengths of the PEA lies precisely in its tax system. Designed to encourage savers to invest in the stock markets with a long-term perspective, the equity savings plan benefits from an attractive tax regime for those who wish to gain long-term exposure to the stock market.
The PEA is one of the last tax shelters for investing in the stock market. Unlike a securities account , which also allows you to invest in the stock market, the equity savings plan offers the possibility of managing a portfolio of shares and funds outside the radar of the tax authorities. Capital gains made on the sale of shares and carried out within the PEA escape taxation. Dividends linked to shares listed on the PEA are not subject to tax either. With a PEA, no taxation is claimed, unlike what happens with a securities account, where the collection of dividends or capital gains is systematically accompanied by taxation.
If the PEA allows you to recover your investments without paying tax, it is all the same under one condition: not to make a withdrawal from your PEA for at least 5 years, (once again, we repeat, the Plan d’Epargne en Actions was designed as a long-term savings instrument) The longer the saver keeps his PEA, the more the exit tax regime is reduced. After five years of detention, the gains are definitively exempt from tax, only social contributions being due. In other words, withdrawals made after 5 years of the PEA will not be subject to the flat tax. Dividends are exempt as are capital gains. In the event of a loss materialising, the capital loss may even come, under certain conditions, to overwrite the capital gains resulting from
The taxation of the PEA proves to be particularly suited to active management based on frequent arbitrage. In addition, a partial withdrawal after the first 5 years of existence of the PEA no longer results in its automatic closure or the impossibility of making new payments, as was the case in the past.