Stock market, real estate, savings … the right options to face inflation in 2022

Poor planet! Barely emerging from one of the most serious health crises in its history, it has faced, since the end of February, serious economic consequences of the Russian invasion of Ukraine: rising prices for energy, raw materials and commodities (Russia and Ukraine account for 30% of world wheat exports, 40% of gas and oil trade in Europe), high inflation (more than 4% in France), low household consumption and business investment programs …

This will lead to a noticeable slowdown in global growth in 2022. It is likely that it will reach only 3%, against the expected 4.5%, a loss of wealth creation of 850 billion euros! A deteriorating economic situation will benefit the usual “safe haven” investments (gold and real estate), but will have a lasting impact on the stock markets: making money through stocks will only be possible by investing wisely and methodically, while the search for good plans that will appear once you put in place weapons and the return of the geopolitical context to normal.

Stock market

High inflation will affect the profits of listed companies. In the face of economic shocks from the Russian-Ukrainian conflict, most countries have revised their growth rate down for 2022, particularly in Europe, where it will peak at 2% (versus 3.5% expected). France, which is less dependent on its foreign trade, does a little better, with an estimated rate of 2.5%. They are all one point lower than expected in 2021, especially since inflation, fueled by higher energy prices (+35% in one year) and those related to food (+5%), should swing in 2022 between 3.5 and 4.5% , levels not seen in more than 20 years.

The results of companies, and therefore the prices of their stock markets, will be affected. Even if the February mini-crash is erased (the Russian attack caused the CAC 40 to fall by about 15%), the beginning of the second half of 2022 will still be very volatile: it will be necessary to invest in stocks gradually, preferably via funds ( The manager selects high-potential securities himself), or directly, by watching the bounce of unfairly slaughtered securities, such as Airbus or Sanofi, or by targeting national security-related securities, such as Alice or Dassault Aviation.

real estate prices

Scarcity of building materials boosts the rating of new homes. Inflation back above 4% is not bad news for real estate investors. First because rents are linked to this inflation (no loss in the purchasing power of lessors), then because credit rates, even if they have increased in recent months, remain very low on the cost of living: by borrowing at 1.50% over 15 years when inflation peaks at 4 %, and we give back to the banker with monkey money, so that we get richer!

But beware: The scarcity of building materials, many of which came from Russia (cement, steel, wood, etc.) will lead to higher prices for new construction. In cities where the rating exceeded 5,000 euros per square meter last year, such as Rennes, Montpellier or Nantes, you have to be very selective to ensure a return of more than 4%, even in cities that rely on Pinel and Censi – Bouvard’s tax-exempt schemes.

Raw materials

Green energies are preferred over oil, the price of which has already risen a lot.

+ 25% for wheat and corn, + 20% for copper, + 35% for oil … The war in Ukraine caused the price of basic commodities to rise. Despite the slowdown in global growth in 2022, it could continue to rise, especially industrial metals, for which demand from China should intensify (the real estate market is recovering).

Gold is also a good bet: it should continue to play its role as a safe haven. Petroleum? Be warned, it has already gone up a lot over the past year (+65%), and is now the subject of all speculation: its price should fluctuate significantly in the coming months. We prefer to bet on renewable energies through the tracker, a sector bolstered by the desire of European governments to be less dependent on hydrocarbons and to speed up their energy transition.

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Mortgage

Prices remain affordable, but the blessed days of cheap money are over.

Between 0.25 and 0.35 points: this is the increase in the cost of credit that has been observed since the beginning of 2022. In the wake of rising inflation, and therefore in long-term interest rates (the 10-year OAT, the norm in this region, was about 1% last April), Thus, mortgage loans are becoming more expensive. Over the course of 20 years, we can currently go into debt at 1.30% (excluding insurance), and according to expert predictions, rates should continue to slowly rise, until the end of the year flirts with a threshold of 1.80 or 2%.

If the blessed era of cheap credit (less than 1%) is over well and truly, it will still be possible to get into debt at a reasonable rate in 2022, at least 1.5 or 2 points below inflation. Investors and candidates to join can also count on the banks, which have the same credit production targets as in 2021 (a record year when 273 billion euros of mortgages were drawn down) to not be oversold. Ranking, or even to give discounts of about 0.1 to 0.2 points just before the summer, a key period of the stone.

life insurance

There is no recovery in sight for the rates of return on the risk-free Euro funds. One would have thought that higher long-term interest rates would give a boost to life insurance, whose returns have been declining for 10 years. Unfortunately, it won’t! The bonuses paid by contracts depend largely on the bond bonds companies already have in their portfolio (they can hold up to 30 years). As returns on these ancient securities are higher than those purchased today, it is clear that returns will continue to erode.

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Commitments

Avoid investing in these products, they are likely to make you lose money. Invest yourself in government or corporate debt securities, in other words buying bonds (or bond funds) from your bank or broker?

The idea makes sense given the long-term rise in interest rates. Bad plan in fact: not only will the increase remain modest in 2022, so the yield offered will be much less than inflation, but when prices rise, the value of the acquired bonds, which is less profitable than the newly created ones, automatically declines. You are more likely to lose money with this type of investment than to gain.

bank books

Even in the case of operations at “bromo” rates, they produce less than booklet. There is nothing to hope for in 2022 from the ledger accounts, this investment is meant to increase cash flow. And for good reason: They’re not indexed for long rates, as they are for mortgages, but for short rates, which have been at ground level for years. The 3-month Euribor, the most representative short, is currently negative (at the end of April it was -0.40%).

Thus, the prices offered by these products are very low, including during promotions launched by some online organizations. Even if the European Central Bank decides to raise interest rates before this summer in order to counter inflation, which is not the most likely scenario (it will smash growth, which is already faltering), it is rare for the banks to book a higher rate. of those for Livret A, currently set at 1% after tax.

>> This article is in the contents of the new Capital Special Edition, available on newsstands and on Primashop

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