Investing that pays off: Strategies for optimizing your returns over the long term

In an ever-changing economic environment, more and more investors are looking for investment solutions capable of generating attractive returns, while ensuring prudent risk management. An "investment that pays off" is not limited to the search for gross performance: it relies on rigorous portfolio construction, an appropriate investment horizon, and controlled diversification.

This guide presents the various high-potential asset classes, the relevant strategies for optimizing profitability, and the precautions to be taken in managing the associated risks.

Discerning investment allows you to meet a variety of wealth objectives:

• Enhance your capital over the long term
• Prepare for retirement or major life projects
• Generate additional income (dividends, rents, coupons)
• Pass on tax-optimized assets

Maximizing returns means above all giving meaning to your savings, by putting them at the service of a coherent, sustainable financial trajectory, adapted to your risk profile.

Certain asset classes have historically offered an attractive risk/return profile. Their selection will depend on the investor's profile and specific objectives.

Listed equities

Equities, particularly those of growth companies, offer the potential for long-term capital gains and dividends. They are, however, subject to market volatility.

Equity Savings Plan (PEA)

The PEA allows you to invest in European equities while benefiting from tax advantages (tax exemption after 5 years). It's an effective tool for combining performance and tax optimization.

Life insurance

With a highly flexible choice of investment vehicles (euro funds, unit-linked products), life insurance is suitable for all investment profiles. It also benefits from an attractive tax framework after an 8-year holding period.

Bonds

Bonds provide regular income through coupon payments. High-yield corporate bonds can offer enhanced performance, albeit with a higher credit risk.

Real estate

Rental real estate, or via collective vehicles such as SCPIs, can generate passive income. It is a traditional pillar of wealth diversification strategies.

Private equity

Private equity provides access to unlisted companies, often those undergoing rapid growth or transformation. This type of investment offers the prospect of significant returns, albeit with a long time horizon and reduced liquidity.

Eurazeo offers individual investors accessible private equity solutions, co-invested with its institutional funds, to gain access to proven strategies.

Crowdfunding

Crowdfunding enables investors to support entrepreneurial projects in exchange for a potential return. This type of investment is reserved for well-informed investors, due to the risks of default or illiquidity.

Cryptoactives

Crypto-currencies offer high potential returns, but are extremely volatile. They should be reserved for a minority allocation, and integrated with caution into an overall strategy.

Commodities

Precious metals and natural resources can play a diversification and hedging role, particularly in times of inflation. These assets remain sensitive to economic and geopolitical cycles.

Sustainable performance is based on a structured approach combining rigor and flexibility.

Diversification

Spreading your portfolio over several asset classes, geographical zones and business sectors dilutes risk and smoothes performance.

Thematic investment

Certain growth sectors, such as emerging technologies or the energy transition, offer long-term growth opportunities. Identifying and integrating these trends can enhance the portfolio's return potential.

Leverage

Leverage (borrowing to invest) can amplify gains, but it also increases the risk of loss. It should be used with caution and reserved for experienced investors.

Performance monitoring

Implementing performance indicators (IRR, volatility, Sharpe ratio) enables you to assess the effectiveness of your investments, and arbitrate if necessary.

Any quest for returns brings with it risks that need to be identified and actively managed.

• Market risk : fluctuations linked to economic cycles
• Credit risk: potential default of an asset's issuer
• Liquidity risk: difficulty in selling an asset without a discount
• Concentration risk : excessive exposure to a particular sector or asset.
• Regulatory risk : impact of legislative or tax changes

A balanced strategy combines performance ambition and management discipline.

Performance analysis is essential for adjusting strategy over time.

• Internal rate of return (IRR): measures actual performance over a given period.
• Annualized return: enables comparison between funds of different durations.
• Risk/return ratio: weights performance against volatility
• Fees and charges: their impact on net performance must be included in the analysis.

The investments that pay off are not necessarily the most spectacular ones, but those that are part of a coherent, controlled strategy aligned with the investor's personal objectives.

By combining diversification, rigorous asset selection, active management and a long-term vision, it is possible to build a high-performance, resilient portfolio.

This article was produced by Eurazeo Global Investor for information purposes only. It does not constitute a solicitation or offer to invest, nor does it constitute legal, tax or financial advice.

Investors are invited to consult their usual advisors before making any decision. Fund legal documentation should be consulted carefully. Past performance is no guarantee of future results. Investment in private equity and private debt carries a risk of capital loss and illiquidity.