Where to invest your money tax-free: Effective investment strategies

Tax-free investments are a strategic solution for optimizing the growth of your wealth while minimizing the tax impact. By choosing your investments wisely, you can benefit from significant tax advantages. Whether through savings products or specific investments, financial tax exemption strategies enable you to generate attractive returns while limiting your tax burden.

It is important to note that any investment carries risks, including the risk of capital loss. Prudent, informed investment management is the key to achieving your financial goals while protecting your assets.

Tax optimization is the key to getting the most out of your investments. Placing your money in tax-free assets allows you to protect your earnings while growing them more advantageously. These solutions can be particularly interesting for those wishing to prepare for retirement, diversify their portfolio or simply maximize their net returns while reducing their tax exposure.

Would you like to know where to invest your money to avoid paying tax? Discover the various tax-free investments that allow you to optimize your savings while benefiting from attractive tax advantages.

The Livret A and the Livret de Développement Durable et Solidaire (LDDS)

The Livret A and LDDS are simple, secure investments. Although yields are modest, these passbooks offer total exemption from income tax and social security contributions, making them ideal solutions for those seeking a tax-free investment. These passbooks are a choice option for savers wishing to secure their capital while avoiding taxation.

Share Savings Plan (PEA)

The Plan d'Epargne en Actions (PEA) is one of the most popular investments for investors wishing to benefit from tax exemption on capital gains. Indeed, after five years of ownership, gains are tax-exempt, although social security contributions (17.2%) remain applicable. So, even if PEA taxation is reduced, it's important to take into account the social security deductions that apply at the time of withdrawal. The PEA is therefore an interesting option for those seeking a long-term investment, offering flexible management and a wide range of assets, while reducing taxation.

PEA-PME

The PEA-PME (Plan d'Épargne en Actions dedicated to SMEs and ETIs) is a special tax-advantaged investment scheme that provides direct support for small and medium-sized European companies. By choosing this plan, investors actively contribute to the dynamism of the local economy, while benefiting froma capital gains tax exemption after five years of ownership. However, capital gains are still subject to social security contributions. The PEA-PME stands out for its ability to offer potentially higher returns, thanks to fast-growing companies, while allowing for advantageous tax management over the long term. It's an ideal solution for those wishing to diversify their portfolio while supporting innovation and growth in SMEs.

Life insurance

Life insurance is one of the most widely used investment products in France. It offers significant tax advantages, particularly if the sums are withdrawn after eight years. Capital gains are subject to an annual allowance of up to €4,600 for a single person or €9,200 for a couple. Life insurance offers great flexibility in the choice of investment vehicles, from guaranteed euro funds to riskier unit-linked products. This investment combines both security and flexibility, while offering tax optimization thanks to a tax allowance on gains.

FCPI and FPI

Fonds Communs de Placement dans l'Innovation (FCPI) and Fonds de Placement Immobilier (FPI) offer interesting opportunities to diversify your portfolio while benefiting from tax breaks.

FCPIs enable you to invest in innovative companies, often in high-potential sectors such as healthcare, technology or energy, while benefiting from an income tax reduction of up to 18% on the amounts invested. These investments support the real economy, but require significant risk-taking, not least because the funds are often locked in for between five and eight years.

REITs, on the other hand, provide access to professional real estate assets such as offices and retail premises, offering interesting diversification compared with traditional investments. These funds generate regular income from rental income, while benefiting from specific tax advantages, notably on capital gains.

All investments entail risks, including the possibility of losing all or part of the capital invested. Strategic guidance helps you to assess the risks and choose the most appropriate options.

Private equity is increasingly attracting investors looking for diversification and tax benefits. By investing in this sector, it is possible to benefit from attractive tax mechanisms, not only to optimize one's assets, but also to take advantage of partial or total tax exemption under certain conditions.

The advantages of private equity

Private equity makes it possible to invest in unlisted companies, often at an early stage of their development. Returns can be substantial, and the tax treatment, which is more advantageous than that of stock market investments, reduces the fiscal impact. What's more, by including these investments in a PEA-PME, you can benefit from considerable tax advantages, including exemption from capital gains tax after five years. Private equity represents an attractive option for those wishing to diversify their portfolio while optimizing their tax situation. Eurazeo, a major player in private equity, combines expertise and rigorous management to support companies with strong growth potential and maximize their development. You can consult our dedicated funds and access exclusive opportunities from as little as €10,000.

It is important to bear in mind the risks associated with private equity, notably the volatility of the private market, the possibility of capital loss, and the difficulty of reselling shares before exit.
 

While tax-free investments offer attractive tax advantages, it's important to remember that every investment carries risks. Here are a few to consider:

• Risk of capital loss: Every investment carries a risk of loss, and even investments considered safe can fluctuate. Financial markets are influenced by many factors, and no investment option is totally loss-proof.
• Liquidity risk: Some investments, particularly in products such as private equity or specific funds, may be less liquid. This means you may find it difficult to access your money quickly if you need it.
• Variable returns: Returns on tax-free investments may be less predictable than those on more traditional investments. Depending on economic conditions and the sectors in which you invest, your returns may be higher or lower.
• Tax risk: Tax legislation changes regularly. It is therefore essential to monitor tax developments to anticipate any changes that could impact your investments.
• Risk of insufficient diversification: Concentrating your investments in a single category, even if tax-free, can increase overall risk. Diversification is key to limiting the negative impact of fluctuations in one sector or type of investment.

• Investment management risk: The performance of tax-free investments depends on the management of the products in which you invest. Ineffective management or a poor choice of products can adversely affect the profitability of your investment, even if it benefits from tax advantages.

   

Before making any investment decision, it's essential to understand these risks and to analyze the options according to your financial objectives and risk tolerance.

This article was produced by Eurazeo Global Investor for information purposes only. It should not be construed as a solicitation or offer for financial products, nor as legal, tax, financial or other advice. Readers are invited to contact their own advisors for any analysis relating to the content of this article. The information presented does not claim to be exhaustive. It should not be relied upon as the sole basis for an investment decision. Please refer to the legal documentation of the funds mentioned before making any final investment decision.

Past performance is not necessarily indicative, nor a guarantee of future results. Information on previous investments is provided solely to illustrate the nature of these investments and the related investment strategy and process. There can be no guarantee that the investments made by the funds will yield comparable results, or that the targeted returns will be achieved. Investing in Private Equity/Private Debt funds involves a risk of capital loss and illiquidity.