The Ordinary Securities Account (OSA)
The OSA is "Compte Titres Ordinaire" in France it's the equivalent of the Brokerage Account is the US.
The Ordinary Securities Account (OSA) is a highly favored investment tool among investors looking to diversify their portfolios and access a wide range of financial assets.
Unlike more specific solutions such as the Equity Savings Plan (PEA), the OSA offers unparalleled flexibility. At WhiteBlock, we advocate for this type of investment due to its numerous advantages, particularly its ability to make you a true owner of the securities you hold. In this article, we will delve into what a OSA is, its benefits, and its relevance in a dividend-focused investment strategy.
What is an Ordinary Securities Account?
An Ordinary Securities Account (OSA) is a bank account that allows you to hold a wide variety of financial assets, including stocks, bonds, mutual funds, ETFs (trackers), and more. Unlike the Equity Savings Plan (PEA), it has no geographical limitations or deposit caps. This means you can purchase shares in companies from around the world without restriction.
Investment Freedom
The OSA’s primary strength lies in its flexibility. You can invest in shares of American, European, Asian, or emerging market companies without constraints.
For an investor seeking to diversify their portfolio globally, the OSA quickly becomes a preferred solution.
Ownership of Securities
At WhiteBlock, we favor the OSA for a critical reason: you genuinely own the securities you purchase. This means you directly hold shares in the companies you invest in, rather than owning a portion of a derivative financial product, as is the case with ETFs.
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Advantages of Direct Ownership:
By directly owning shares, you enjoy all the rights associated with them, starting with the right to receive dividends directly. You also theoretically have voting rights at general meetings (though, as an individual investor, the number of shares held is usually insufficient to influence company decisions significantly). -
Comparison with ETFs:
While ETFs are powerful tools for quickly diversifying a portfolio, they do not allow you to own the underlying shares. Instead, you own a fraction of a fund that replicates an index, which suits passive strategies. However, at WhiteBlock, we believe that direct ownership of securities via a CTO provides a higher level of control and transparency. By holding shares directly, you avoid the complexities and risks associated with derivative products, particularly synthetic ETFs, and you are less exposed to fluctuations during financial crises.
Security in the Event of Broker Insolvency
One last but crucial advantage: in the event of your broker's bankruptcy, your securities can be transferred without delay to another stable financial intermediary. The insolvent broker will return all financial securities owned by its clients. The OSA thus represents a robust, flexible, and secure tool for investors aiming to build and manage their portfolios effectively. At WhiteBlock, we advocate for this approach as part of a strategy focused on control, diversification, and long-term growth.
The OSA and the strategy
dividend stocks
The CTO: A Key Tool for a Dividend Investment Strategy
Another significant advantage of the CTO is its suitability for a dividend-based investment strategy. At WhiteBlock, we find this approach particularly appealing, especially for investors seeking to build a steady source of income.
Why Focus on Dividends?
Dividends represent a share of the profits distributed by a company to its shareholders. For some investors, receiving dividends provides a way to regularly take profits without selling their shares. It acts as a form of "forced profit-taking" that, in a passive strategy, helps secure a portion of gains.
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A Less Volatile Strategy:
By focusing on dividend-paying stocks, you generally invest in more stable and less volatile companies. Dividend stocks are often issued by large, mature companies with a proven ability to generate consistent profits, even during crises. -
The Example of "Dividend Aristocrats":
Some companies, known as Dividend Aristocrats, have increased their dividend payouts every year for at least 25 years. These include giants like P&G, Walmart, 3M, and Coca-Cola. Investing in such companies through a OSA offers a stable income stream while reducing exposure to financial market volatility.
Are Dividends Controversial?
It’s true that dividend strategies are not universally favored. Some investors prefer to focus on high-growth stocks, particularly in sectors like technology. These "growth" stocks can appreciate rapidly but are also much more volatile.
At WhiteBlock, we believe a dividend-based strategy is complementary to other approaches and offers a more conservative pathway. It’s especially appealing for investors looking to secure a portion of their gains while reducing exposure to the most volatile stocks.
Why Use a OSA for Dividend Investing?
The CTO’s flexibility and direct ownership advantages make it an ideal vehicle for dividend strategies. By holding dividend-paying stocks in a CTO, you can collect regular income while maintaining full control over your portfolio, all without geographical or financial limits.
With a CTO and a dividend-focused approach, you can strike a balance between stability and long-term portfolio growth, a philosophy we actively support at WhiteBlock.
Advantages and disadvantages of OSA
Advantages :
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No Contribution Limits: Unlike the PEA, which caps the amount you can invest, the OSA has no ceiling.
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Access to All Markets: You can purchase shares of companies in any country, enabling you to diversify your portfolio internationally.
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Real Ownership of Shares: Unlike ETFs, you are the actual owner of the securities, with all the associated rights.
Disadvantages :
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Higher Taxation: Capital gains and dividends are subject to the flat tax (PFU) of 30% in France, making the tax treatment less attractive than the PEA for French tax residents.
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Active Management Required: The OSA demands relatively active management. You’ll need to monitor your investments and adjust your portfolio based on market trends.
Conclusion
At WhiteBlock, we value the CTO for its flexibility and return potential. We believe this investment vehicle is ideal for long-term investors aiming to build a portfolio of solid and stable companies. By investing in dividend-paying stocks through a CTO, our clients can enjoy both ownership of their assets and a steady income stream from dividends.
WhiteBlock’s approach is straightforward: focus on robust, low-volatility companies to secure regular gains via dividends, while ensuring international diversification.
The Ordinary Securities Account (CTO) is a flexible and powerful option for investors looking to access a wide range of assets while maintaining full ownership of their shares. At WhiteBlock, we advocate for this type of investment due to its ability to provide total control over investments and the opportunity to develop an effective dividend strategy. With a CTO, you can invest in solid companies like Walmart, Coca-Cola, or P&G and enjoy a steady flow of income through dividends.
