France Livret A and savings: Why booklet A remains uninteresting despite its recent revaluation.
Faced with the rising cost of living, the state has just doubled the rate of pay for the favorite savings product of the French.
The number 1 investment for the French, livret A represented more than 343 billion euros at the end of 2021, according to the Observatory of Regulated Savings. It must be said that 55 million people hold this regulated savings product, the average outstanding amount of which is estimated at some € 5,800 per passbook!
In detail, however, 8% of the holders own 32% of the funds by placing – more than for good reason – their money on this account, which is certainly secure but also very low-paying.
France Livret A
If this savings product appeals, it is because it has a number of advantages: anyone, from the age of 16, can open an A-booklet (and only one) in any bank. She will then be able to deposit there but also withdraw her money freely as she sees fit, within the limit of a high ceiling set at € 22,950 for individuals (excluding the calculation of capitalized interest).
However, the money saved in this way is not only exempt from any taxation, but the capital is also guaranteed, which avoids any risk of loss. Faced with the well-known frightfulness of the French in terms of financial risks, this precautionary savings therefore enjoys a general plebiscite.
But this national craze omits a major drawback: its pay rate. Because if the A-book enjoyed its glory days by going so far as to exceed 8% interest in the 1980s, its yield has since plummeted to the point of becoming non-existent, despite several reforms to its calculation method.
France Livret A history
Since 2020, the interest rate has thus been obtained from the average of short-term interbank rates and that of inflation over the last six months. However, at that time, this savings product was only remunerated at 0.50%!
Faced with rampant inflation, the rate then rose to 1% in February 2022, then rose to 2% on August 1, 2022.
France Livret A investment
But this is still not enough for it to be financially interesting, as Thomas Perret, the founder of the fintech monpetitplacement, explains: "The delta between this new rate of the A-passbook at 2% and the inflation rate at 5.8% still illustrates a loss of purchasing power of almost 3.8%, if the French leave all their savings on this passbook".
As a precautionary savings account, this account should in fact only be used to compensate for hard knocks and to finance small pleasures. Therefore, it is advisable not to leave more than two or three months of salary there and to diversify the rest of your savings through products with a higher yield.
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