Faced with the economic crisis and job uncertainties, the French are looking for ways to protect their savings while still being able to access them in the event of unforeseen circumstances. Here's an overview of the options available.
Livret A: immediately available savings with limited returns
The Livret A is a regulated, tax-free, capped and secure savings product. Each bank determines its own opening threshold (generally set at 10 euros), while the maximum limit is set by the French government at 22,950 euros for individuals. The interest rate varies with inflation, but can be revised according to economic conditions. However, the interest rate remains the same for all banks. It changed on February 1, 2020 to 0.5%.
This investment allows you to dispose of the sums invested at any time, free of charge. However, its yield remains very limited and is likely to remain at 0.5% for a long time to come.
LEP: a means-tested product
The LEP seems to be little-known or little-appreciated by private individuals. And yet, with an interest rate of 1% net of tax per annum and a ceiling of 7,700 euros, it's not to be overlooked. Its opening is subject to income conditions. For 2020, the 2018 tax income shown on the 2019 tax notice must be taken into account. For a single person, the maximum taxable income is set at 19,977 euros. For a childless couple, it is raised to 30,645 euros.
PEL: the best-yielding medium-term investment
Life insurance's euro funds offer both a capital guarantee and a higher return than regulated savings accounts. According to the Autorité des marchés financiers (AMF), the average return on this type of investment was 1.5% in 2019, but forecasts for 2020 are not looking good. The net return on conventional euro funds could fall to between 1 and 1.10% this year, reports the consultancy Facts & Figures.
Against this backdrop, the Plan Epargne Logement (PEL) is the best-yielding medium-term investment. PELs opened since October 2016 yield around 1%. For those taken out previously, the average yield is 2.63%, according to the Banque de France.
The AMF advises savers who have savings to invest and are aiming for higher returns, but are aware of the risks involved, to turn to the financial markets. Over 15-20 years, for example, diversified equity investments deliver much higher returns than guaranteed investments. To get the best return, however, you need to invest regularly and in a diversified way.