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Savings: what are the most profitable investments?

Published on December 03, 2021 - 3 mins reading time
Individuals Savings Life insurance

According to a study recently published by Le Cercle de l'Epargne, the French consider rental investment to be the most profitable investment, ahead of equities and life insurance euro funds. Next come Livret A passbook savings accounts, which now offer an interest rate of 0.5%, and bitcoin, which is particularly attractive to young people.

Rental investment, the solution of choice

With a rate of 0.5%, the Livret A offers a negative real return of -1.5%, with inflation at around 2%. The same reasoning applies to life insurance euro funds, which offer an average return net of social security contributions and payment charges of 1%.

To beat inflation, savers can invest directly in real estate. This means selecting the right geographic zone, and not just relying on posted yields. Intramuros, Paris still has arrondissements, such as the 19th arrondissement, that offer net yields of up to 4%. But investors are now turning their attention to the rapidly expanding towns and cities of the Petite Couronne. These will benefit from the Grand Paris Express network and offer excellent opportunities, with formidable prices per square meter.

Among provincial cities, Nantes, Grenoble, Villeurbanne, Nancy and Bayonne are particularly attractive, with prices per square meter ranging from 2,000 to 6,000 euros, neighborhoods undergoing major transformation and net yields of 4% or more, providing good rental income.

Equities, a profitable long-term investment

Equities are associated with high volatility, but are among the most profitable investments over the long term. The Pacte Act recently capped fees on the PEA ( share savings plan ) and made its operation more flexible.

This product allows you to acquire a portfolio of shares in European companies, while benefiting from tax exemptions under certain conditions. The maximum contribution is set at 150,000 euros for a classic PEA, and 250,000 euros for a PEA-PME.

Despite the improvements introduced by the Pacte Act, the PEA offers a more restricted financial palette than life insurance. It is primarily aimed at investors who are sensitive to supporting the real economy and can bear significant risk-taking.

Life insurance, a favorable tax framework

Although euro-denominatedlife insurance has lost some of its appeal in recent years, that doesn't mean we should abandon this investment. In fact, life insurance offers many advantages. It allows you to build up capital over the long term, as well as supplementing your income. What's more, it's an excellent way of passing on assets, thanks to its tax advantages and the freedom to choose beneficiaries.

Nevertheless, the fall in interest rates makes it essential to adjust the policy's euro component downwards. Depending on the desired investment horizon, it may be wise to increase the unit-linked portion, invest in different markets or opt for controlled management.