Livret A: security above all
The Livret A continues to be a preferred choice for savers. With its interest rate maintained at 3% until 2025 and a deposit ceiling of 22,950 euros, it provides a total capital guarantee and the interest is exempt from income tax and social deductions. In 2024, it might even more than compensate for inflation, predicted to be around 2.5% by the Banque de France. A phenomenon that has not happened since 2016.
More than ever, in 2024, the Livret A is an essential base for any savings strategy.
The Livret A can be opened in most banking establishments.
LDDS: For Responsible Savings
In the range of investments suitable for cautious savers, the Sustainable and Solidarity Development Booklet (LDDS) takes a great place. It follows the footsteps of Livret A in terms of rates, security, and money availability. It also enjoys a similar tax exemption, all within a ceiling of 12,000 euros. Its focus on financing SMEs and energy savings makes it an ethical choice, allowing savers to contribute to a more sustainable economy while securing their savings.
The LDDS is available in almost all banks.
Bank Savings Accounts: risk-free and with increasing rates
Savings books, or super-savings books, offered by traditional or online banks, often provide interest rates that are lower than those offered by Livret A and LDDS. What makes them attractive is their lack of a ceiling and often enticing promotional offers, although these are limited to a few months. In January 2024, MeilleursTaux offers 5.5% annually for 3 months, Placement-Direct 5.25% for 3 months, Fortunéo and Monabanq 5% for 4 months...
Always better than a current account, their interests are nevertheless subject to taxes and social deductions. Grab your calculators to figure out if the process of opening a savings book is worth the candle.
Term account: security and interesting return
It's one of the good surprises of the interest rate hike: the term accounts have become attractive again. They are distinguished by offering a fixed return over a specific period, thus providing clear visibility on the interest to be received. The money is locked up for the entire period. So it's a risk-free investment ideal for those who can tie up a sum of money in the medium or long term without needing to withdraw.
In January, Monabanq offers a progressive return of 2.80 to 4.8% in the 5th and final year. The Distingo savings account and that of Boursobank come to 3.50% over 1 year. However, note that these interests are taxed.
Euro funds of life insurances: the return to grace
Second surprise linked to the rise in rates: the comeback of euro funds in life insurance policies. After years of gloom, some players like Placement-Direct have even relaunched a "single-support" contract, a commodity that had faded some time ago!
Euro funds within the framework of life insurance remain a benchmark in terms of secure investment. They benefit from a capital guarantee and favorable taxation after eight years of holding, making them a cautious and safe savings solution.
Returns remain variable depending on players and often on the percentage of savings invested in financial supports, some even exceeded 4% in 2023. For last year, the average annual return is around 2.50%. The year 2024 should be in the same line, or even beyond.
Monetary funds: back in the spotlight
A money market fund is an investment fund that aims for assets with high liquidity and very low risk. They mainly include Treasury bills, certificates of deposit, very short-term corporate bonds, and other monetary instruments.
Money market funds are often used by investors who have short-term cash, or who keep cash within a larger portfolio. They are considered conservative investments and are particularly attractive during times of economic uncertainty or market volatility, where capital preservation becomes a priority.
Many money market funds have the €STER (ex-EONIA) as a benchmark. This index reflects the average weighted interest rate at which banks in the Euro zone lend money at very short term. In January, it is slowly approaching 4%. Barely volatile, it provides visibility to savers and allows time to recover one's funds in case of an anticipated drop.
Investors can hold money market funds in a life insurance, a PEA, a PER, or a simple securities account. The list of money market funds is long. For example:
Axa short-term (3.35% in 2023), LMdG FLEX SHORT TERM (EUR) (4.58%), SG MONETARY PLUS P (3.11%). Unlike other investments however, the risk of seeing one's capital shrink exists, albeit minimal. With the rise in rates, however, this possibility is distancing itself, at least in the coming months.
