The Livret A rate will remain frozen throughout 2024 at 3%. So what are the other secure investments that will bring more returns to savers this year?
The Livret A rate which has been 3% since February 1, 2023 will remain frozen until January 31, 2025. A decision taken by the government last summer. However, this could have changed: a law professor, Paul Cassia, had in fact asked the Council of State to annul the decree of July 28 which blocks the Livret A rate. The reason given? Freezing the rate of this regulated savings account penalizes savers.
But the Council of State rendered its decision this Monday, February 19. The rate will remain 3% as planned until the start of 2025, whereas it should have increased to 4.10% last summer and 3.90% on February 1.
With 22,950 euros placed in their Livret A since January 1, a saver will therefore be able to generate 688.50 euros of capital gains in 2024 (compared to 669.38 euros in 2023) if he does not receive his savings during the year. Are there other risk-free investments today that yield more than Livret A?
The popular savings account (LEP)
With a rate 5% since February 1, the LEP remains the best option to do better than the Livret A. Tax-free, it allows you to invest up to 10,000 euros (compared to 22,950 euros for the Livret A). One downside, however: it is not accessible to everyone. Opening a LEP is in fact subject to certain income conditions. Nearly 8 million French people out of 18 million eligible have not yet opened a LEP. Even if the remuneration of the LEP risks falling on August 1, it will remain, in all cases, higher than that of the Livret A. If you are entitled to the LEP, fill it up to the ceiling before opting for the Livret A .
LEP: bad news confirmed, here is the new official rate from February 1
The youth booklet not to be forgotten
This is Booklet A reserved for juniors since it benefits from the same guarantees. The youth booklet is aimed at 12-25 year olds. If the level of remuneration for the youth savings account is set by each bank, its interest rate must be higher than or equal to that of the Livret A, i.e. at least 3%. Several establishments currently offer a rate of 4% net on their youth booklet. The only constraint: the payment ceiling is 1600 euros.
Life insurance
The remuneration of euro life insurance funds rebounded significantly in 2023 and should reach 2.5% on average. France Mutualiste even revealed a base rate higher than that of Livret A for the year 2023 with a return of 3.70% net of management fees for all its life insurance contracts. Once the social security contributions of 17.2% have been deducted, the rate of the Euro fund rises to 3.10%, which therefore remains higher than the Livret A.
Life insurance yield 2023-2024: here are the contracts that beat the Livret A rate
Other players in the life insurance market offer attractive bonuses on the remuneration of their funds in euros on the condition of putting part of the payments on units of account (UC) whose capital is not guaranteed. The contract Horizo 2 Banque Populaire offer, for example) a performance bonus up to 4.38% according to the share of UC held, Direct Investment Life displays a maximum rate of 4% or Multiple placements 2 at BNP Paribas which allows savers to benefit from a reduced rate up to 5%.
Note that in 2024, the net remuneration of fund management fees in euros should be around, or even reach, the 3% mark of Livret A. Some contracts already offer bonuses to boost the rate of your contract in 2024. For example , for the BoursoVie contract which announced a 2023 rate of 3.10% on the Euro Exclusive euro fund, BoursoBank guarantees a bonus of 1.50% in 2024 and 2025 for any new membership and free payments made until February 29 .
To be complete about life insurance, we must also raise the question of surrender since the interest on the contract is subject to taxation when we wish to recover our money. Taxation which depends on several factors: the age of the contract and the date of payments.
Taxation for a contract of less than 8 years
Age of contract | Taxation of earnings attached to payments made | |
---|---|---|
from 01/01/1998 to 09/26/2017 | from 09/27/2017 | |
less than 4 years old | Income tax or PFL of 35% | PFU of 12.8% or Income tax (global option) |
between 4 and 8 years old | Income tax or PFL of 15% |
For life insurance, it’s impossible to know in advance how much your contract will earn you in 2024! But a glance in the rearview mirror speaks for itself… Thus, a saver who has placed 22,950 euros on La France Mutualiste life insurance, paying 3.70% gross, will have earned 849.15 euros gross, i.e. 594.41 euros net of taxes and social security contributions in 2023.
Taxation for a contract of more than 8 years
For contracts of more than 8 years, the saver benefits from an overall annual reduction, 4600euros for a single person or 9200euros for a couple, on all gains from life insurance surrenders over 8 years old. For interest higher than this reduction, a tax of 7.5%, or even 12.8% on the largest contracts may be applied.
Date of payments | Deductions made by the insurer | Progressive tax choice | Flat tax choice |
---|---|---|---|
From 01/01/1998 to 09/26/2017 | PFL of 7.5% (if option is requested) | (impossible) | No supplement |
None (the PFL option was not taken) | Integration into taxable income | (impossible) | |
Since 09/27/2017 | Mandatory flat-rate deduction of 7.5% | Restitution of PFO and integration into taxable income (global option) | Possible supplement to reach 12.8% PFU |
A saver who placed 22,950 euros in a fund in euros paying 3.70% gross for a contract opened more than 8 years ago, will have earned 849.15 euros gross, i.e. 703.10 euros net social deductions. Taxation is not applied because the 849.15 euros of interest fall into the tax deduction to which the saver is entitled each year.
Taxation of life insurance: the rules in the event of surrender, before/after 8 years
Furthermore, the deadlines for disposing of your money when purchasing life insurance are longer (2 to 3 working days). On Livret A, a simple click allows you to receive the amount in your bank account.
Compare the best life insurance offers
The term account… But over more than a year of holding
The French placed nearly 41.5 billion euros in term accounts between January and November last year. Taxed at 30%, the remuneration of these savings account accounts is fixed in advance and varies depending on the holding period from 3 months to 5 years. Over one year of holding, the term account is less attractive than the Livret A. Even the best term accounts at the moment do less well than regulated savings once taxation is applied.
In fact, the saver who has placed 22,950 euros in an interest-bearing term account 3.20% for one year, as is the one proposed by Distingo Bank, will obtain 514.08 euros net of taxes. Less good than Livret A and its 688.50 euros in capital gains.
Livret A and LDDS on the ceiling? Open a term account with a super rate locked in now
But over a longer period, the term account could well make the difference. Indeed, the Livret A rate which is blocked until January 2025 risks decreasing thereafter due to the drop in inflation. Conversely, the term account rate is guaranteed throughout its lifespan. Its rate is therefore likely to be more attractive than the Medium-Term Booklet.
This is the case, for example, of the CIC term account. For a holding period of 5 years, the saver benefits from a gross annualized rate 3.75%. Furthermore, term accounts also benefit from much higher payment ceilings, often beyond a million euros. Please note that to benefit from the rate displayed by the term account, you must not claim your money before the contract expires to avoid being subject to penalties.
Compare term account offers
Bank books with boosted rates
The remuneration of bank accounts has increased sharply in recent months thanks to the multiplication of boosted rates. Some supports are even more interesting than the Livret A for investing money… but over a very short period. Let’s take for example the rate of Monabanq’s Rentabilis booklet, rmunr 5% during 3 months. The saver who invests 22,950 euros in it will therefore be able to benefit from better remuneration than the Livret A during this period and this, even after the 30% tax applied. During the other 9 months of the year, the rate rises to 2%, i.e. an average gross rate of 2.76% over the year.
The saver who places 22,950 euros in the Rentabilis savings account throughout the year 2024 will benefit from 443.40 euros in net interest. If the boosted rates make bank accounts very attractive, you will have every interest in comparing them carefully, taking into account the non-promotional rates. Bank accounts are therefore useful for depositing precautionary savings, but once the regulated savings accounts have been completed.
Risk-free investment: comparison of offers