Nearly 10 million French people now hold a LEP, a booklet which is increasingly attracting eligible low-income households, since it yields double that of a Livret A. Its ceiling has just increased to 10,000 euros. Hence this not-so-stupid question: how much is in your interest to save?
The hit of the year 2023. And not only that. With its remuneration of 6%, without any tax or social contribution paid on your interests, the Popular Savings Booklet (LEP) attracts money like never before in the 21st century: 11.1 billion euros more on the LEP in 9 months, which is already much better than the 9 billion in 2022, a record year so far in this millennium.
As a reminder, the LEP is only accessible to low-income households. You must not exceed an income threshold, which, to simplify, corresponds to the threshold which makes you fall into the circle of households paying or not paying income tax. For those who can open a LEP, this is obviously a godsend.
Like the Livret A, the LEP is an ideal support for your precautionary savings: that is to say to put the 2 to 4 months of salary from which you can draw at any time in the event of a hard hit. The objective is obviously already, as a priority, to succeed in building this mattress.
An unbeatable rate for money available at any time
Once the objective of precautionary savings has been achieved, therefore by having 6000 euros in your LEP if you earn 2000 euros per month, very schematically, what should you do if you have more savings to invest?
Currently, given the possible returns on other investment families, the rule consisting in saying that one must invest and take risks after having built up one’s precautionary savings does not really apply to the LEP… In short, in 2023, if you have access to the LEP, paying 6%, without tax, it is almost always in your best interest to make the most of this windfall.
If you have 10,000 euros in savings, and if you have a LEP, you might as well increase your LEP to the ceiling recently raised to this level. If you have more than 10,000 euros in savings, you can possibly consider other investments once your LEP is completed.
In 2024, from February 1, the LEP rate will most certainly fall again, but it will remain very high, most likely around 4.5%. For comparison, the Livret A is blocked at 3% for even more than a year. Regarding life insurance funds in euros – to remain in the field of risk-free investments – around 2.5% are expected for the year 2023.
LEP: how much interest for 2 months 10,000 euros?
You open a LEP at the end of October and you immediately pay 10,000 euros into it: how much interest will you receive on January 1st? 600 euros? No! This corresponds to what you would have earned with a full year: 10,000 euros. For 2 months, the LEP 6% port to the ceiling will yield 100 euros interest.
How much 2023 interest? Other examples…
One year 1000 euros: 59 euros, and not 60, because the LEP was paid 4.6% in January then 6.1% for 6 months and 6% since August. Which gives an average rate for the year 2023 of 5.93%.
One year 5000 euros: 297 euros.
One year 6000 euros then 10000 euros during October: 406 euros of annual interest.
One year 7700 euros (the old ceiling, excluding interest) then 10,000 euros during October: 486 euros of annual interest.