Livret A, LEP, PEL… With the 2023 rates, how many years does it take to double your bet?

The passbook A rate goes up to 3% from February 1st. Less than inflation but this rate is starting to become competitive, especially for risk-free savings. A year ago, with 0.5%, you had to wait 139 years to hope to double your savings at a snail’s pace… At 3%, this period is shortened to 24 years! Here is the match of the savings (without risk!) double version 2023.

Double your savings by depositing it in an investment guaranteeing you to recover your stake at any time? A mirage, in 2023, as in previous years. But this mirage is no longer as imaginary in 2023 as it was a year earlier. From 0.5% in January 2022, the Livret A passbook rose to 3% in February 2023 and it carries with it all risk-free savings.

After having pushed back the horizon of a double savings in the 22nd century a year ago, MoneyVox comes out with the calculator for this calculation fiction which makes it possible to compare performance in a more concrete way than with percentages. spoileramong the 5 products held by the largest segment of the population, the livret A, life insurance, the LDDS, the home savings plan and the popular savings account, one currently offers you a savings multiplied by 10 in less than 40 years!

Livret A and LDDS: 24 years old… compared to 139 years old last year!

0.5% in January 2022, then 1% in February, 2% in August… and therefore 3% in February 2023. Driven by inflation, the Livret A rate – and automatically that of the LDDS, which displays a identical rate – goes up at a very steady pace. Good news for the French, who favor these booklets for their precautionary savings.

On a booklet A or an LDDS, the rate of return of 3% is exempt from all taxation. Is this an investment to grow your long-term savings? Recent history regularly shows that, financially speaking, taking risks (via the stock market in particular) pays off in the long run. But if with a 3% net rate of tax, financially speaking, the booklet A is not ridiculous.

Concrete illustration with the time required to double your savings, taking into account the capitalization of interest – the annual remuneration is added each year to the capital, which generates new interest: you had to be 139 years old with a 0.5% interest rate, 70 years old with 1%, 36 years old with a 2% income savings account, and now only 24 years old with a 3% interest rate on February 1.

3% A rmunr bookletCapital
At the start10000
After 5 years11593
… 10 years12668
… 20 years18061
… 24 years20328
… 100 years192186

The simulation detailed in the table above is based on the following principle: 10000euros deposited 3%, then letting this savings work without withdrawing or depositing anything. And starting from the totally improbable hypothesis maintaining the rate at 3% for decades…

Its weak point. Support adapted to precautionary savings (2 to 4 months of income), the Livret A, like the Sustainable and Solidarity Development Booklet (LDDS) – will become very competitive again in 2023, but there is no guarantee that its remuneration will remain attractive over the long term. term to grow your savings. Its rate is recalculated every 6 months.

A 3% booklet: this trick to maximize your interests

More than 300 years for bank books

A real big bang! All rates rebound, even those of traditional bank books, remunrs a year earlier 0.09% on average, according to the Bank of France. At this rate, taking into account taxation (single lump sum, or flat tax, 30%), you needed more than 1111 years to double your savings… This average rate is already 0.33% and will go up again: the delay is already coming back 303 years. Better than Back to the future: 800 years gained in the space of one year!

Life insurance: 43 years on a fund in euros

By definition, it is impossible to know the returns of funds in euros over the coming years, and even less over the decades to come! Let’s take the average rate anticipated for the year 2022, in the most optimistic version: 2%. Attention, it is necessary to deduct the social contributions (currently 17.2%), levied each year on the interests of the euro funds.

Last year, you needed more than half a century to double your wealth, 66 years old, more exactly: now 43 years are enough. A delay a little longer than the current expectation of the French to have a successor Yannick Noah Roland-Garros.

Euro funds at the average rate *Capital
After 5 years10541
… 10 years11785
… 20 years13889
… 30 years16368
… 43 years20264

* 2% after management fees, high assumption for the year 2022, i.e. approximately 1.66% net after annual social security contributions (17.2%).

Its weak point. The life insurance fund in euros has long been on the downward slope: it is rising less quickly than the Livret A account. It is difficult today to obtain good long-term performance via life insurance without betting partly on units of account.

The list of 2022 rates for life insurance

PEL: 40 years for the old… 50 years for the new

Is having an old home savings plan still a godsend? Most likely. But if the windfall is obvious for PEL yielding more than 4%, holding a PEL remunerated at 2.50% remains very advantageous and becomes less and less anachronistic. While this rate guaranteed for many years was present as an anomaly a few months ago…

What to do with my 2.50% PEL, which is approaching 10 years?

Measuring the time needed to double your PEL is totally theoretical and virtual (1) but this exercise shows how the lines have moved.

First case: you are one of the lucky ones who have opened a home savings plan before March 2011. Double bargain! On the one hand, your PEL is part of the old generation of plans, with no maximum lifespan (15 years maximum since March 2011). On the other hand, the contractual rate – most often 2.5% – is guaranteed for the entire life of the product. Admittedly, the social security contributions deducted each year from the 10th anniversary of the PEL reduce this 2.5%. And interest is also subject to income tax (by default up to the flat tax, ie 30% social security contributions included) from the 12th birthday. But even by paying income tax and social security contributions each year, the net rate is 1.75%. What remains competitive for a risk-free investment: the capital is doubled in 40 years (1).

Old PEL 2.5% gross*Capital
After 5 years10906
… 10 years11894
… 20 years14148
… 30 years16828
… 40 years20016

* By applying the 30% flat tax

Second case: you open a ELP version 2023, remunr 2%, before flat tax. In other words: 1.40% net of tax per year. At this rate, it takes 50 years to double a capital… which is still much better than the century needed for the 1% PEL of the year 2022! The gap is closing.

New PEL 2% gross*Capital
After 5 years10720
… 10 years11492
… 20 years13206
… 30 years15175
… 50 years20040

* By applying the 30% flat tax

Its weak point. Almost one out of two PEL holders (42% exactly) benefits from a rate of 2.5%. And the lucky savers who opened an old PEL more than 20 years ago even benefit from higher returns. Banks pay on average 4.5% gross for old PELs, which makes it possible to double capital in just 22 years! BUT… only holders of an open PEL before March 2011 can take advantage of such a rate ad vitam aeternam…

My PEL is 10 years old: will it be closed?

LEP: 12 years only… and a tenfold savings in less than 40 years!

On a popular savings account (LEP), impossible to start with 10,000 euros: the ceiling of payments is 7,700 euros. Let’s go with 5000 euros, rmunrs 6.1% net of all taxes from 1 February. Watch out, the rhythm is mind-blowing! In 12 years, your 5000 euros have doubled. In 24 years, your 5,000 euros starting cap the booklet A: the LEP is x4 when the booklet A is limited to x2. After 31 years, the LEP exceeds 30,000 euros, and after 39 years of ownership, a LEP remunerated at 6.1% has multiplied by 10 its starting stake: 50,000 euros!

LEP rmunr 6.1%Capital
At the opening5000
After 5 years6723
… 10 years9039
12 years10175
… 24 years20708
… 40 years53405

Its weak point. In the world of risk-free investments, the LEP is now unbeatable. But… you have to be one of the eligible households – and remain so for the duration – which in short concerns non-taxable or low-tax households.

Livret A, LEP, PEL… What is the best regulated savings product for you?

Einstein’s rule

Wondering how many years a particular investment will allow you to double your capital? There is a formula to answer it, Einstein’s rule, then simplified by Dr. Albert Bartlett as explained Finance for all in an educational article: divide 70 by the figure of your percentage and you will obtain the number of years necessary to double the capital. This formula offers a rounded result but which allows you to get an idea quickly.

Example. For a 2% interest-bearing investment, divide 70 by 2 = 35. The capital doubles in 35 years.

Don’t forget about inflation!

5.9%over a year, at the end of December… but probably close to 7% in January according to INSEE projections. Blame it on the prices of gas and electricity, which are nonetheless held back by the tariff shield. Aside from LEP, no risk-free investment rivals the pace of rising prices.

And keep in mind that with regulated savings, the accounts are calculated on December 31. Last year, 1000 euros placed on a Livret A account certainly brought you 13.75 euros in interest in 2022 in January 2023 (and not 20 euros because of the rates applied at the start of the year) but galloping inflation made you lose purchasing power. INSEE estimates an overall price increase of 5.2% for the year 2022 compared to 2021. The real return (after inflation) of your booklet A in 2022 was therefore negative. More concretely, because of the rise in prices, with 1013.75 euros at the beginning of 2023, you cannot buy as many products in a store as with 1000 euros at the beginning of 2022. The reverse of inflation.

What long-term alternatives, accepting some risk?

These calculations are already totally theoretical for risk-free products. Such a simulation would be unfounded for riskier products because, by definition, performance is bound to change much more strongly from one year to the next. The most obvious symbol being the last annual performances of the CAC40: a surge of 26.37% in 2019 before a drop of 7.14% in 2020 then a record year of nearly 29% in 2021 followed by a catastrophic vintage in 2022 with a fall of 9.5%.

Nevertheless, if your objective is to grow your savings over the long term, it is currently difficult to do so other than by taking risks, even measured ones. The IEIF (2) estimates each year the returns of different investment families over several decades. In his last edition (1981-2021), real estate and the actions once again stand out as the most profitable long-term investments, despite the ups and downs of the markets. The annual performance exceeds 12% over the last 10 years for shares or, for example, 5% for SCPIs. But beware: it is obviously impossible to predict future returns

(1) Scenario used for the PEL 2.5% gross: a plan for which the annual interest is subject to flat tax (12.8% income tax and 17.2% social contributions). So a plan of more than 12 years, for a theoretical capital of 10,000 euros at the start of the scenario. As this PEL has expired, no new payment is made: the savings are doubled in 40 years with the taxation applicable in 2023 – solely thanks to the capitalization of interest.

(2) Institute for Real Estate and Land Savings.

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