Do you have 100,000 euros to invest? Here are the best investments to make your money grow while taking no (or little) risk in 2024.
Since July 2022, the European Central Bank (ECB) has raised its key rates ten consecutive times. And this increase, the fastest ever recorded, has completely redefined the French financial landscape.
Certain products that we thought were forgotten have suddenly returned to the forefront, such as bank accounts, structured products or euro funds, while other star investments have lost their appeal, such as real estate. .
The good news for French savers is that with the rise in rates, investing your money without taking risk has become more interesting than before. But you still need to know what you mean by “risk-free”.
If you want to take zero risk, then the spectrum of your investments will be limited to products with a capital guarantee. There are actually quite few of them: the Livret A, the LDDS, funds in euros, term accounts and bank books.
On the other hand, if by “invest without risk”, you mean “by taking little risk”, other possibilities are available to you, starting with bond funds, structured products and real estate investment companies (SCPI ).
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1. Booklet A
Next to 9 French people out of 10 hold a Livret A. A figure which has continued to increase in recent years. And it’s easy to understand why. The funds deposited in your Livret A are available instantly and your winnings are exempt from all taxes.
And that’s not all. The Livret A is a savings product with zero risk, since your capital is guaranteed up to 100,000 euros by the Deposit Guarantee and Resolution Fund (FGDR). Even if your bank goes bankrupt.
Another strong point of this investment: its rate. Over the last 16 months, the remuneration of the French’s favorite booklet has increased sixfold, from 0.5% has 3%. And this rate will not drop in 2024, since the remuneration of Livret A is frozen until January 1, 2025.
Result ? With an increase in consumer prices expected below the bar 2.5% by the end of the year, according to forecasts from the Banque de France, the yield on Livret A should (finally) become higher than inflation again in 2024.
In other words, placing part of your 100,000 euros in your Livret A will not make you rich. However, this investment has become an interesting support for building up precautionary savings and protecting your capital against price increases without taking any risk.
Where does the Livret A money go?
2. Term accounts
Another option for investing your savings without risk in 2023: term accounts (CAT). The principle ? You lend money to your bank for a period which can extend from 3 months to 5 years, depending on your choice. During this period, your funds are not accessible.
In return, your bank undertakes to pay you interest once the time has expired. In general, the longer you agree to lock up your funds, the more attractive the remuneration offered by your banker.
Currently, the Ramify term account offers, for example, remuneration of 3.10% if your funds are blocked for 12 months and up to 3.38% if you agree to lock in your savings for 36 months.
“These rates are set when the contract is signed. It may therefore be interesting to open a CAT at the moment, while rates are high, in order to maintain your rate over the coming years,” notes Stéphane van Huffel, co-founder of Netinvestment.
Your deposits are, again, guaranteed by the FGDR up to a limit of 100,000 euros per person and per bank. That said, your funds are not accessible for the entire life of your CAT, except in the event of early release, which exposes you to penalties.
Term account: comparison of the best 2024 offers
3. Bank books
Next investment: bank books. The latter have also taken full advantage of the rise in ECB key rates in recent months. Result ? It is not uncommon for the rates offered by banks to exceed the 3%.
Especially since some brands offer promotional rates to attract new customers. An example: the Distingo booklet, with its rate boosted to 4% for the first four monthsThen 3% beyond that, i.e. a total return of 3.34% the first year. It’s quite simply the best one-year rate on the market. Especially since Distingo also offers a bonus of 80 euros under conditions.
The only downside: your winnings are subject to flat tax. Either 12.8% tax and 17.2% social security contributions. Conclusion: “Despite these boosted rates, bank accounts still bring in less than Livret A,” indicates Aymeric Richard, director of the Chartrons Patrimoine firm.
That said, these savings products have the advantage of being liquid and risk-free. Not to mention that their ceilings are significantly higher than that of Livret A (22,900 euros). Recently, the Cashbee booklet, for example, no longer has any ceiling.
Comparison of offers on the best bank accounts
4. Euro funds
Euro funds from life insurance contracts are an interesting alternative for investing 100,000 euros without risk. And for good reason: after a long period of decline, the returns on these funds should start to rise again this year.
“On average, returns on euro funds should reach 2.5% in 2023,” estimates Aymeric Richard. And certain nuggets, particularly among the most recent contracts, could be used up to 4.5% net of management fees.
Life insurance returns: the good and the bad performers of 2023 rates
BoursoBank, for example, offers a yield of 3.10% net of management fees on its Bourso Vie contract. That said, this rate can be increased up to 3.60% if you have at least 50% Units of Account (UC) – a medium which presents a risk of capital loss.
The last strong point of life insurance: its taxation. Because if you have had a contract for more than 8 years, you benefit from a tax reduction of 4,600 euros per year for a single person or 9,200 euros for a couple.
Life insurance: comparison of the best offers in 2024
5. Structured products
In 2023, formula funds, also called structured products, have received a lot of attention. A deserved reputation, since these investments offer – under conditions – returns which range from 5% has 12% per year.
But above all, structured products allow you to expose yourself to financial markets with lower risk. “These funds offer the saver a capital guarantee, which can be total or partial, depending on the case,” explains Stéphane van Huffel.
The M Rendement 11 fund, for example, offers a return of 7.5% for 1 to 10 years, with a partial capital guarantee. In detail, your capital is protected if the reference index records a fall of between 10% And 50%.
On the other hand, if the decline exceeds 50%, you lose the equivalent of the fall in the index. In other words, the risk of capital loss remains. Unless you are willing to sacrifice a little of your return in return for a total capital guarantee.
SEE OUR PARTNER’S STRUCTURED PRODUCTS
6. Bond funds
Bond funds allow you to invest in a basket of bonds with yields that currently range between 4% And 6%. As a reminder, a bond is a debt security issued by a government or a company.
That said, caution remains in order. “When you invest in a bond fund, your capital is not guaranteed. However, the volatility of these funds is 2 to 3 times less than on the stock markets,” recalls Aymeric Richard.
Depending on your risk profile, you can opt for sovereign bonds, called “investment grade” and deemed safe because they are issued by States, or for “high yeld” bonds, which are riskier but potentially more profitable.
Dated bond funds: investment opportunities and explanations
7. SCPIs
Finally, real estate investment companies (SCPI) are an option that you can consider if you want to invest in real estate. But caution is required, because the sector is going through a zone of turbulence.
Several major SCPIs have revised the value of their shares downwards. And the fall is sometimes dizzying: -12.42% for Rivoli Avenir Patrimoine, -13.92% for Edissimo, -17.04% for Génépierre (Amundi) or even -17.07% for Accimmo Pierre (BNP Paribas REIM).
The reason: the rise in rates. Always her. Because investors, cooled by the cost of credits, which now exceeds the bar 4%postponed their real estate projects, which automatically lowered prices.
However, as a reminder, the value of shares in an SCPI corresponds – more or less 10% – to the reconstitution value of its real estate stock. In other words, if stone prices fall, the valuation of SCPIs also plummets.
Should we therefore abandon SCPIs in 2024? Not necessarily. “Some historic SCPIs are in difficulty, because they have old assets, with major work to bring them up to standard, and they are struggling to raise funds,” observes Stéphane van Huffel.
Other players, on the other hand, continue to do well. This is particularly the case for most of the more recent SCPIs, such as Iroko Zen and Remake Live, both of which plan to serve more than 7% yield this year.
For these management companies, the drop in prices that we have been witnessing in recent months is precisely an opportunity to build up real estate assets at a lower cost. Provided, however, that the collection is there.
SCPI: What yield? How to invest? Our advices
To sum up :
If you want to invest with ZERO risk:
- Place your precautionary savings in a Livret A.
- Open a super bank account with a boosted rate.
- Invest in a term account.
- Or bet on euro funds.
If you are willing to take A LITTLE risk:
- Make sure to diversify your portfolio.
- Invest in a bond fund.
- Bet on structured products.
- Or buy SCPI shares.