For several months, price increases have stalled in the United States. For France, on the other hand, it is another story. Inflation is expected at 7% over 1 year in January 2023. And at such a level, few investments can protect your savings.
In 2022, the 30.4million French households have seen their savings evaporate 2400 euros on average, according to estimates by fintech Mon Petit Placement. At issue: a persistent gap between inflation and returns on savings products.
The first reached 5.2% in 2022. While the latter have fluctuated between 0.5 and 4.6%. Consequence? For every euro deposited in these investments over the past 12 months, you have lost purchasing power.
The good news is that this gap is gradually narrowing. The yield on the Livret A, for example, went from 0.5 1%. Then this rate doubled to reach 2%. And as of February 1, 2023, it will increase 3%.
It’s a good start. But this return is still not enough to protect you against inflation which, according to the Banque de France, should be 6% on average in 2023 after a peak of more than 7% at the start of the year.
Other investments achieve this. However, these can be counted (almost) on the fingers of one hand.
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1. The popular savings account (LEP)
Zero fees. Zero tax. Zero risk. Zero delay to withdraw your funds. On paper, LEP has it all. But if this booklet is talking about him at the moment, it is mainly because of his performance. And for good reason: from next February 1, the LEP rate will go from 4.6% 6.1%. Its highest level since 1986.
This spectacular rise, the LEP owes it to inflation. Because precisely: this booklet was designed to protect low-income households against soaring prices. Its interest rate is revised once every six months based on the average monthly inflation observed over the last 6 months.
That said, not everyone can benefit from LEP’s largesse. To subscribe to this booklet, your reference tax income (RFR) must not exceed 21393 euros. More than 10million French people are eligible, but have not yet opened a LEP. Damage. Because today, no other investment offers better protection against inflation.
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2. Rental real estate
Faced with inflation, stone-paper has serious advantages. Starting with its yields, which are often high. On average, SCPIs generated 4.2% yield over the first six months of 2022. Some even outperformed inflation. This is particularly the case for Iroko Zen SCPIs (7.10%) and Corum Origin (7.03%).
Over the past twenty years, the performance of SCPIs has exceeded inflation almost every year, notes Jonathan Dhiver, founder of mieuxSCPI.com. And for good reason: SCPIs are one of the rare savings vehicles whose returns are (partly) indexed to inflation.
Concretely, when you buy SCPI shares, the management company invests your money to buy real estate, which it then rents out. And the rents it receives in return are indexed to the Rent Reference Index (IRL), the Commercial Rent Index (ILC) or the Tertiary Activities Rent Index (ILAT).
These three indexes take inflation into account, which partially protects your savings. At least in theory, since this mechanism is not infallible. The State has thus set up a rent shield until June 2023.
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3. Inflation-linked bonds (OII)
It is a more confidential placement. However, it is difficult not to tell you about inflation-indexed bonds (OII) as they are adapted to the situation. These debt securities are specifically aimed at investors who wish to protect themselves against rising prices.
As early as 1998, the French State began issuing equivalent Treasury bonds indexed to the consumer price index in France (OATi) or in Europe (OATi). The main advantage of OIIs is that when prices rise, your returns also increase.
But this investment is not without risk. Because if inflation falls, your returns will follow. In the absence of a significant price increase, inflation-indexed bonds yield less than a conventional bond, warns Philippe Crevel, economist and director of Cercle de l’Epargne.
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4. Gold
It is the safe haven par excellence. Gold through centuries, crises and wars. But is it an effective investment against inflation? In theory yes. In times of inflation, the value of the currency drops, recalls Jean-Franois Faure, founder of the site AuCoffre.com. Result: it takes more money to buy the same amount of gold.
Since the beginning of November, the price of the yellow metal has jumped 15%. And the price of an ounce today $1900. Its highest level for a year. Should you convert your euros into bullion? Not necessarily. Because other factors, independent of inflation, are likely to impact the price of gold.
Another downside: gold does not bring anything. In the event of a price change, we may end up stuck with his golden mattress, says Philippe Crevel. Which is not a problem in times of negative rates. But when rates go up, as they are right now, you risk losing money.
5. Structured products
Some players have taken the subject of inflation head on. This is particularly the case of the Mon Petit Placement savings solution, which has launched an anti-inflation portfolio. This takes the form of a structured product designed in partnership with Socit Generale and incorporated into a life insurance contract.
In detail, this investment replicates the performance of the Eurostat Euro zone HICP index, which measures inflation within the euro zone. Portfolio return is capped 7% but yields at least 2%. Each year, you therefore receive 2 to 7% interest, depending on the annual performance of the index.
Another special feature: your capital is guaranteed. Provided you agree to tie up your funds for 5 years. At this chance, your capital and the interest thus generated will be returned to you. The entry ticket for this placement is fixed 1000 euros. And you can’t place more than 50000 euros.
Other players offer guaranteed capital structured funds, each with their own specificities. This is the case, for example, of Meilleurtaux Placement, of Cashbee with its new product Onyx 1 also accessible from 1000 euros., but also of Linxea….
6. Private equity
Private equity, or capital investment, consists of taking a stake in the capital of companies not listed on the stock exchange in the hope of realizing a capital gain when reselling the shares. And this placement exploded in 2022 thanks in particular to certain online life insurance contracts which now make it possible to invest in this type of support, previously reserved for the wealthiest. In the first half of 2022, French private equity players thus collected more than 21 billion euros.
This success, private equity owes to its exceptional performance. Over the past 15 years, this asset class has generated an average return on investment of 12.1% per year, according to the association France Invest. This is twice as much as the CAC40. It couldn’t be more effective in protecting your savings against inflation.
That said, private equity is a risky investment. 90% startups go bankrupt, including 10% from the first year, recalls Claude Calmon, founder of the fundraising consulting firm Calmon Partners. Another drawback: your funds are often blocked during 8 10 years.
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