The Livret A rate will remain blocked at 3% for the whole of 2024. A rate which risks exceeding that of inflation in a few months. One year 3% will be very insufficient to double your stake. So how many years? Attention, fictional scenario! Here is the double savings match (without risk!), in order to compare the rates on a snail’s scale.
Double your savings by depositing them in an investment that guarantees you will recover your investment at any time? A mirage no longer as imaginary in 2024 as at the start of 2022 when the Livret A still only earned you a small 0.5%.
After having pushed back the horizon of a double savings in the 22nd century – it took 139 years to double your savings with 0.5% – MoneyVox brings out the calculator for this calculation fiction which allows performance to be compared in a more concrete way than with percentages. Spoilersamong the 5 products held by the broadest segment of the population, the Livret A, life insurance, the LDDS, the housing savings plan and the popular savings account, one offers you a triple savings in less than 25 years!
Livret A and LDDS: 24 years 3%… compared to 139 years 0.5%
0.5% in January 2022, then 1% in February, 2% in August… and therefore 3% from February 2023, until January 2025. The rate of the Livret A – and automatically that of the LDDS, which displays a identical rate – is certainly below inflation at the start of the year but risks falling back ahead in 2024 with the slowdown in price increases.
How long does it take 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 needed 139 years with a rate of 0.5%, 70 years at 1%, 36 years with an A savings account paying 2%, and now only 24 years at a rate of 3%remuneration completely exempt from tax.
| Booklet A rmunr 3% | Capital |
|---|---|
| At the start | 10000 |
| After 5 years | 11593 |
| … 10 years | 12668 |
| … 20 years | 18061 |
| … 24 years | 20328 |
| … 100 years | 192186 |
The simulation detailed in the table above is based on the following principle: 10,000 euros deposited 3%, then letting this savings work without withdrawing or depositing anything. And starting from the totally improbable hypothesis maintaining the 3% rate for decades…
His weak point. Support adapted to precautionary savings (2 to 4 months of income), the Livret A just like the sustainable and solidarity development booklet (LDDS) – is very competitive in 2024, but nothing guarantees that its remuneration will remain attractive on the very long term. The next revision is scheduled for February 1, 2025.
3% booklet: this tip to maximize your interest
Bank books: from a millennium to a century
A real big bang! Since last year, all rates have rebounded, even those of traditional bank accounts, which still pay 0.09% on average at the start of 2022, according to the Banque de France. At this rate, taking into account taxation (single lump sum levy, or flat tax, 30%), you would need more than 1111 years to double your savings…
This average rate is already 0.83% (so 0.58% after flat tax) and will go up again, without forgetting the boosted rate booklets which offer more than 5% gross over a few months: the deadline is already returning 120 years. Better than Back to the future: a millennium saved in the space of a year and a half!
Life insurance: 34 years on a euro fund
By definition, it is impossible to know the returns on euro funds in the years to come, and even less so over the decades to come! Let’s take the anticipated average rate for the year 2023: 2.5%knowing that it will almost certainly progress in 2024. Be careful, you must subtract social security contributions (currently 17.2%), levied each year on the interest on euro funds.
Two years ago, you needed more than half a century to double your assets, at 66 years old, to be exact: from now on 34 years old are enough. This remains shorter than the current wait for the French to have a successor Bernard Hinault in the Tour de France.
| Euro funds at the average rate * | Capital |
|---|---|
| After 5 years | 11079 |
| … 10 years | 12274 |
| … 20 years | 15065 |
| … 30 years | 18490 |
| … 34 years old | 20069 |
* 2.5% after management fees, assumption for the year 2023, or a little less than 2.1% net after annual social security contributions (17.2%).
His weak point. The euro life insurance fund has long been on the decline: it is rising again, but at a disparate pace. The 2023 rates are far from having all been revealed.
The 2023 life insurance rate charts
PEL: 40 years for the veterans… 50 years for the new
Is having an old home savings plan still a godsend? Probably. But if the windfall is obvious for PELs yielding more than 4%, holding a PEL earning 2.5% is no longer the jackpot that it was a few years ago.
First case: you are one of the lucky ones who have opened a home savings plan before March 2011. Double boon! 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.
Certainly, the social contributions levied each year from the 10th anniversary of the PEL reduce this 2.5%. And the interest is also subject to income tax (by default at the level of the flat tax, i.e. 30% including social security contributions) from the 12th birthday. But even if you adjust income tax and social security contributions each year, the net rate comes out to 1.75%. Nothing incredible in 2024 but a long-term bet. The capital is doubled in 40 years (1).
| Old PEL 2.5% gross * | Capital |
|---|---|
| After 5 years | 10906 |
| … 10 years | 11894 |
| … 20 years | 14148 |
| … 30 years | 16828 |
| … 40 years | 20016 |
* By applying the flat tax of 30%
Second case: you open a PEL version 2024, remunr 2.25%, before flat tax. In other words: 1.58% net of tax per year. At this rate, it takes 45 years to double a capital… which is still significantly better than the century necessary for the 1% PEL for the year 2022! The gap is closing.
| New PEL 2.25% gross * | Capital |
|---|---|
| After 5 years | 10813 |
| … 10 years | 11691 |
| … 20 years | 13669 |
| … 30 years | 15981 |
| … 50 years | 20203 |
* By applying the flat tax of 30%
His weak point. Nearly one in two PEL holders (41% exactly) benefit 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 on old PELs, which allows capital to be doubled in just 22 years! BUT… only holders of a PEL opened before March 2011 can benefit from such a rate ad vitam aeternam…
PEL 2.25%: opening or reopening a home savings plan, is it really worth it?
LEP: only 15 years… and triple savings in less than 25 years!
The rate of the popular savings account (LEP) falls on February 1, 2024. From 6%, it falls 5%.
Even with a rate reduced to 5%, the rate is breathtaking compared to all other risk-free investments! In 15 years, your 10,000 euros have doubled. In 23 years, your starting 10,000 euros have tripled, and are multiplied by 5 in 33 years.
| LEP remunr 5% | Capital |
|---|---|
| After 5 years | 12763 |
| … 10 years | 16289 |
| …15 years | 20789 |
| … 33 Years | 50031 |
His weak point. In the world of risk-free investments, the LEP is now unbeatable. But… you must be part of eligible households – and remain so for the entire 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
Are you wondering how many years this or that investment will allow you to double your capital? There is a formula to answer this, 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 an investment paying 2%, divide 70 by 2 = 35. The capital doubles in 35 years.
Don’t forget inflation!
4.9%, over one year, in 2023 compared to 2022… Here is the latest forecast from INSEE for annual inflation, after a year 2022 which saw the same index rise to 5.2%. Aside from the LEP, whose rate (almost) matches inflation, no risk-free investment rivals the pace of price increases.
And keep in mind that with regulated savings, the accounts are done on December 31. Last year, 1000 euros placed in a Livret A certainly earned you a little more than 29 euros in interest in January 2024 (and not 30 euros because of the rates applied at the start of the year) but galloping inflation made you lose in purchasing power. THE real return (after 4.9% inflation in 2023) of your Livret A was therefore negative.
More concretely, because of the increase in prices, with your 1029.17 euros from the start of 2024 on your Livret A, you cannot buy as many products in a store as with 1000 euros a year earlier. The downside of inflation.
Taxes, RSA, retirement, salary… These increases that await you in 2024 with inflation almost 5%
(1) Scenario used for the 2.5% gross PEL: a plan for which annual interest is subject to flat tax (12.8% income tax and 17.2% social security contributions). So a plan of more than 12 years, for a theoretical capital of 10,000 euros at the start of the scenario. This PEL having expired, no new payment is made: the savings are doubled in 40 years with the taxation applicable in 2024 – only thanks to the capitalization of interest.
(2) Real Estate and Land Savings Institute.