In three years, 1.1 million new investors have launched themselves into the equity markets, according to the Financial Markets Authority (AMF). And everyone asked themselves this fateful question when they started out: is it more interesting to open a securities account… or a PEA?
The Plan d’epargne en actions (PEA) is making a comeback. After rising to fame in the mid-2000s, with more than 7.3million plans, this savings product has long been shunned by the French. So much so that after the 2008 financial crisis, the number of PEAs fell below the bar of 4 million.
But in recent years, the trend has reversed. So much so that in the first quarter of 2022, the Banque de France identified more than 5.1million open PEAs. So should you also opt for this savings product or for an ordinary securities account if you wish to invest in the equity markets? The answer in 4 rounds.
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Round #1: taxation
The main asset of the PEA? Its taxation. The stock savings plan is one of the most advantageous tax envelopes for savers, confirms Philippe Crevel, director of the Cercle de l’pargne.
For starters, capital gains and dividends earned on your PEA are not taxed until you take money out of your plan. Result? If you do 1000 euros capital gain, you can directly reinvest these 1000euros in other actions. And taxes won’t hurt your bottom line.
By contrast, as soon as you generate earnings on a trading account, these are subject to a flat tax of 30%. In other words, if you do 1000 euros of capital gain, you will have to pay 300 euros tax at the end of the year. And this, even if you have immediately reinvested your earnings in other securities.
However, the real strength of the PEA is that after 5 years holding, all your earnings are exempt from income tax. In the event of withdrawal or termination of the plan after this chance, only social contributions (17.2%) apply.
But beware! Any withdrawal, even partial, made before the fifth anniversary of your plan leads to its closure, warns Philippe Crevel. Worse: all gains made since the opening will then be subject to the 30% flat tax, as in the case of an ordinary securities account.
The only exceptions: partial withdrawal or redemption is authorized in the event of the creation or takeover of a business, dismissal, disability or early retirement of the PEA holder or his spouse.
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Round #2: eligible supports
If you opt for an ordinary securities account, the investment universe that opens up to you is unlimited. For example, you can store bonds, currencies or interest rate products. And this, all regions of the world combined.
Conversely, the PEA complies with two constraints. The first is that you can only invest in certain assets: stocks, index funds (ETFs), and shares in variable capital investment companies (SICAVs) or mutual funds (FCPs). But above all, you can only invest in european companieswhich poses a double problem.
To begin with, you lose the ability to ensure good geographical diversification of your wallet. In the event of an economic slowdown in the euro zone, all your positions will therefore potentially be affected.
But that’s not all: on average, European markets are less dynamic than American markets. Over the past 10 years, the CAC 40, for example, has progressed by +87%. Over the same period, the S&P 500, which tracks the valuation of 500 of the largest US companies, rose by +165%.
The development of ETFs, these funds indexed to an index, however, makes it possible to (partly) circumvent this limitation. Some fund managers, such as Amundi or Lyxor, offer ETFs invested in European equities and therefore eligible for the PEA while being able to replicate the course of certain international indices, such as the S&P 500, observes Philippe Crevel.
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Round #3: brokerage fees
When you place a buy or sell order, your broker charges you brokerage fees. However, since July 2020, these fees have been capped for PEAs. Result? An order of 1000 euros placed with your bank via internet cost 8euros in 2019. Either 0.8% the amount of the order, according to the AMF. Two years later, in 2022, the average price of this web order of 1000 euros fell 5 euros (0.49%).
Still according to the AMF, brokerage fees are slightly higher (on average) on a securities account. Thus, for this same order of 1000 euros, the invoice remained 8euros on securities accounts marketed by banks. In a bank, it is often less costly to place orders from a PEA than from a securities account, concludes the financial policeman.
However, this demarcation is less marked among other players. After studying the fee schedules of 10 no-brokers, these new generation brokers, the AMF calculated an average cost, PEA and securities accounts combined, of 2.50 euros (0.25%) for an order of 1000 euros.
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Round #4: ceilings
One of the disadvantages of the PEA is that it is capped. Cumulative payments cannot exceed 150000 euros on the classic PEA. If you have reached this ceiling, it is however possible to open a PEA-PME and pay into it up to 75000 euros additional, recalls Philippe Crevel. The securities account is not subject to any ceiling.
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Conclusion:
- The PEA is more tax-efficient.
- The securities account offers you more flexibility in the management of your portfolio and a wider selection of securities.
- The ideal, in our opinion? Combine these two savings products, which are ultimately very complementary. You will thus benefit from the unbeatable taxation of the PEA while retaining the possibility of housing a wide selection of assets in your securities account.
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