More than 8 out of 10 French people have an A booklet! This makes it by far the best-selling savings product. But do you know how much it brings you if you leave 1000 euros there for 1, 5 or 10 years? Not so stupid, this question!
Wondering how much the money deposited in your Livret A is worth? Have no shame! As this study by the Banque de France on the financial knowledge of the French shows, you are far from being an isolated case. When the Banque de France tests the understanding of the concept of interest rate (100euros 2%), knowledge is approximate: 53% give the correct answer over one year (2euros interest) but the majority of French people are mistaken for determine the capital after 5 years (more than 110 euros). The livret A climbs 3%, net of tax rate, on February 1, 2023. With such a return, how much interest would you have after 1, 5 or 10 years?
Interest transformed into capital each year
Practical work, for a placement of 1000 euros, leaving these 1000euros to grow for 1 or even 5, 10 or 20 years. Result: you win 30euros over a full year. Then these 30euros are added to your initial capital: the 1030euros thus bring in a little more than 30euros the following year, and so on. It is the principle of capitalization of interest. This explains why after 10 years, your starting 1000euros did not yield 300euros (or 30euros per year) but a little more: 343.92euros.
Discover our and all the .
Beware of the misunderstanding: all these figures are theoretical! They correspond to a regular salary, over 20 years, without you touching your woolen stocking… the yield of the Livret A changes over the years! Moreover, for the year 2023, if you had very precisely 1000 euros on December 31, 2022 on your Livret A and you do not touch it for 1 year, you will not receive 30 euros of interest in 2023 but 29.17 euros . Why? Because the month of January 2023 remains remunerated at 2%, the rate of 3% applying from February… pending a probably higher rate in August, which will further modify the calculation. With the rise in inflation, you can already anticipate an increase in the remuneration of the Livret A around 4% in August 2023.
Lost interest due to back and forth with the current account
In addition, constant back and forth between your savings account A and your current account can cause you to lose interest, even if the losses remain marginal in view of the low rates: the banks take into account the sums present in your savings account on the 1st and the 15th, then between the 16th and the end of each month (this is the fortnightly rule).
Example, with a Livret A paid at 3% until the end of the year: you have 1,000 euros from January to March, then you withdraw 500 euros at the beginning of April before redepositing them two months later. At the end of the year, your Livret A shows 1026.67 euros. With this two-month round trip on your Livret A account, you have lost just under 3 euros in interest compared to the 29.17 euros mentioned above. Losses, however, far from significant compared to what you risk paying in overdraft fees if you leave your current account in the red…
Difficult end of the month: should you dig into your Livret A or pay your overdraft?
And if you are entitled to the LEP…
People’s savings account. You place 1,000 euros on an LEP, which yields 6.1% from February 1 and is fully tax-exempt like the Livret A. After a year, you gain in theory 61 euros in interest this rate (it will be a little less in reality in 2023 with the month of January paying 4.6%, and while waiting to know the new evolution expected in August). After 10 years 6.1%, your savings reached 1807.81 euros. Much more profitable therefore than the Livret A, a condition however… if you meet the LEP access conditions, this booklet is reserved for households with little or no tax.
Interest is welcome… but does not protect you from inflation
There remains one major downside: in the face of galloping inflation, which will once again exceed 6% at the start of 2023, a Livret A savings account remunerated at 3% cannot keep pace with the rise in prices. Currently, in the family of risk-free savings, only the LEP keeps pace with inflation.
Livret A, LEP, PEL… With the 2023 rates, how many years does it take to double your bet?