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The Federation of European Independent Financial Advisers

“ Do you want to grow your savings securely and without paying tax? You can open an A booklet . source official website of the French administration.

With no less than 56 million Livret A accounts recorded at the end of 2022, this advertising seems to have appealed to the French, but what really happens with this investment, the interest rate of which is set by the State?

Livret A is the preferred placement of the French. Eight out of ten French people hold it and they have deposited nearly 26 billion in this savings product over the first six months of 2023. Unheard of…

Livret A is a safe and liquid investment, which means that you can withdraw your money at any time without penalty. The Minister of Economy and Finance, Bruno Le Maire, recently chose to maintain his remuneration rate at 3%, ensuring that he benefits from a fixed rate until 2025.

Despite its success, this savings product is often criticized for its low remuneration.

Below is a comparison of the last 5 years in the face of inflation:

Years Annual rate of Livret A Inflation rate
2023 2.92% 5.60% (Bank of France forecast)
2022 1.38% 5.20%
2021 0.50% 1.60%
2020 0.52% 0.50%
2019 0.75% 1.10%
Sources: Banque de France, INSEE

Recently, the government deviated from the calculation formula setting its yield, a calculation which would have potentially brought the rate to more than 4%.

The Livret A therefore does not protect the French from a loss of purchasing power, and does not constitute a “bulwark” against inflation. Since the real rate is negative, the money invested loses its value over time.

The Livret A remains relevant for certain situations
By nature, the Livret A being guaranteed, its return is low. But despite its low remuneration, it may nevertheless be suitable for certain savers.

It is simple, accessible to everyone and guarantees capital that is fully available at all times.

It makes it possible to limit the phenomenon of monetary erosion for these sums saved in the short term, in order to meet exceptional needs.

Booklet A is designed to constitute a safety mattress. It is recommended to leave precautionary savings in your Livret A account corresponding to 3 to 6 months of current expenses, in order to cope with unforeseen events.

What alternatives?
The answer depends mainly on the savings objectives, the availability sought and the risk profile of each person.

For savers ready to accept a little more risk and limit availability for a few years, there are investments offering better return prospects.

Life insurance (the most diversified product), investment in shares (the most dynamic) or SCPIs (the most stable) will be the most coherent options.

Purchasing power is at the center of French concerns and investment is a means that really allows you to protect yourself from inflation and build your future projects. Savings and investment do not address the same issues.

When you have at least three years ahead of you, there is no point letting this money sit, whether in a current account or in a savings account.

Let’s not forget this key principle of finance: there is no return without risk.


This article was kindly provided by Cedric Privat from The Spectrum IFA Group and originally posted at:

The above contents and comments are entirely the views and words of the author. FEIFA is not responsible for any action taken, or inaction, by anyone or any entity, because of reading this article. It is for guidance only and relevant professional advice should always be taken before investing in any assets or undertaking any financial planning.