In every economic cycle, we see investment and disinvestment movements in every financial instrument. Depending on the economic climate and other factors, some investments are in demand while others are rejected. As far as the French are concerned, we see a particular attraction for regulated savings accounts and life insurance policies. What are their specific features?

Changes in regulated savings account rates

Regulated passbooks are passbooks whose interest rates are set by the French government. Rates are revised regularly and take several factors into account. The most important of these is the inflation rate. In 2024, with inflation in France approaching 5%, these rates have been revised upwards to reflect this economic reality.

On 1 August 2024, some rates were adjusted in response to the economic situation and the fall in inflation. Livret A and LDDS passbook savings accounts and the PEL home savings scheme will retain their terms and conditions. However, the LEP, whose rate fell from 6% to 5% on 1 February 2024, has seen its rate cut to 4% since 1 August 2024. Here are the current rates:

• Livret A: 3.00%
• Livret de Développement Durable et Solidaire (LDDS): 3.00%.
• Livret d'Epargne Populaire (LEP) passbook savings account: 4.00%.
• Plan Épargne Logement (PEL): 2.25% for new plans opened since 1 January 2024

Adjustments to passbook rates mean that savers do not see their purchasing power eroded too much by inflation. However, even with these increases, real rates (nominal rate - inflation) often remain negative. That's why it's important to diversify these investments, particularly through more effective medium- and long-term investment solutions.

Is life assurance an alternative to savings books?

Life insurance is still the investment of choice for French savers. Even though it operates differently from savings books, it offers great flexibility. It is made up of two types of investment vehicle:

• Euro funds: secure, these funds are guaranteed by the government (up to a certain limit) and offer a relatively stable return (around 1% to 2.5% in 2023).
• Units of account: more dynamic and volatile, these allow you to aim for higher returns by investing in equities, bonds, ETFs, structured products or even property.

That's why a tailor-made allocation put together by the specialists at Finankap Group can deliver higher returns over the investment horizon, even for so-called "cautious" profiles.

In conclusion, regulated passbooks offer ideal security and liquidity for precautionary savings, but with limited or even insufficient returns in periods of high inflation. To optimise your savings, it is crucial to turn to long-term investments such as life insurance, PERs, PEAs or property, which offer higher potential returns and, in some cases, significant tax advantages. Diversifying your investments allows you to better manage risk and improve the overall performance of your assets. Finankap Group's financial advisers can draw up a financial report and recommend solutions tailored to your needs and situation. Contact us for more information!