Rise in the Livret A rate: “Despite a low yield, the French favor this type of investment”, explains an economist

“Despite a low yield, the French favor this type of investment”, explained Friday January 14 on franceinfo Philippe Crevel, economist, director of the Cercle de l’Épargne, while the rate of the Livret A will go from 0.5 to 1% on February 1.

franceinfo: Is the Livret A a good investment?

Philippe Crevel : It’s not a high return investment, it never has been. This is not currently the case since inflation remains higher than the rate of return on the Livret A, it is running at more than 2%, which means that in real return we are in negative. But the Livret A is the guarantee of capital, liquidity, being able to enter and exit money at any time. So, despite a low return, the French favor this type of investment.

Is this the preferred placement of the French?

This is the most popular placement in France. Four out of five French people have a Livret A. In terms of outstandings, it’s not the first, it’s life insurance.

Who is heading for this placement?

It is not exclusively the modest French, it is all the French, essentially those who can save. So, we will find the 40% of the wealthiest households who will constitute the heart of the Livret A. Those who have modest incomes generally have little financial capacity to benefit from the Livret A and it would be better if they took out a Popular savings book with a yield of 2.2%.

Do you recommend putting your money on Livret A?

It’s a bit of a must. This is precautionary savings. We all need to have precautionary savings to deal with the vagaries of work, home or car. I advise against putting all your money available on a Livret A given its performance. What we have in addition we must try to diversify by going on a savings plan in shares, on life insurance or open a retirement savings plan.