Should we boycott life insurance and prefer savings account A?

The Livret A rate rose to 2% on August 1st. Of course, that’s little with inflation now exceeding 6%… But it’s still good news for savers who might hesitate to invest their money in a fund denominated in euros, whose average return in 2021 will reach 1.30%. he, yes or no, boycott life insurance in favor of the famous set of rules?

Since Monday August 1st, the rate on your savings account A has doubled to 2%, net of all taxes! A return that is below the inflation rate, but certainly makes you hesitate to continue investing your money in the euro fund of your life insurance. So money in euros or a savings account?

1 – How much do you earn with it?

Like all French people who invest their money in a savings product, the main reason for this choice is performance. with, on one side, 2% on your savings account A or other LDDS and on average 1.30% (in 2021) on your capital guaranteed fund of your life insurance contract, the calculation is done quickly! But for 2022, the difference isn’t so obvious.

The Livret A savings account earns you 2% interest calculated every two weeks from August 1st. However, it is useful to remember that the rate was 0.5% between January 1st and February 1st, and then 1% until August 1st. Which is actually an annual rate… 1.375%.

Your fund in euros earns you an annual average of 1.3% interest. A rate with no management fees, but you have to opt out of it 17.2% social security contributions.

By depositing 10,000 euros in your savings account at an average annual interest rate of 1.375%, you will receive 137.50 euros in interest. By paying this amount into the euro fund of your life insurance, you receive 130 euros in interest, from which you take 17.2% (i.e. 22.36 euros). You only have 107.64 euros in your pocket.

SIMULATOR. Discover the actual return on your savings account A in 2022 (spoiler: it is mostly negative)

If the savings account A remains more interesting, the difference is not as great as one might initially think. The most important savings market interest rate is the Livret A interest rate. The increase in the rate of regulated savings accountswhich will be continued in 2023, will increase life insurance returns. It is done little by little to achieve 1.7% or even 1.9%. It will never be as much as the Sparbuch A, but the gap is getting smaller, analyzes Cyril Blesson, partner at the specialist company PAIR Conseil.

Victory (narrow) for Livret A.

2 – How much money can you deposit?

As you know, Livret A Upper limit 22950 euros and you can only open one. So you can only place a maximum of 22,950 euros, once the upper limit has been reached, only the interest generated will be added.

You can invest as much money as you want on your life insurance contract and on as many contracts as you want.

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The increase in the Livret A rate will boost the collection of regulated booklets, but it risks being hampered by the caps, stresses Cyril Blesson.

Life Insurance Victory.

3 – Where can you diversify risks and investments?

The euro fund very often represents only part of your life insurance investments. The latest figures from France Assureurs confirm this. While the net inflow of funds into funds in euros declined (EUR -8.8 billion in the first half of the year), unit-linked funds reached EUR 20.9 billion. For comparison: Sparbuch A accounts recorded net inflows of 16.5 billion euros in the first half of 2022.

Life insurance: will the return on your euro fund finally increase with rising interest rates?

Often pushed by insurance companies, the French are taking more and more risks in order to achieve higher returns. Investing in life insurance allows you to juggle Easier to the different units of account and from Securing Capital Gains on the euro fund. In these conditions, it is difficult to compare a savings book and life insurance, which is more complex and allows you to take risks for a medium or long-term savings project.

Life Insurance Victory.

4 – Where is your money most accessible?

Whether to your Sparbuch A or to the euro fund of your life insurance contract, you have the option of withdrawing your money as soon as you need it. But one difference remains. With Sparbuch A, a simple transfer is sufficient, which arrives in your checking account within an hour; with life insurance, it’s another pair of sleeves. You must request your insurer who will then pay the amounts within a period of 2 to 10 days.

5 – Cost: Which product is more expensive?

Opening, adding, withdrawing or closing your Livret A account: all these operations are free of charge. This is not the case with life insurance: membership, entry or payment fees, management fees, arbitration fees, increase for pilot administration, pension fees… If these operations are more or less expensive depending on the insurer, accessing them is now easy to be able to negotiate them. See the summary table of costs, which has been available on retailers’ websites since June 1st.

Result… Why choose?

The increase in the rate of the Sparbuch A and other regulated booklets, while welcome, is not a sufficient reason to boycott life insurance and the euro fund in particular. Especially since the fund in euros within a life insurance contract is just one subsidy among others. Contract with various objectives: provisions for retirement, succession, medium-term savings… Savings book A remains a precautionary savings medium.

If both have certain advantages, it is best to combine them. And being able to put up to 22,950 euros on a Livret A means you don’t have to put that money back into your current account every week… It would therefore be wise to keep some of those savings available in your savings account A, but at the same time continue to feed your life insurance (money in euros or another medium).

Compare life insurance policies

Kaddouri Ismail

I am Ismail from Morocco, I work as a blogger and online marketer. I am also the founder of the “Mofid” site, in which I constantly publish many important articles in the field of technology, taking advantage of more than 5 years of experience working in the field. I focus on publishing in a group of areas, the most important of which are programming, e-marketing, digital currencies and freelance work.

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