As French savers seek low-risk investment options, they face dwindling returns from traditional accounts like the Livret A. This popular savings account, known for its 100% capital guarantee and liquidity, has seen its net interest rate drop from a peak of 3% to 2.4% as of February 1, 2025. Experts predict it will fall further to 1.7% by August 1, 2025, prompting many to explore alternative investment avenues.
In March 2025, deposits in the Livret A only exceeded withdrawals by 400 million euros, marking the worst performance for the month since 2016, according to data released by the Caisse des dépôts et consignations (CDC) and reported by Agence France-Presse (AFP). The total amount collected from both the Livret A and the Livret de développement durable et solidaire (LDDS) was just 1.02 billion euros, the lowest figure seen in nine years. This stark decline reflects the challenges posed by falling interest rates and rising inflation.
Antoine Delon, president of the brokerage Linxea, notes that "today, there are very attractive 100% Euro fund offers available. Some contracts allow for boosted returns of up to 4.5% on a liquid product, guaranteed in capital and much better remunerated than the Livret A, and this without taking on additional risk." This shift is evident as more French citizens are transitioning from the Livret A to life insurance options.
The Euro funds, often seen as a natural alternative to the Livret A, offer a similar capital guarantee while providing slightly higher returns. In 2024, these funds averaged a return of 2.6%, which translates to 2.15% net of social security contributions. Some of the best contracts on the market yielded returns as high as 4.65% in 2024, enticing cautious investors.
Another investment option gaining traction is the sociétés civiles de placement immobilier (SCPI). These funds allow investors to purchase shares in real estate investments, which generate rental income. Although SCPI investments carry a moderate risk of capital loss, they offer a compelling average return of 4.72% in 2024, with top-performing products exceeding 10%. Olivier Herbout, co-founder of the investment platform Ramify, explains, "With the decline in returns from low-risk investments and the anticipated recovery in the real estate market, we see many clients returning to this asset class." However, investors must remain vigilant about the tax implications of SCPI investments, as rental income is subject to income tax based on the marginal tax rate and social contributions.
For those willing to take on a bit more risk, bonds present another avenue for potential returns. Currently, lending to states or large "investment grade" companies can yield between 3% and 4%. For investors open to riskier corporate bonds, returns can climb to as much as 7%. Delon points out that "some funds available in life insurance aim for performances exceeding 5% by 2031," making bonds an attractive option for those looking to diversify their portfolios.
As of March 31, 2025, the outstanding amounts for the Livret A and LDDS were 444.2 billion euros and 162.4 billion euros, respectively, totaling 606.6 billion euros. Despite the low collection in March, these figures reflect the continued popularity of these savings accounts among the French public. However, the Livret d’épargne populaire (LEP), designed for modest savers, also struggled, with a net collection of just 140 million euros in January and an outstanding amount of 82.8 billion euros.
Looking ahead, Philippe Crevel, president of the Cercle de l’épargne, warns that another drop in the Livret A rate is "probable" by August 1, 2025. This anticipated decrease is influenced by both inflation and interbank interest rates, which have been declining in recent months. This trend has led to increased competition from other guaranteed savings products, such as Euro funds in life insurance, which have drawn significant interest from savers.
As the landscape of savings and investment continues to evolve, French savers must adapt their strategies to navigate the changing economic environment effectively. With the Livret A's appeal waning due to lower returns, exploring options like life insurance Euro funds, SCPI investments, and bonds may prove essential for those looking to safeguard and grow their savings.
