Savings: How to take advantage of rising interest rates

The European Central Bank’s (ECB) key interest rate rose from -0.50% a year ago to 3.25% in early May, following its seventh hike in as many months. the purpose? Maintain price stability. The target is a long way off, as inflation in the euro area was still 7% year-on-year in April. A sharp rise in short-term interest rates has a direct impact on the return on secured investments. Here are the investments for that rate increase.

regulated booklets

Livret A and Livret de Développement durable et solidaire (LDDS) yield 3% (exempt from taxes and social security contributions) from year 1.^Eh February, against 0.5% until January 31, 2022. These are the most profitable risk-free investments in the market, apart from the popular savings account. The right strategy is to finish them before looking at other solutions after reaching the ceiling (€22,950 for Livret A, €12,000 for LDDS).

Their yield can be further increased from 1^Eh August 2023, next revision date. This depends on a calculation formula that consists of achieving an average between short-term interest rates and inflation, ie a rate between 4.3% and 4.5% under the current conditions of these two parameters. “Bruno Le Maire promised new growth, but he should not use the calculation formula as it is, especially because it penalizes the banks, Philippe Crevel, director of the Cercle de l’épargne, explains. It is estimated that Answer Book A’s rate will drop to 3.5% on 1^Eh August, a level not seen since 1998.

It should be noted that the future “Climate Savings Plan” that Bers offers to persons under 18 should show higher benefits than Livret A, but it is not a cash management product because it is blocked until the child.

Bank books

Bank books offered by banks yielded an average of 0.54% in March, according to the Banque de France. Scarce loot. However, the best ones show rates of 2% or even 2.5% before tax at Hello Bank. The interest rate is subject to a one-time flat rate deduction of 30% or, optionally, the income tax scale. Therefore, the net profit is 1.4% or 1.75%, very far from Livret A.

The only advantage is that bank books allow you to invest up to several million euros. Savers of large sums, for example after a gift or inheritance, should fill out their regulatory documents first, then their bank book, prioritizing those offering a welcome offer to new customers. This multiplies over the course of several months in the face of competition between institutions. They are generally valid for a few weeks, so you should look for the most attractive offer when opening your account.