The Governor of the Banque de France Christian Noyer claiming for months a decline in Livret A remuneration rate , has finally been successful. Bercy has decided to follow the recommendation to reduce the rate of that regulated savings to 0.75% per annum from 1 st August. Admittedly, that rate should have fallen further, to 0.5%, if the authorities stuck to the formula strict sense. It provides for remuneration corresponding to inflation (now 0.3% year on year) to which is added 0.25 points. Still, this is the first time that the rate of the Livret A passes under the symbolic 1% since its inception in 1818 to settle the cost of the Napoleonic Wars. If the psychological impact of such a measure is not to be overlooked, that the portfolio will remain limited. Challenges.fr realized the calculation for you
& gt. For someone with 2,000 euros on its Livret A:
As noted in a study of Crédoc published in 2010, the use of the Livret A both as an investment for their savings and Classic current account is significant in low-income households. If you place 2,000 euros on a Livret A, with a rate of 1%, you get 20 euros interest the full year. Now, with a 0.75% pay rate, you no longer will receive 15 euros. A loss of € 5
& gt. For someone with 4,000 euros of savings:
This is the average amount on the regulated Booklet. With 4,000 euros, the interest earned on a full year increased from 40 to 30 euros with the rate cut, a total loss of 10 euros
& gt;. For a person who placed 10,000 euros :
The loss logically increases linearly with the amounts set aside on the most popular Passbook France. With 10,000 euros, the investor sees his net pay of 25 euros lower year on year with the new rates
& gt. For a person with 22,950 euros on its Livret A:
Under the leadership of the current government, the Livret A ceiling has been revised upwards. Since 1 st January 2013, you can file up to 22,950 euros on your book, against 15,300 euros before the election of Francois Hollande as president. People who reached the ceiling in their Livret A will see their interests go from 172.125 euros to 229.5 euros per year, or a maximum loss of a little over 57 euros per year. Even for a wealthy family with two accounts for each parent and two children have their Livret A, all the ceiling, the loss does not exceed 230 euros per year for the entire home. If the case is limited on the side of the holders of a Livret A, this does not mean, however, that there are no other more advantageous regulated savings investments (equities, real estate, life insurance, …).
And compared to inflation and taxes?
The French investors sometimes tend to forget that beyond performance displayed by gross investments, we must also look to the net real return, that is to say, after tax and taking into account inflation.
Interest earned on Livret A has the advantage of not being subject to tax. Other securities investments that pay interest (paid booklet, term account, income mutual funds, money market funds, bonds, …) does not escape from their side to the compulsory levies. But they are far from negligible. Social contributions represent 15.5% of the interest earned. It then must be added taxes on income, which weigh from 14% to 45% interest depending on your marginal tax bracket. A deposit of 24% of these taxes is also taken at the time of payment of interest, before the tax authorities will adjust the situation the following year when your tax return, even make you overflow the possible perceived
. Result: if you are subject to the last tax bracket (for your income exceeding 151,956 euros), an investment that has a gross yield of 1.75% will be less profitable after tax that Livret A tax-free 0.75%
As for inflation (0.3% year on year excluding tobacco), net real return on the Livret A is still positive and represent 0, 45%. This has not always been the case. For example, in 1981 the rate of remuneration of the Livret A was 8.5% but inflation of 13.4%. Ie a net real return of -4.9% per year.
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