LEP, PEL, life insurance… What are the solutions to avoid losing money in the face of inflation?

For several decades, the livret A was globally indexed to inflation. And the euro life insurance fund was often above the latter. “The French therefore never asked themselves questions about what to do with their money”, recognizes Maxime Chipoy, president of Moneyvox, a website for the general public, specializing in budgetary issues and personal finance.

But the rule has changed. And faced with inflation that rises a little more each month, by doing nothing, the loss of purchasing power can reach very significant levels. To offset this increase, at least in part, solutions exist. Overview.

1 – With the current account, it’s 100% loser

If there is one thing not to do, it is to leave your money in your current account or in bank books whose starving rates are around 0.10%.

“Many French people sometimes do not even bother to make a small transfer from the current account to the Livret A or another. With that, it’s 100% loser. Today, when you don’t take risks, you are sure to lose purchasing power.

Maxime Chipoy (President of the Moneyvox site)

2 – Regulated savings: do not forget the LEP

Among the products offered in the context of regulated savings is of course the A booklet, particularly popular with the French, and whose rate rose to 2% on August 1. “The Livret A, it’s not that bad, notes the president of Moneyvox. But it’s precautionary savings so you have to put in the equivalent of three or four months’ salary, not much more”. Because in the face of inflation, if you leave it full for several years, you will leave feathers there.

Why, despite rising interest rates, it is still worth investing in real estate (May 2022)

Much less known, the People’s Savings Account (LEP), may appear as an alternative. Reserved for people who pay no or very little tax, its ceiling is set at 7,700 euros but its interest rate rose on August 1 to 4.6%. “It’s the only savings product, or almost, that guarantees you against inflation because the rate is calculated on the last six months of inflation”.
Also remains the Housing savings plan (PEL), provided that it is old. Indeed, the rate set at the opening does not change and those offered recently are not very interesting.

3 – Life insurance: riskier… but not that much

Offered by many banking or insurance institutions, they are divided into two compartments: the euro fund and the unit-linked. The first, secure part of life insurance, “is less and less profitable, warns Maxime Chipoy. Those opened with your banker will not bring in much and cause a lot of costs, while those opened on the internet will bring in a little more, are free of charge, and are often backed by large companies.
The vast majority of sums invested by the French in life insurance are on these contracts, ultimately not very interesting.

To try not to lose purchasing power, you have to go to the units of account. “This is where it gets a little complicated and where you have to take risks,” warns the specialist. Even if, over the long term, from 5 years, the risk is ultimately not very high and the return is much better than on the euro fund or the Livret A account”. If you are not very comfortable, you can choose managed management and give the keys to your life insurance to a professional, who will manage your money according to your wishes.

Purchasing power: the National Assembly votes a “rent shield” and the revaluation of APL

4 – Real estate: always a safe bet but…

To expand your range, there is also real estate. Live, of course, by buying a property with the risks that entails (rental, falling prices, etc.), or through an SCPI. A real estate investment company is a real estate investment fund that buys and manages dozens of homes, shops or offices. A way of investing in real estate while limiting the risks, even if significant costs are to be integrated at the start.

5 – The scholarship, reserved for specialists

If you have made your precautionary savings with the livret A, diversified your savings with life insurance, or even invested in real estate, and you still have the means, you can turn to the stock market, by opening a PEA or a securities account, and invest in investment funds or shares. “There, you still have to be well informed, warns Maxime Chipoy. And respect a basic rule, diversify your investments well and not put all your eggs in one basket”.

Maxime Escot


Leave a Comment