Since February 1, 2023, the remuneration of the Livret A has increased to 3% net. The Ministry of Economy and Finance, on the recommendation of the Banque de France, has therefore tripled the interest rate of the preferred savings account of the French in just one year. This increase is significant and the public was not mistaken: outstandings increased by 6.27 billion euros in February alone.
With a return of 3% net, the interest paid can amount to 688.50 euros per year if your Livret A is full (22,950 euros maximum). While around 7.8% of all Livret A savings accounts have reached the ceiling, a majority of these investments do not exceed 1,500 euros in assets according to figures from the Regulated Savings Observatory in 2021.
23 years to double down
Whatever the amount you have invested in Livret A, the relative performance remains the same. Taking the example of a constant rate of 3% over the next few years, you will find below the table with the interest linked to this investment. To reach the 1,000 euros of cumulative interest with an initial investment of 1,000 euros, you will have to wait 23 years.
| Duration of investment | Capital | Accumulated interest |
|---|---|---|
| D-Day | 1 000,00 € | 0 € |
| 1 an | 1 030,00 € | 30,00 € |
| 2 ans | 1 060,90 € | 60,90 € |
| 5 ans | 1 159,27 € | 159,27 € |
| 10 ans | 1 343,92 € | 343,92 € |
| 20 ans | 1 806,11 € | 806,11 € |
| 30 ans | 2 427,26 € | 1 427,24 € |
There are three things to keep in mind: this is the non-inflation-adjusted return, not the actual return. Currently, if the Livret A rate pays 3% net, you will find that inflation at 6.1% in February (according to INSEE) penalizes performance. Despite the increase in savings account remuneration, the cost of living is increasing more rapidly. The real return on Livret A therefore remains negative.
Then, keep in mind that the Livret A rate will not be stable for the next 24 years – and that this example cannot be very precise. Indeed, the government can change the rate of this investment every six months, according to a defined calculation rule and external parameters. It could also be that the Livret A rate climbs to 4% net from next August.
Finally, it is important to understand the effect of compound interest. In the case of the Livret A, the interest paid each year (3% net) is automatically placed on the booklet. The following year, you will therefore receive additional interest on this newly invested interest. It is for this reason that in year 2, if the Livret A rate remained at 3% net, you would not receive 30 euros on 1,000 euros of investment, but rather 30.90 euros on 1,030 euros. placed (1,000 euros of initial capital + 3% net of 1,000 euros of interest for the account of year 1).
It should also be noted that the doubling of the capital is very sensitive to changes in the Livret A rate. Indeed, if this were 2% net on average over the next few years, it would then take 35 years to double. the money you have placed in this passbook.
