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Who doesn’t want to save for later? Just be able to put a few pennies aside, pennies that can be used if necessary. Or the fact of being able to put money aside and create capital for your children when they start their own life, to save for your own future when you retire. These are all good initiatives, but how do you get there effectively?
Have a Livret A, at any age
Historically the livret A was available for the very first time at the Savings Bank, today you can open one at each of the banks. The pay rate fluctuates based on interbank rates and inflation.
Who can own a livret A?
Anyone can open a Livret A, regardless of age. Even a minor child can have one, however it will be managed by his parents until he comes of age. Be aware that it is not possible to have several Livret A
The advantages of the A booklet
It is a risk-free product, the capital is guaranteed and the rate of return is not set by the banks, but by the government. It is enough to put a minimum of 10 € generally to activate it. Finally, the remuneration of the Livret A is not subject to any tax, social security tax or deduction.
The disadvantages of the Livret A
The maximum deposit on the Livret A cannot exceed 22,950 €, at least to spend on a Livret de Développement Durable which is similar to the Livret A and you can increase this ceiling by 12,000 €. The interest rate has been 0.75% since 2015.
The bank savings account, with multiple choices
The distribution of these booklets has been widely developed in recent years. Many players have specialized in this type of product, such as AXA, ING for example. The remuneration is often an entry bonus and the rate is often boosted during a given period to an amount that is limited.
Who is this type of booklet for?
Every adult has the possibility to open this type of booklet. And there is no limit to the number of booklets owned. However, it will be necessary to wait for his majority to be able to launch this type of savings.
The advantages of this booklet
Interest rates are generally boosted, around 2% over a few months. This type of passbook guarantees a capital and you will not have any surprise with the remuneration, because it is known in advance. Another advantage is that you can have the funds available after a week. It is not possible to have only one booklet of each type, but you can combine them.
The disadvantages of this booklet
Despite advantageous rates in certain periods, the rest of the time the rate is around ‘1%. In addition, this remuneration is subject to a flat-rate deduction of 24% to which must be added the social security contributions which are 17.2%.
The Savings Plan in Action (PEA)
The benefit of tax conditions is very advantageous in return for the investment in various limited supports. The sums paid into a PEA must be invested in French or European equities. The sums received from this PEA can be either in the form of a capital or a life annuity, moreover these sums are not subject to income tax.
Who is the PEA for?
Once the majority is reached any person can have a Savings Plan in Action. However, it is only possible to own one, as for the Livret A. To be able to open a PEA, you must obviously be domiciled in France. In addition, it is only possible to have one per person, which means 2 per household, generally if there is no adult child.
The advantages of PEA
The amounts earned are capitalized sir the PEA and are not subject to any taxation, as long as the money is not withdrawn. If the saver waits 5 years before withdrawing the money from this PEA, again he will not be subject to any tax, only social security contributions will be due. After the 8-year period, the PEA will no longer be able to be funded, but withdrawals are still quite possible. This makes it possible to move the start of payment for an annuity for example.
The disadvantages of this savings plan
It’s money invested in action, it can’t be the only financial investment. The ceiling is € 150,000. Despite the advantageous remuneration, there are risks for the invested capital. It is a long term investment, because it is better to wait 5 years before withdrawing the money. You are subject to fees, 6.30 € for all operations, plus a commission which varies depending on the bank.
Life insurance, the preference of the French
It is one of the most used and preferred media of the French. It is not really a financial investment, but more a fiscal envelope in which it is possible to subscribe to different financial supports. These supports will correspond to your objectives and involve different risks.
Who is life insurance for?
Every good saver should have a life insurance policy, and you’re not limited to just one policy. And sometimes the banks allow the opening of this type of contract for minors and the parents are the main managers until the majority of the person in question.
The benefits of life insurance
The gains owned on this contract are not subject to any taxation, as long as no sum is withdrawn. No taxation is incurred up to € 152,500 per beneficiary, the conditions are the same if there is no family link between the insured and the beneficiary. This savings is flexible, the capital is available at all times.
The disadvantages of life insurance
There is no real downside to taking out this type of contract, however the offer is wide, so you have to make your choice of contract. You have to make sure that you keep costs down and that the contract is open enough to cover all the investments you want to make.
There are therefore several solutions for making investments. Each of them has advantages, but also disadvantages. You must therefore ask yourself the right questions, to make the best investments according to your needs.