Why safe investments will no longer pay off in 2025

The French are saving more and more and are mainly looking for security in their investments. Unfortunately, the safest savings products will be much less profitable in 2025.

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The French are more ants than ever. According to the Odoxa-Groupama savings, retirement and investment barometer for Capital and BFM, they always want to save more: 72% already save every month and 36% want to save even more in the months to come. An observation shared by INSEE. In mid-December, the institute noted that the savings rate of the French reached 17.9% of their gross disposable income (income without social charges and taxes), the highest level ever reached, excluding confinement. Before the Covid crisis, the average savings rate oscillated between 14% and 15%…

“It is the current political uncertainty that pushes them to save more and more: 7 out of 10 are worried about the future of their business and 8 out of 10 about the return on their savings. French pessimism has never been so high.notes Gaël Sliman, president of Odoxa. The economic recovery seems in fact to be postponed until 2026, with growth expected to painfully reach 0.9% in 2025, according to the Banque de France, with an unemployment rate which will increase from 7.5% to 8% in 2025 and 2026. to business bankruptcies, they are higher than ever, with entire sectors and in particular that of construction, in very great difficulty (100,000 job losses expected in 2025…).

Fall in returns on risk-free savings

“In this context, security is more than ever THE top priority for the French for their savings products. For them, it counts 3 times more than performance (45% vs 14%)”notes Gaël Sliman again. With inflation rising very sharply in recent years, risk-free products followed the key rates of the European Central Bank, and offered a pleasant return, up to 6.1% for the Popular Savings Booklet (LEP) – it is remunerated at 4% net today – and up to 3% for the Livret A. Bank term accounts and money market funds, also without risk, could reach a remuneration of 4% in 2024. As for the fund in euros of life insurance or the retirement savings plan, it more or less followed the increase in yields, in particular from Livret A, the best companies offering a net remuneration greater than 3% (for an average of 2.60% in 2023) .

But the ECB is winning its battle against inflation and it once again, on December 12, lowered its key rates, with the deposit rate back at 3% and which should continue to fall throughout the first half of 2025. And who says a drop in ECB rates, says a drop in the return on risk-free savings, completely correlated with the level of inflation and… with ECB rates. The Livret A rate should increase from 3% to 2.50% and that of the LEP from 4% to 3%, on February 1, 2025. The performance of the fund guaranteed in euros should also decrease slightly with an anticipated average of 2.50 % for 2024 (announced at the beginning of 2025).

Look at other life insurance and PER supports

To find performance you will have to look elsewhere. And why not on other life insurance vehicles, those invested in corporate bonds or shares, or even on heritage funds (mixture of shares and bonds) which had disappeared from the landscape during the long period of interest rates? low, but who could come back strong?

“This distressing environment “benefits” the retirement savings plan (PER), ever more well-known and popular: 25% of French people and 43% of the “biggest” savers have at least one PER»says Gaël Sliman. But, here again, savers can be bold and rather than remaining invested in the euro fund, they could look at other supports of their PER (on equity, bond or mixed funds for example) . And for those who know nothing about it or who do not have the time to devote themselves to the financial management of their PER, entrusting it to their insurer via management profiles with a balanced or dynamic horizon is also a good idea.

The French don’t have morale, but that’s no reason not to put your money to good use!