What is savings? Savings: bank and financial investments available

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Savings generally refer to the savings we can make over the course of a lifetime. We can all, at some point, save money to deal with unforeseen situations, to finance a project or to prepare for retirement. But what exactly is saving? And what are the different investments available?

DEFINITION OF SAVINGS

Savings are the part of money that is not consumed and that is set aside. The main forms of savings :

- Liquid" savings: This type of savings allows people to have their money immediately available. These are resources that are available and used for daily living. Examples include current accounts, youth passbooks and Livret A savings accounts.

- Financial savings: Financial savings allow capital to grow and thus benefit from capital gains: it is a profitable investment. Financial savings can consist of money placed in the bank, financial products for real estate investment, which can be financed by the individual himself or herself, but also through his or her employer (company).

These investments are voluntary.

MAIN INVESTMENTS

We will look at bank investments and financial investments, as these two types of investments are the most popular.

BANK INVESTMENTS

These are generally short-term investments. They are considered to be risk-free because they do not pay much interest. They are therefore the safest investments. The most common bank investments are

- The Livret A: This is the tax-free savings account most used by the French. It is only possible to open one per person, starting at 1 euro and going up to 22,950 euros. Interest is calculated every 15 days. Thus, it is the safest bank investment but with a low interest rate (1.75% as of 1 February 2013). However, it allows you to have your savings at your disposal at any time.

- The Livret Jeune: This bank investment is reserved for 12 to 25 year olds and works on the same principle as the Livret A. The interest rate is at least equal to that of the Livret A, although banks are free to determine their own rate of interest. The remuneration is net of tax. 15 must always be left on deposit. The maximum deposit on this account is 1,600 euros.

- Interest-bearing current account: Introduced by the banks in 2005, this is an interest-bearing current account. It is possible to have a chequebook or a bank card, just like a current account. The main advantage of this bank investment is that deposits are remunerated daily. It is still an uncommon system and the remuneration is not very advantageous.

- Housing savings: Called Plan Epargne Logement (PEL) or Compte Epargne Logement (CEL). These bank investments allow you to benefit from interest-bearing savings linked to a loan. They work in two stages: firstly, the savings are remunerated, then a (property) loan is made available at a rate determined in advance when the CEL or PEL is opened, depending on the regulations. They allow you to benefit from an attractive borrowing rate.

FINANCIAL INVESTMENTS

Financial investments are more profitable. As a result, they can also sometimes involve more risk. They are generally long-term investments.

- Life insurance: A savings contract signed between the insurer and the policyholder, the aim of life insurance is to make your money grow for a future project or to finance your retirement. The policyholder can invest his or her savings in a secure euro fund or choose to boost it by investing in unit-linked products, which are subject to fluctuations in the financial markets. The range of different investment vehicles also makes it possible to combine security and return. If the insured person dies before the end of the contract, the annuity is paid to the beneficiaries designated by the insured person.

- Securities accounts: The securities account is a financial investment. It is a bank account associated with a current account allowing investment in the financial markets. It is possible to invest directly in financial products such as shares or bonds.

- Retirement savings plans: Used to finance retirement, retirement savings products allow you to build up capital or an annuity. There are several schemes available to individuals such as the Plan d'Epargne Retraite Populaire and the Madelin contract for non-salaried workers. The Plan d'Epargne pour la Retraite Collectif (employee savings scheme) and the Article 83 and 39 contracts of the CGI are company retirement savings contracts. They can be partly financed by the company for the benefit of its employees.

Financial investments may involve more risk than bank investments. They are investments that can generate long-term capital gains. There are many ways to save and it is necessary to have all the keys in hand to make the right choice as an individual and as an employee.