Seventy billion euros more in France, fifteen billion more in Belgium… across Europe, personal savings increased in 2020. In the midst of the pandemic, households, worried and confined, could not consume as usual and preferred to top up their savings accounts. And the big winners remain the regulated savings accounts while pay rates are at their lowest… let’s see if they are still of interest and what the other options are.
The mirage of risk-free savings accounts
Everyone knows the advantages of regulated savings accounts: deposit security up to €100,000, availability of capital, tax exemption, and guaranteed interest rate. This is why this type of savings account is so popular.
There are also unregulated savings accounts known as ‘boosted savings accounts’ or ‘super savings accounts’ which display higher interest rates, with the same level of security… but which offer boosted return for only a few months, before reverting to the normal return thereafter. Another downside is that the interest received on these unregulated savings accounts is subject to tax, which means that the net rates are ultimately lower than the rates of the regulated savings accounts.
Because of successive crises, savers are more afraid of placing their money in risky vehicles and prefer to increase their precautionary savings, despite very low interest rates. However, these investments are no longer profitable because of inflation: your assets are gradually eaten away and you lose purchasing power over the years.
There are lots of negatives, but savings accounts can still be useful.
Should you keep your savings accounts?
Practical and advantageous, the savings account remains a financial product that can be part of your investment strategy, for several reasons:
- It meets the need to create a safe, precautionary savings, available to cover unforeseen expenses;
- It allows you to save for a future investment in the short or medium term;
- It is an appropriate vehicle for the youngest (adolescents, students) who do not yet have an income and do not yet have an investment perspective;
- Owning a savings account can be useful for those who have few resources and little savings, to save without constraint, while waiting for their situation to become more favourable.
Apart from these cases, if your financial situation allows it, it is preferable to invest your money in other ways, in more attractive products to boost your portfolio. To get your foot in the door, Birdee offers you the opportunity to invest as little as €50, to start investing gradually, while keeping your savings account for shorter-term projects. This is also a way to start diversifying your investments: a necessary precaution to limit risk and an opportunity to improve performance.
Two alternatives to savings accounts to stimulate your savings
There are dozens of possibilities for investing your savings, all of which have different characteristics: amount to be invested, level of risk, investment horizon, funds locked in or not, tax exemption options, etc. What do they have in common? The return is always linked to taking a risk (more or less high).
At Birdee, we have chosen to specialise in two vehicles:
- The stock market. Despite a bad reputation (linked to short-term speculation), it is an investment that offers significant potential for gain in return for a high risk of capital loss. However, it is possible to limit the risks by taking certain precautions, such as investing for the long term to smooth out market fluctuations, diversifying your portfolio across several investment vehicle categories (equities, bonds, ETFs, etc.), and investing in several securities in each category so as not to bet everything on the same horse
We offer you access to stock market investment through a tailor-made securities account, suited to your profile, starting at €50, and with reduced fees. Birdee also allows you to invest on a regular basis, for the long term, thanks to incremental investment. This simple mechanism (you make an automatic transfer every month, for example) makes it possible to flatten the average purchase price of financial assets: the investment is strengthened in a bear market and reduced in a bull market.
- Life insurance. This investment ‘Swiss Army knife’ is a very flexible investment vehicle, which meets many objectives: tax exemption, creation of capital, preparation for retirement, or even transmission of your assets. Life insurance consists of two parts, one in guaranteed euro funds and the other in Units of Accounts (equities, ETFs, etc.), which is riskier but has a higher return potential. The distribution of your assets, and therefore the risk taken, can be modulated according to your investor profile and according to the period of life you’re in, to reduce exposure to the markets as retirement approaches, for example.
In all cases, the choice of an investment solution must be considered according to your personal and financial situation. This is why Birdee offers you investment portfolios that meet your objectives and your concerns (environment, small companies, biotech, health, etc.) and are diversified, to spread the risks over various products and thus improve the return/risk ratio.