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In France, many parents are keen to prepare their children for the future. For this, they are exploring different options. Among the popular ones, the Livret A, the PEL and life insurance. If they are essential, it is because they are solutions that are both simple and accessible.
However, they do not allow you to obtain a very attractive return. However, a less popular savings strategy can be much more successful in the long term. According to a finance expert, it even allows you to avoid taxation on the gains made. Our sisters from Women's Journal let us know, so we share this valuable information.
Forget Livret A in favor of a more interesting option
Rather than limiting yourself to classic savings products, such as Livret A, Nicolas, financial advisor, highlights a different approach via a securities account. On his TikTok account (@nicolas_finance), he takes the example of Sophie, a young mother of 34 years old. As soon as her daughter was born, Sophie decided to opt for a securities account, a more efficient solution than an A booklet, whose yield is very low.
A securities account allows you to invest in the stock market, particularly in ETFs (Exchange Traded Funds), index funds. Historically, the stock market displays an average performance of +8% per yearmaking it a very attractive option.
To have
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By investing 200 euros per month, Sophie could allow her daughter to have a capital of almost 100,000 euros upon reaching the age of majoritywith a capital gain of 60,000 euros. Enough to overshadow Livret A, isn't it?
How to avoid taxation?
However, we know that Livret A earns points fiscally. Indeed, the money you earn from it ends up in your pocket and only your pocket. It is not subject to income tax.
However, within the framework of the securities account, the gain is not exempt from tax. In fact, capital gains generated on a securities account are subject to at a taxation of 30% (social security contributions included). This would represent an amount of 18,000 euros to be paid to the tax administration.
To get around this constraint, Nicolas offers a clever solution: keep the securities account in the parent's name until the child turns 18. At that point, the parent can transfer all of the securities as a gift.
How does the securities account work?
This notion of a securities account can scare savers. In fact, they know Booklet A well and know how to use it. But they fear not understanding the functioning of other savings products.
To have
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To put it simply, a securities account offers the possibility of investing in a wide range of financial assets, from stocks to bonds, through mutual fund shares and ETFs.
It should be kept in mind that financial markets fluctuate, which may temporarily affect the value of the investment. A long-term vision and thoughtful management are therefore essential to maximize gains.
Parents must ask themselves, compare the possibilities and find the one that is best for the children's future. Please note that it is not obligatory to opt for just one option. Indeed, if Livret A reassures you, nothing stops you from opening one. However, opening a Livret A should not prevent you from turning to alternatives.
