Feeling the sting every time you walk out of the supermarket? You’re not alone. In 2022, prices in France are soaring at a rate not seen for decades—an annual inflation of 4.8% by the end of April. The consequence? Purchasing power is shrinking, household spending is down, and saving feels like paddling upstream with a teaspoon. Still, if you’re wondering whether stuffing your mattress or splurging on a gold bar is smarter than stashing cash in a bank, the answer might surprise you.
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The Inescapable Reality of Negative Returns
It’s not rocket science—though perhaps a little basic math helps. François Geerolf, economics professor and savings expert, sums it up: periods of inflation are always bad news for savers. Consider the popular “livret A,” with its 55 million account holders: it currently dishes out a mere 1% annual yield. Against 4.8% inflation, your purchasing power takes a hit the moment you deposit your euros. According to Geerolf, most interest rates are now negative. And let’s face it, 5% returns on a bank savings account these days are about as common as unicorns.
If Saving Doesn’t Pay, Why Keep Doing It?
Cue the music: is it time to empty every bank account and spend like there’s no tomorrow? Not exactly. Philippe Crevel, director of the Cercle de l’épargne, offers a twist—despite everything, the French save more during inflationary times. In today’s atmosphere of economic uncertainty, the focus shifts from profit margins to security: as Crevel explains, people forget about complicated calculations and simply set money aside, “just in case.”
The numbers agree. Even after the COVID pandemic peak, French households are saving over 20% of their disposable income, a figure that refuses to drop despite government nudges to boost spending. In the first quarter of 2022 alone, an extra 12.2 billion euros flowed into livret A accounts. Meanwhile, 40% of the population holds a life insurance policy. It’s not just about fear—Olivier Rull, co-founder of the ethical and solidarity savings platform Caravel, points out a rational angle: in times of inflation, not investing means losing purchasing power. So yes, keeping some money put aside may actually be a sensible move—the question is where, exactly.
Alternatives: Fool’s Gold and Faltering Markets
You might think diversifying is the answer. But beware the “false good ideas.” Geerolf is blunt: company shares, especially from heavyweights like the CAC40, are currently taking a nosedive. If you must invest, says Crevel, veer toward dividend-paying stocks for some chance at gains—but that’s hardly a guarantee.
What about the time-honored tradition of buying gold or other “real” assets? Approach with caution. Many households tried this trick during the oil crisis of the 1980s, recalls Crevel, and regretted it: it took over 20 years for gold to recover its value. Not exactly a quick win. And as for real estate, the logic seems airtight—rents typically climb with inflation. Yet Geerolf warns that the government could step in to freeze or at least slow down rent hikes, making even this haven less reliable than it appears.
Why Many Still Choose to Save—For Lack of Anything Better
With so many options floundering, it’s no wonder people stick to savings accounts—even with negative real returns. Sometimes there’s simply no better choice. As Crevel concedes, even if these accounts grow more slowly than inflation, saving at least helps nurture your assets a little. That could be necessary to fund future expenses.
Another strategy? Wait, with the hope that prices come down. But as Geerolf points out, if wages climb to keep up with inflation, they won’t drop back down—and prices are likely to stay high too. In other words, at least some prices may never fall. And no one can promise inflation will disappear any time soon; financial markets expect rising prices for the next few years.
So, what’s a prudent saver to do? Rull has a straightforward formula for splitting your income:
- 50% on essentials (rent, food, bills)
- 30% on “extras” like eating out or going to the movies
- 20% on savings and investment.
That means you’re free to spend four-fifths of your earnings right away—perhaps a small comfort in uncertain times.
Conclusion: Sometimes, Saving Is the Least Unwise Option
Inflation may nibble away at your savings, but splurging or searching for miracle investments rarely works out better. When the alternatives are unstable markets or gold that takes longer to shine than your patience can handle, a little pragmatic saving—even with a pinch of regret—might just be your safest bet.
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