Simone Wapler – La Chronique Agora (France) –
<img class=”wp-image-44865 alignleft” src=”http://la-chronique-agora.com/wp-content/uploads/sites/3/2018/02/shutterstock_428290006.jpg” alt=”Livret A” width=”353″ height=”235″ srcset=”http://la-chronique-agora.com/wp-content/uploads/sites/3/2018/02/shutterstock_428290006.jpg 1000w, http://la-chronique-agora.com/wp-content/uploads/sites/3/2018/02/shutterstock_428290006-300×200.jpg 300w” sizes=”(max-width: 353px) 100vw, 353px” />Livret A finances the mismanagement of the state. In addition, it serves negative real interest rates. However, you can find return with an acceptable risk.
Calm has returned to the financial markets. This makes it possible to talk about things more useful and concrete than the XIV. You know, this structured structured product that is speculating on the inverse of volatility (VIX) and that has given Swiss Credit a cold sweat.
These more useful and concrete things are your money, what you choose to finance and the return on risk ratio.
When we put money aside, it is usually to deal with an unforeseen – so-called precautionary savings. Or to finance a future project. In general, when one is French, the support chosen is Livret A.
The deposited money is paid at 0.75% per year. And this rate will be maintained until 2020. The maximum amount is € 22,950. In its immense generosity, the State exempts you from taxes on the generous interest paid. That’s 172 € a year if you are on the ceiling. Big deal.
A double punishment as a saver and as a taxpayer
At the same time, inflation estimated in 2018 will be 1.1%. So your money will have lost (1,1- 0,75 = 0,35) of its purchasing power, ie 80 €. Your savings are punished instead of being rewarded. As you know, this is the result of the low interest rate policy pursued by the European Central Bank and the weak euro zone states. We must save the banks, the businesses and the spending governments. You know, these financial zombies unable to meet the interest on their debt if the rates were at normal levels (historically, of the order of 4%).
It’s a punishment, but at the risk of shocking you, I’ll say it’s a deserved punishment.
Booklet A: Your money is used to finance future sources of cost to the taxpayer
When you deposit money on a Livret A, or the booklet of sustainable development and solidarity, you put your money in the service of public finance mismanagement. Above all, you allow it to last! These two investments totaled € 376 billion in 2017.
Booklet A finances social housing: public planning and construction boards (OPAC), public housing offices (OPH), social housing enterprises (ESH). Instead of being at the service of the driving forces of the economy (the companies), your money is used to finance future sources of cost for the taxpayer.
Obviously, you are made to mirror the incomparable security of these booklets. This is the state, you will always be refunded. Zero risk is good to pay a bit (since the return is negative)? No. Certainly not. You’d better put € 22,950 in an envelope to the safe. Finally, it would be cheaper for the part of you that is a taxpayer to entrust your money to the Parasitocracy.
6.50% over 46 months, it is possible today
So, to find performance, it is obviously necessary to make a small effort. But not that big.
Emmanuel Macron gives grandiloquent speeches about helping businesses. But, in general, entrepreneurs do not seek help. They need :
- that we do not put sticks in the wheels (less paperwork, regulations, administrative barriers …);
- to finance their projects in a fluid and easy way.
On crowdfunding sites, you can lend directly to companies that have customers, revenue, profits and are looking for money for development projects.
For our Real Profits subscribers , we have already built a portfolio of 24 loans. These provide an annual gross yield of 6.50% with an average maturity of 46 months.
It’s risky ? Less than what you think …
Today, if you lend to the Greek state for 10 years, you will be paid 4.30%. In Italy, you will earn 2.06%. These two countries are so heavily indebted that they are unable to cope with rising interest rates, just like France.
Contrary to what one might think, mature business loans are not so risky as this – provided you follow the diversification rule “not all your eggs in one basket”.
In addition, we add to the usual accounting criteria that the contractor is himself “wet” and exposed to risk. This is also the theme of the latest book by Nassim Nicholas Taleb (*), Playing his skin – asymmetries hidden in everyday life . Thus, the one who gathers the gains must also expose himself to the risks. It is not enough to have a reward when all is well, you must also have a punishment when everything goes wrong.
Our portfolio is aging and we hope that our selection criteria will lead to zero defaults. <img class=”alignleft” src=”https://cdn.publications-agora.com/elements/lca/newsletter/images/contenu/180207_taleb.png” alt=”TALEB” width=”100″ border=”0″ />
So, do you also think about going on a Livret A strike? The risk-return ratio of the real economy is better than you think. In contrast, the risk-return ratio of zombie companies unable to support a rise in long rates is much worse than you think.
* Taleb is the father of the Black Swan . Former options trader, Lebanese, residing in the United States, Taleb teaches risk at the engineering school of New York University. He published his latest book in French before publishing it in English.