LEP, SCPI, gold… These six investments can protect your savings against inflation

As inflation continues in France, finding an investment capable of earning you enough money to maintain your current level of purchasing power is becoming more and more difficult. Only a few assets still manage to outperform rising prices. The MoneyVox editorial team has selected 6 of them for you.

In August, inflation reached +5.8% over 1 year, according to INSEE estimates. While energy remains the hardest hit sector, everyday products are not spared by soaring prices either. Nielsen, for example, observes +18.3% average increase in pasta prices. Oil (+15.6%) and butter (+13%) have also seen their prices skyrocket over the past 12 months.

In this context, your Livret A will not be of much help to you. Despite two consecutive rate hikes, the preferred investment of the French still shows a relative return. Result: when you put money into your Livret A now paying 2% (or worse, when you leave your savings in your current account), you lose purchasing power. Fortunately solutions exist to fight against inflation.

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1. Stocks of companies with strong pricing power

In an inflationary environment, companies have two options: increase their prices at the risk of losing customers, or not pass inflation on to their prices and see their margins erode. However, a company with a strong brand or a real competitive advantage will be able to draw its pin from the game, because it will be more easily able to impose a price increase on its market. We then speak of pricing power.

The evolution of the price of an individual ticket to access Walt Disney World Park, Orlando, is a good illustration of this phenomenon. When it opened in 1971, tickets were offered $3.50. If their price had increased in line with inflation, these same banknotes would today be worth $22 about. But in fact, they are flowing today over $100 the unit.

The purchase of shares is however reserved for seasoned investors, insofar as any investment in the stock market presents a risk of capital loss. If price fluctuations don’t scare you, and you already have comfortable savings, there are funds specifically dedicated to stocks with strong pricing power, such as Amplegest Pricing Power.

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2. SCPIs

On paper, civil real estate investment companies (SCPI) have everything from the perfect anti-inflation investment. According to France SCPI, this investment pays off 4.20% on average over the first six months of 2022. And some SCPIs even manage to beat inflation, like Iroko Zen (7.10%) and Corum Origin (7.03%).

Over the past twenty years, the performance of SCPIs has exceeded inflation almost every year, observes Jonathan Dhiver, founder of mieuxSCPI.com. And it is not a hazard. The yields of SCPIs depend mainly on the rents they collect. However, the latter are indexed to the Rent Reference Index (IRL), the Commercial Rent Index (ILC) or the Tertiary Activities Rent Index (ILAT), all three of which take inflation into account.

Indexing rents to inflation is excellent protection for savers, says Clment Renault, co-founder of online brokerage firm Louve Invest. When prices soar, the indices increase, and rents can be revalued accord- ingly. At least in theory. Because to limit the impact of inflation on the budget of households and small businesses, the government has recently implemented a rent shield. Result? Rent increases are capped 3.5% until June 30, 2023.

Second downside: to curb inflation, the European Central Bank has started to raise its key rates, which is not without danger for the real estate market. These increases will affect the rates of loans granted by banks, explains Clément Renault. However, if credit rates increase, fewer people will be able to borrow. Demand is then likely to fall, and land prices could suffer.

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3. The popular savings account (LEP)

If you are highly risk averse and want to favor liquid investments, the People’s Savings Account (LEP) is your best option. Its interest rate is in fact based on the average annual inflation observed over the last six months. Result? His compensation has been increased 4.6% on August 1, 2022. With the rise in prices, it could even drop to 6.5% in February 2023 during its next revision.

At the present time, no other liquid investment without risk of capital offers a return equivalent to that of the LEP. However, the opening of this booklet is subject to means test. To benefit from this booklet, your reference tax income must not exceed the legal ceiling of 20297 euros.

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4. Inflation-linked bonds (OII)

It is impossible not to mention inflation-indexed bonds (OII) in this list. This investment is aimed specifically at investors who wish to protect themselves against rising prices. Since 1998, the French State has, for example, issued equivalent Treasury bonds indexed to the consumer price index in France (OATi) or in Europe (OATi).

The advantage: if prices rise, the yields on your bond increase accordingly, making this investment a powerful bulwark against inflation. But beware. These investments are remunerative in times of inflation, but generally yield less than a conventional bond in the absence of a significant price increase, warns Philippe Crevel.

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5. Gold

Ah, gold… The sacrosanct safe investment does it work against inflation? In theory yes. Mechanically, in the event of inflation, the value of the currency falls. It then takes more money to buy the same quantity of gold, decrypts Jean-Franois Faure, founder of the AuCoffre.com platform, for whom gold has its place in a well-diversified portfolio.

Should we therefore invest in the precious metal? Nothing is less certain, because central bank policy, stock markets and geopolitics are all factors that can influence the price of gold, independently of inflation. On July 22, the price of an ounce of gold, for example, fell $1700its lowest level since the beginning of the year.

Another downside: in the event of a price change, we can get stuck with its golden mattress, and this placement does not produce no returnswarns Philippe Crevel, economist and director of the Cercle de l’Epargne.

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6. Cryptocurrency staking

Cryptocurrencies have been rocking since the beginning of 2022. Bitcoin, the most famous digital currency, is currently trading around $21000far from the historic peak of $69,044 reached on November 10, 2021. And its main rival, ethereum, lost more than 55% of its value within 6 months.

However, if you are willing to take risks, the ecosystem still offers attractive returns, especially through the stakinga practice which consists of immobilizing part of your cryptos for a few weeks or a few months to secure a network of the type proof-of-stack (proof of stake).

At the time of writing, the Lido platform offers you, for example, an annual remuneration of 5.3% if you stake Ethereum tokens and up to 16.4% if you stake Polkadot tokens. However, these rewards will be paid to you in stake cryptocurrency. If the price of the latter unscrews, you risk losing more money than you won.

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Anti-inflation investments: the results

Inflation results in a loss of purchasing power currency. To limit its impact on your savings, solutions exist. However, it is important to keep in mind that inflation is only one of the components likely to influence the value of your investments. Other factors are to be taken into account before you decide.

Moreover, with the exception of the People’s Savings Account, the anti-inflation investments listed in this article systematically involve taking risks or immobilizing your money for a certain period of time. Caution is therefore still required if you opt for this type of investment.

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LEP, SCPI, gold… These six investments can protect your savings against inflation

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