Investing for Income

No property or family connections with UK after house sale goes through and I leave to buy my home in France. Can anyone give me some pointers on investing my nest egg after buying in France? Ive tried several FA in UK all of which have made it as clear as mud, costly and little return to provide a very tiny income. The only ideas I have gleaned from these meetings is to invest in International companies. Does anyone have sound solid experience in this area? Not desperate yet but will be when the exchange and complete go through in a couple of months.

Hi Jilly - we have money invested through Credit Agricole. (various bits and bobs)

Whoever you bank with - you can ask their advice. Personally, we have oped for no-risk on all our investments. Our initial funds are guaranteed - but this does give us a lower return.

You will want to ensure that you can get at some or all of your money - should the need arise - so it is important to discuss thoroughly and take your time before deciding/signing anything.

@james can you remind us who is the Assurance Vie Expert ??

A good thing about investing in an Assurance Vie is that you can leave whatever percentage of it you want to, to whoever you want. Thus you can name friends and not have to go through the decendecy palava. Do though, as Stella suggests, seek advice …

Hi Stella

Thank you, I thought this might be the route but I wondered whether this was too obvious and I was missing something. What/who is @james Assurance Vie Expert? Should I know this?

Jilly

Dear Ann

Okay, thank you. I will look up the Assurance Vie !

Jilly

Jilly - @james is James Higginson, the Community Development Manager of this website/forum and he has links with all sorts of reliable and useful Experts. :hugs:

Our beloved site provider - he who is the font of all knowledge :man_teacher:

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Oops… I’m embarrassed I didn’t know this… grateful you pointed this out to me.
Jilly

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Is there any (sensible) way of getting more than about 1% interest?

If you look at the banner heading across the top of the page you will see a heading PENSIONS/FINANCE. click on that and you will get to Graham https://www.survivefrance.com/u/graham_keysell who specialises in assurance vie.

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AV still seems to only be up to about 3% net (i.e barely above inflation)

I was thinking 5-10% (I have such investments in the UK, it’s doable without excessive risk)

As I don’t live in France it is merely curiosity (but, ultimately, would be part of a decision whether to move).

Paul - one of the most attractive things about AV’s is the fact that only the growth element of any withdrawal is classed as taxable income, after deduction of a tax free allowance which increases after holding the AV for 8 years. This applies to both French and overseas based recognised (by the Fisc) AV structures. Naturally (!) the dreaded social charges will apply whatever…Essentially a really tax efficient structure and, if anyone tried to muck about with it I think it would signal the next Revolution!!

So it’s not just about the fund growth which can vary enormously - I’d say 3% is incredibly conservative for a well managed AV.

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You’re in exactly the position I was 3 or 4 years ago.

There’s a bank account Livret A I think (suspect I’m about to be corrected) that is tax free - 16k’ish max investment - returns aren’t great - but its instant access so worse places to leave your contingency funds

So … assuming French tax Resident - Assurance Vie are the closest France has to ISA. There’s no maximum opening balance or annual limits on what you invest. Within an AV there’s no tax whilst the money sits in there. When you withdraw money in simple terms only the “gain” counts as income (so invest 100k - it gains 10% - you have 110 000. Take 11k out - 1k is income.

Now there’s more to managing withdrawals - there’s break points after 4 and 8 years where tax levels change - and there’s options of flat tax or standard “income” tax.

Assurance Vie come in many forms - some are hmmmmm - some are good - some are great if you’ve got millions but bugger all use to mortals. Its like any UK investment - what the history looks like - what levels of fees etc.

There is I forget the name - but some monumentally awful AV which are close to UK Cash ISA - thats where people get the 1% figures from - performance is universally awful

There are also Sterling and Euro AVs.

Bank AV’s I’d avoid like the plague return wise - online look at Boursarama and Fortunea (?). The Prudential one I have has been solid - my other is more share/unit trust based and its been volatile.

I’m not doing personal details - but I have funds returning 21% per year and others struggling to make 1% a year. Overall its ticking along at 7-8% - but had better years when it was well into double figures.

Outside of AVs - you can invest where you like - you just don’t get tax breaks. There’s nothing to stop you holding share accounts - UK based Unit Trusts etc. whatever - taxable in France but …

I think whats available inside AV wrappers is more limited than the UK offers - but its also about my knowledge base. So I’m looking at the next step being some of the better Unit Trusts available and accept they will attract tax when the money is withdrawn

There’s two big UK “focussed” investment groups in France I’m aware of - both pretty much Expat staffed - certainly worth chatting to them

But add in how risk averse you are (hide it under the bed - or invest a banks Assurance Vie) - look at UK based Tracker funds (tend to do well over 5+ years and low fees - not amazing but the fees are low and it doesn’t require any knowledge on your part. There’s far higher risk options but you takes you pick and takes your chances.

Otherwise invest in Marks and Spencer whenever its having a bad year and sell when it has a good year seem to be a 10 year cycle.

General advice I got was assume you’ll take 4% real growth yearly from any half decent investment and that’s the figure you plan on if you keep the original investment intact - I’m working on 5% and slowly spending the bulk over the period to achieve the 5%

You can also look at pension top ups although my opinions are run as fast and far as possible from any pension company - but thats me.

I am hoping that @Graham Keysell will get into this conversation

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Hi Jilly

It’s Graham Keysell :slight_smile:

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I have looked at various methods of investing and in the end decided the best yields were in residential investment. Eschewing pretty gites and country houses, I’ve been looking at city centre flats. Yields vary - Paris and Bordeaux are rubbish, but Limoges, Saint-Etienne, Vichy, and some larger cities in the north-east offer 7-8% up to 10% gross if you’re prepared to do some renovation. Plus prices in some of these cities make it possible to purchase a house divided into 3-4 flats quite reasonably.

It may also be looking at the various tax breaks (loi Pinel, loi Denormandie) for investment in new property. However, developers’ products aimed at these tax breaks are often priced highly and you might do better in the resale market.

I have also parked money in dividend ETFs. This gives me a 3-4% yield with minimal costs in Fortuneo / Boursorama accounts, though I don’t like the exposure to stock markets right now.

Well we get 10% net on our Paris flat, and 6% on our pretty gîte.

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A neighbour has a number of garages in Paris - he gets a healthy income from their rentals - all long-leases and with virtually no upkeep. :hugs:

Mind you - I don’t know how much Tax and Social he pays on that lot.

10% is really good for Paris. You must have bought well or put some work into it :slight_smile:

I see a lot of recommendations for garages on French personal finance blogs. But the problem is that notaire’s fees make them uneconomic (round here anyway) unless you buy five or six as a lot (apparently some people try to buy up the unsold ones from new blocks of flats). I think the tax is slightly more than on residential property as you don’t get the allowances you would on a resi rental.

Yes, we bought well I think. Which is good as the idea was that it would be OH’s pension rather than investing in private pension that relied on stock market. With depreciation the tax is minimal, so just (!) social charges.