Saving money in France: What's the best option?
Ever wondered what's the best thing to do with your savings in France? As part of our "Ask The Experts" series we've invited expat financial adviser Jonathan Cooper to tell you what to do with your hard-earned euros.
With the interest rates on Livret A Savings Accounts dropping as low as one percent in August and set to go even lower in the coming months, the prospects of making your savings pay, do not appear rosy. At least at first glance.
But there are other options for where to invest your hard-earned euros.
We asked Jonathan Cooper from the Paris office of independent financial advisers, The Spectrum IFA Group, to tell us, in his opinion, what the best option is.
Cooper: “If you have anywhere from €20,000 to multi-millions in savings then you should think about opening a life insurance policy (Assurance Vie).
"Around €3.2 trillion is invested in Assurance Vie and every French bank will offer it, as well as international providers like Prudential and SEB Life, who provide French compliant Assurance Vie’s with English written contracts.
"For English speakers, I would recommend going through an international insurance company rather than a French bank or French insurance company.
“It is basically a long term savings plan which allows you to invest in funds of your choice.
“You are able to withdraw your money at will and, although some policies have early redemption penalties, most have set limits where no penalty is incurred – usually between 5 and 75% for the first 5 years and then no penalty at all. However, why would you set up a lump sum policy and then withdraw it a few months later?
“The French Assurance Vie is like having a UK unlimited ISA (interest free savings account). It grows tax-free from day one and you will only pay tax on the gain element of what you withdraw, when you withdraw it.
"There is a part of the French tax return which asks if you have set up any Assurance Vie policies during the year, and if you have received any income from the policies.
“Personally, I am not a fan of monthly savings plans, they tend to be expensive and inflexible. Signing up to a plan for between 10 and 20 years where you are committing to a monthly amount which, while affordable now, may not be in 5 years time, is not a wise decision.
"I would urge you to build up your savings in a Livret A. When you have between €20,000 and €30,000, invest it as a lump sum in an Assurance Vie and then top up when you have sums of around €7,000 to €10,000.
“Assurance Vie policies are also a great way of Estate Planning.
“In short, Assurance Vie is the most tax efficient, flexible, client-friendly investment model available in France.
It is, however, just a model. What makes the money grow is the choice of underlying investments, which we take very seriously. Every client is given a full financial review and evaluated on their attitude to risk - because funds, like property and all types of investment, can go down as well as up.
"Every client is different and we, as a group, work with our clients on the investment strategy that suits them.”
Jonathan Cooper is with The Spectrum IFA Group, which specialises in assisting expatriates moving to France or already living here with tax efficient solutions for savings, investments and pensions. For more information visit their website by CLICKING HERE. If you are living in or around the Ile-de-France or northern France you can email Jon direct on [email protected] or call on 07 50 87 59 69.
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With the interest rates on Livret A Savings Accounts dropping as low as one percent in August and set to go even lower in the coming months, the prospects of making your savings pay, do not appear rosy. At least at first glance.
But there are other options for where to invest your hard-earned euros.
We asked Jonathan Cooper from the Paris office of independent financial advisers, The Spectrum IFA Group, to tell us, in his opinion, what the best option is.
Cooper: “If you have anywhere from €20,000 to multi-millions in savings then you should think about opening a life insurance policy (Assurance Vie).
"Around €3.2 trillion is invested in Assurance Vie and every French bank will offer it, as well as international providers like Prudential and SEB Life, who provide French compliant Assurance Vie’s with English written contracts.
"For English speakers, I would recommend going through an international insurance company rather than a French bank or French insurance company.
“It is basically a long term savings plan which allows you to invest in funds of your choice.
“You are able to withdraw your money at will and, although some policies have early redemption penalties, most have set limits where no penalty is incurred – usually between 5 and 75% for the first 5 years and then no penalty at all. However, why would you set up a lump sum policy and then withdraw it a few months later?
“The French Assurance Vie is like having a UK unlimited ISA (interest free savings account). It grows tax-free from day one and you will only pay tax on the gain element of what you withdraw, when you withdraw it.
"There is a part of the French tax return which asks if you have set up any Assurance Vie policies during the year, and if you have received any income from the policies.
“Personally, I am not a fan of monthly savings plans, they tend to be expensive and inflexible. Signing up to a plan for between 10 and 20 years where you are committing to a monthly amount which, while affordable now, may not be in 5 years time, is not a wise decision.
"I would urge you to build up your savings in a Livret A. When you have between €20,000 and €30,000, invest it as a lump sum in an Assurance Vie and then top up when you have sums of around €7,000 to €10,000.
“Assurance Vie policies are also a great way of Estate Planning.
“In short, Assurance Vie is the most tax efficient, flexible, client-friendly investment model available in France.
It is, however, just a model. What makes the money grow is the choice of underlying investments, which we take very seriously. Every client is given a full financial review and evaluated on their attitude to risk - because funds, like property and all types of investment, can go down as well as up.
"Every client is different and we, as a group, work with our clients on the investment strategy that suits them.”
Jonathan Cooper is with The Spectrum IFA Group, which specialises in assisting expatriates moving to France or already living here with tax efficient solutions for savings, investments and pensions. For more information visit their website by CLICKING HERE. If you are living in or around the Ile-de-France or northern France you can email Jon direct on [email protected] or call on 07 50 87 59 69.
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