You can increase your income by using inflation to your advantage, says Daniel Butcher
Rising inflation is generally perceived with negativity, but in the current climate it can bring expats financial gain. Holders of an Assurance Vie – an insurance-based investment scheme – or those who take out such a policy can tap into the benefits of inflation and expand their earnings.
Every Assurance Vie policy comes with managed funds to choose from, as well as a “fonds euro” or euro fund. While it is the only fund in Europe that is completely guaranteed – and therefore very secure – the protection is only for capital, not the accompanying interest rate. Once hovering around 6 % net fifteen years ago, in these more austere times it sits at 1,5% net – but inflation is changing the picture.
“Inflation has boosted the ‘fonds euro’ interest rates so one can imagine getting at least 3% net this year,” said Daniel Butcher, founder of DTB Wealth Management. “There are ways to top this up with bonuses – perhaps for having more than 40% of your Assurance Vie’s portfolio in risky assets – then adding to the higher rates it’s possible to reach 3,5% net or even 4% net for the best-in-class schemes.”
Before starting DTB Wealth Management, Daniel was an inspector at global French insurance company AXA managing over 250 British expat clients. Driven to help expats get the best out of the French financial system, he warns those looking into Assurance Vie options not be tempted by the Irish policies. These are largely proposed to the British expat community but can have dire inheritance-related consequences.
“A problem occurs when the policy holder deceases because Ireland Assurance Vie managers do not have any knowledge about French inheritance laws,” said Daniel. “Whereas in France or Luxembourg, all tax and succession documents are easily accessible or provided by the insurers – this is not the case in Ireland.”
He added: “I’d advise British expats in France not to neglect the French Assurance Vie policies, but anyone with over €100,000 should likely choose Luxembourg-based bonds where 100% of securities are protected.”
Overall, it is crucial that expats choose a knowledgeable, qualified and client-dedicated advisor, who will match the best Assurance Vie options with the client’s specific criteria and portfolio.
“DTB Wealth Management is more than just an independent financial advisor, we’re regulated in France and we’re also bilingual with experience of living in both the UK and France,” said Daniel. “We’re in a unique position to support expats and ensure they have the most lucrative and secure financial arrangements in France. Anyone interested to find out more should get in touch, we’d love to help.”