If your portfolio isn’t generating the income you’d planned for, there is an alternative solution, says Daniel Butcher of DTB Wealth Management.
Amidst the ongoing energy crisis and cost-of-living increases, the last twelve months have seen a decline in the financial markets. Assets, equities, bonds and funds have faced problems, reducing the value of portfolios and making life more challenging for many expats in France.
For those who need to generate income, there is a stable, alternative solution to an Assurance Vie product called the “SCPI de rendement”. This consists of a grouping of investors who acquire real estate for rental. A management company oversees the SCPI (Société Civile de Placement Immobilier) and is responsible for finding, buying, renting and managing the properties, as well as distributing income to the shareholders.
“The good news is that this SCPI product is stable, doesn’t go up and down like a yoyo, and is tailored to generate income for its owner every three months, for life,” said Daniel, “Whilst 100% of all financial-based assets crashed during the early days of COVID-19, SCPIs, like Epargne Pierre, managed by Atland Voisin, continued to give a positive 5.35%. In general, the SCPIs have not moved one iota.”
There are more than 96 different SCPI providers, but they all offer the same advantages, including being professionally managed and easy to resell – plus there are no charges.
DTB Wealth Management is an expert in this area and helps British expats in France to choose the product that best meets their objectives. “One can choose where to invest, in what type of asset and where – outside France in the EU, for example, to reduce taxes. There is a whole world out there which only French regulated and AMF (Autorité des Marchés Financiers) certified advisers can propose. That is why you don’t see them in many other expat-dedicated financial advisor catalogues.”
In summary, holders of an SCPI can get an average of 6% per annum rental income and 1.2% capital growth. Availability on the investment is around 15 days from the moment it is requested.
“We must make sure we offer our clients alternative solutions, and this is as near to liquid assets as one can get,” said Daniel. “For those concerned about the fees, it is crucial to understand that quarterly returns (rents) are calculated on the nominal purchase price of the units, so you receive rents on the nominal amount invested, excluding any fees,” said Daniel. “This means that anyone holding their SCPI for the proposed duration of 10 to 15 years, will actually never pay any fees at all, as they will be diluted over time and depreciate.”