Pros and Cons of UK and French Savings Accounts

[Blossom]

We are soon to become French residents and need to organise our finances before our move. With savings accounts and bonds in the UK offering well over 6%, we wonder if it would be a good idea to leave our savings (£100,000) generating an income in our building society rather than seeking a French savings account. Would such tax-free accounts as the Livret A (3.50% net!!), for example, offer any advantages?

(NB: We are not interested in any off-shore or risky equity-based solutions)

[Clair]

See here for basic info: http://www.cbanque.com/placement/

[suein56]

[quote user="Blossom"]Would such tax-free accounts as the Livret A (3.50% net!!), for example, offer any advantages?
[/quote]

Yes they do - you can have one each, up to a smallish maximum, and they are free of tax and the dreaded 11% social charges. IMHO it is always a good idea to have some savings in your adopted country.

Sue

[Cat]

Does France have a financial products site like the Motley Fool, for discussion and comparison of personal finance stuff? I doubt it somehow, but there's no harm in asking [Www]

[Bob T]

The thing to remember is with a UK account you are at the mercy of the exchange rates.

If you had invested £10,000 a year ago in the UK, it would have been worth 14,800 euros.

Today that figure would be £10,600 with interest (6%) but at the present exchange rate it would be worth 13,568 euros - a loss of over a 1,000 euros.

Had you invested in France it would be worth 15,318 euros. ( 14,800 invested here + 3.5%)

[Blossom]

[quote user="Bob T"]Had you invested in France it would be worth 15,318 euros.

[/quote]

Thanks Bob T. But would you mind showing us how you arrived at 15,318 euros? For example, which French interest rates/accounts are you using?

[Blossom]

[quote user="spg"] Yes they do - you can have one each, up to a smallish maximum, and they are free of tax and the dreaded 11% social charges. IMHO it is always a good idea to have some savings in your adopted country. Sue [/quote]

Thanks Sue. But would it still not be more efficient to enyoy the UK

6.5% and pay the social charges on the gross interest rather than the

meager tax-free 3.5% of a Livret A?

[allanb]

[quote user="Blossom"]But would it still not be more efficient to enyoy the UK

6.5% and pay the social charges on the gross interest rather than the

meager tax-free 3.5% of a Livret A?

[/quote]You would be liable to French tax on your UK interest, as well as the social charges; and you would be subject to currency risk on your savings.  So it depends on your prospective French tax rate, and on your view of future exchange rates.

I don't think it's a clear decision.  A crystal ball would help!

[suein56]

[quote user="Blossom"][quote user="spg"] Yes they do - you can have one each, up to a smallish maximum, and they are free of tax and the dreaded 11% social charges. IMHO it is always a good idea to have some savings in your adopted country. Sue [/quote]

Thanks Sue. But would it still not be more efficient to enyoy the UK 6.5% and pay the social charges on the gross interest rather than the meager tax-free 3.5% of a Livret A?[/quote]

Apologies, I explained myself poorly - I meant have both types of investment; as IMHO it is a good idea to benefit from the advantages of the Livret A as they are tax and soc charge free.

Sue

[ams]

Take advantage of the Livret a account. You can open up one for each person in the family. have a look at Anglo Irish in the IOM, they offer 5% on euro deposits, they also offer sterling savings accounts.

 

ams