Financial update France March 2024

For me it always feels like January is such a long month, February passes in a blink of an eye and all of a sudden it’s March and there is so much excitement and activity. I had a few days off at the end of February to spend time with my boys, rest and recuperate and catch up on some reading.

One of the things I like to read is the Le Particulier magazine and this month they had a very interesting special limited edition on how and where to invest in 2024. There was a lot of information in this special edition which I found fascinating but also a lot that confirmed many things I had been advising for a while.

One key point is that whilst having savings accounts such as the Livret A, the LDDS and (if you are eligible) the LEP are great places to keep your money in the short to medium term, by which we mean in the next 5 years, these accounts should only be used as emergency funds or money destined for a particular project that you intend to carry out soon. This is why on the Spectrum Confidential Review document we ask our clients which bank accounts they have, what the interest rate is on them and what is the purpose of this money. If there isn’t a reason to have these savings and you can’t foresee a reason for using the funds within the next five years, then it is important to think about investing some of it as, no matter what the rate currently offered, such rates will not protect your money from inflation over the long term.

I’m often asked about how to save money for children. If you have a child aged between 12 and 25 years of age you can open a Livret Jeune in addition to them having a Livret A. Your children who are included in your tax return cannot have a LDDS as these are only for tax payers. However the Livret Jeune can have a maximum capital of €1600 and whilst the interest rate is not fixed by the Banque de France, banks are required to set an interest rate which is at least the equivalent of the Livret A but may also play the competition and offer more.

In the longer term it is important to invest and the preferred way of doing that in France is by using an assurance vie. According to a statistic in this special edition of the Le Particulier magazine, over a period of 20 years the Livret A account had only made 40% compared to a CAC 40, with dividends reinvested, managed fund with a 3% management fee, over the same period made 289%.

March is a month where things start to happen. I read recently that mortgage rates have begun to fall in France. Although the ECB decided on 25th January to keep the key three interest rates unchanged, there is a strong expectation that mortgage rates will continue to fall this year possibly reaching 3.5% this summer and as low as 3% by the end of the year. This will be much welcome news for those looking to sell property in France.

From 1st April you won’t need to fiddle around to try and put the little green insurance certificate square on your windshield. If you are stopped by the police during a routine insurance check they will be able to tell whether you are up to date with your insurance by checking your license plate with their database.

For those invested with the Pru, there was good news this month as on Monday 26th February 2024 the Prudential Assurance Company (PAC) board reviewed the Prufund Expected Growth Rates (EGR) as part of the quarterly review process and once again there were no unit price adjustments. The expected growth rates remained the same for the PruFund GBP Growth and Cautious funds, whereas for the PruFund Growth Euro fund the Expected Growth rate was lowered slightly to 6.6% (previously 6.9% in November) and the PruFund Cautious Euro to 5.7% (previously 6.2% in November).

Although the tax season in France doesn’t begin until April, I know that lots of you will be thinking about preparing your tax returns. If you have any questions on your taxes or any other financial matters please do get in touch.