Pre-retirement assessment

My wealth strategy
1

Hello,

I’m 66 years old and retiring in 12 months. I’ve never invested anything anywhere, except for 3,500 euros in a Revolut Robo-advisor account that I glance at absentmindedly every month. Married under separation of property with two children far away abroad who are very financially independent. They already earn more than I do…

Here’s how I hope to organize myself:

  • Combined employment and retirement: one quarter of temporary work per year until hospitals no longer want me, or my intellectual abilities are no longer suited to work that requires quite a bit, or the laws change and that happens too often.
  • As long as I’m in good physical shape, I’ll do 3 to 4 months of « rough » bicycle touring with a monthly budget of less than 1,000 euros, probably for 3 to 5 years, even switching to electric if it’s too hard. After that, it will be car and camping in it.
  • One quarter of hospital replacement work per year
  • The rest of the time attending operas and concerts: that can be a big budget, tickets at 200 euros.
  • I currently live in a very rural area, prices are low compared to Paris: direct local food, wood heating at 800 euros per year, solar panels and batteries for electricity. On the other hand, a car is essential; in Paris, depending on the location, less necessary.
  • I’m going to move back to Paris, I have the Brussels option, but I like neither the city nor the food and the taxation on employment income is enormous (sorry to the Belgians). My operating budget: mainly food and heating/air conditioning is likely to increase considerably.

First and foremost, I need to secure my savings in safe investments for 2-3 years: I’ll end up with 350 to 380,000 euros in January, then the sale of the house, for a Parisian purchase. I’m looking for a ground floor on a courtyard, with renovation work, in the 12th, 13th; or even 20th, Montreuil, Bagnolet, KB or Villejuif. Definitely not 6th, 7th, 16th. Ideally in a building from the 70s-80s with a ceiling height of at least 3 meters: I want to be able to knock down as many partition walls as possible to get a 5x8x3 room. It’s a tall order, but it can be found.

This is where I need some rather urgent advice. I have very eco-friendly shares with Terre de Lien, La Nef and Enercoop: they yield nothing at all and are locked until the general meetings of these associations in January. I prefer to avoid oil and agrochemicals, the rest leaves me « cold »: weapons, rare metals… Then, I’ll have a fixed income, few expenses except for trips to see my children who are very far away outside of France. I could learn a bit about finance.

Thanks for your advice!

Yves

profile: 66 years old, retiring in 12 months. Owner of a house valued at 300,000+, current financial assets 280,000 + ~150,000 in 3-4 months.

monthly savings capacity: Currently large savings capacity, about 40,000 per year for the next 2 years. Then retirement of about 2,600 euros, plus income of 30 to 40,000 per year for 5 years. Without major expenses.

current assets: a fully renovated rural primary residence and low-yield savings accounts

objectives: Sell the house in 1-3 years and buy in Paris with significant renovation work. I’ll also need to change cars within 5 years for an electric one; the car is strictly a utilitarian object for me. risk tolerance: I’m completely financially illiterate, I prefer a safe investment for the next 2-3 years to secure the purchase of the new home.

main question: Advice for a safe and flexible investment with a bit more return than savings accounts for the next 3 years.

2

Hello

There is a lot of information. I’m having trouble understanding the post-retirement activities, are you a hospital practitioner?

Regarding your savings, there aren’t many solutions if you need liquidity in 2/3 years: term deposits, or euro funds in life insurance… money market funds in life insurance as well. Do you have an idea of the price of your future home in Paris? What amount will you have left in liquid assets?

3

I had a career as a hospital practitioner then private practice S2, hospital temporary work, then S1 in ZRR for 4 years: I have zero tax, I can save. DAT I don’t even know what that is… Term Deposit? I may be wrong, but I’d prefer to avoid anything Euro-based.
I’ll only take on non-Rist assignments, it’s often 12,000 per month before tax.

Housing: I’ve seen price stagnation for just over a year in Paris, I’m waiting to see if it will go down, I go there regularly and no real estate agencies starting to close, but fewer clients. I’m aiming between 400 and 700 depending on the opportunity. I’ll do the work myself.

The « stock trading » will be once all that is done.

4

here, most people prefer to use the term « investing in the stock market » rather than « boursicoter » (but you put it in quotation marks, so that’s fine…) or worse, « playing the stock market ».
Given your income level and your children abroad who « already earn more than you », I dare not ask what they do and where…
I’m not familiar with the « very eco-friendly shares » you mention. But I also have the problem « how to invest money short-term for a property purchase in 2/3/4 years ». I haven’t found any solutions apart from the euro funds in life insurance policies (but the Sapin law is starting to worry people, and especially the major upcoming needs of the French state which could encourage it to engage in maneuvers amounting to theft) or term deposit accounts (Comptes A Terme) from banks. Nothing exciting, especially with 3% inflation.

5

If it’s for short-term use, your options are limited. High-performing and secure investments don’t exist.

Perhaps it can help you to visualize the difference between the various options over such a short timeframe.

€350,000 invested over two years yields:

  • €12,000 (net) capital gain with a bank savings account (at 2.5% gross)
  • €15,000 (net) capital gain with a euro fund in an AV (assurance vie) (at 3% gross)
  • €34,000 (net) capital gain with a World ETF in a CTO (compte-titres ordinaire) (at 7% gross) (bull market)
  • €34,000 loss with a World ETF in a CTO (at -5% gross) (bear market)

Now that the figures are more concrete, it’s up to you to make your choice.

7

Thank you
It’s extremely clear: I’m going to put cash in the Livret A and the rest between Euro funds and World ETF.
Is it necessary to spread across multiple accounts to not exceed the 100,000 insured?
YA

8

For these short-term investments, I’m mainly aiming to limit the effect of inflation and take advantage of a possible drop in Parisian real estate prices.
As for the term that offends you, without wanting to go too far, the first investors not linked to commercial transactions were mainly English aristocrats who saw it as an amusing game…

Regarding my children: it’s not very difficult to earn a better living than in France with a few qualifications. Spain is already surpassing us. In many OECD countries, the standard of living is four times higher than ours…

9

Doing all three allows you to have immediate liquidity with your savings account portion. Have a secure portion that’s slightly more profitable than the savings account. And a high-performing portion that exposes you to a risk of capital loss. If the balance is well-proportioned, your choice seems relevant to me.

Personally, I’m not too worried about a potential failure of an insurer or bank. And I find that multiplying them complicates life. If this possibility worries you, do it.

10

I quite agree regarding the large French banks: the risk of bankruptcy is practically zero, if that happens we will have other more serious problems to deal with.

11

Is it necessary to spread across multiple accounts to avoid exceeding the 100,000 insured limit?

It depends on which type of account we’re talking about.

For example: with CTO and PEA, the securities belong to you and are not on the bank’s balance sheet, nor on the fund manager’s. You are « only » subject to market risk.

With AV you hold a claim against the insurer, and you are indeed exposed to the risk of your insurer’s bankruptcy.
I would tend to say that if Générali or Spirica (Crédit Agricole) go bankrupt, the market is likely to be very shaken in any case.

If a major insurer goes bankrupt, will the state be able to provide liquid reimbursement?

12

Unfortunately, I know exactly what you’re talking about, and this isn’t new for me (as a higher education professor in a technical field, paid less than in high school).

13

My 2 children, in their thirties, have a Master’s degree level,
the youngest earns about 6K€/month after taxes, not counting numerous bonuses, this is in Northern Europe and he was a hopeless underachiever!
The eldest, 32 years old, has an executive-level income in the Silicon Valley area. She put an enormous amount of energy into it, changed jobs at every opportunity and is always on the lookout for something better.
I’m lucky to be able to count on them financially if necessary: this is extremely rare. I have many friends whose children are still financially dependent. My daughter offered to build a garden shed at her place to accommodate me :wink:

14

I still need to find the right ETFs and term funds: which subsection is that in here?
Thanks

15

For ETFs (CTO):

World ETF:

Emerging Markets ETF:

Replication: Swap

Replication: Physical

ACWI ETF:

Gold ETC:

For term funds.

  • If you mean DAT or CAT (dépôt à terme or compte à terme - term deposit or term account). I just checked, the rates are low at the moment. You might as well take an uncapped bank savings account. On Boursorama I have a 2.5% rate (1% boost linked to their paid Ultim card at €10/month). But do your research, see what they offer at yours, otherwise almost all banks offer an in-house savings account.
  • If you mean euro funds, it depends on the life insurance (AV) you’re going to choose. Personally, I chose Linxea Spirit 2 because of its low fees and good reputation. There’s a 1.5% bonus for two years if you deposit €100,000 with 30% in unit-linked funds. €70,000 in euro funds >>> €76,000 in two years (4.5% assumption) in secure funds and €30,000 that you can put in a gold ETC and a world or ACWI ETF.
16

There are some interesting boosted rates on euro funds from certain life insurance policies, for example on Linxea Vie (for Spirit, you need to invest €100k).

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