100,000 limit & investments
 

On a previous thread Novocastrian (think it was) mentioned the folly of keeping too much invested with the bank. Some thoughts and questions...

1. I believe there's a limit of 100,000 euro that is considered 'untouchable' by governments if banks go bust, and beyond that they can help themselves. I think Cyprus (was it?) savers broke that golden rule, but in general what then is the best way to send and save money in France before heading there in person?

2. Novocastrian and all, if not the bank, where else is a safe (too old for too many risks) investment with a return better than a kick up the backside? I have some DAT accounts which pay around 4.2%, but if there's anything better sharing would be wonderful..:thumbsup:

Re: 100,000 limit & investments
 

A SAFE investment? No such thing. Return and Risk go hand in hand.

Alternatively, after you have found such a thing, I have an old bridge you might care to buy?

Re: 100,000 limit & investments
 

I invested my cash in a company that makes DVD Rewinders, they save people loads of time between films.

Re: 100,000 limit & investments
 

I think your first point is broadly true bearing in mind that this limit of €100K is per bank. Therefore you could have €100K with multiple banks with each deposit having its own protection.

This is confirmed in the following EU banking legislation:-

Europe gets ready for big "haircut"

Europe is leaving others behind on the way to introducing the haircuts of deposits. Or the European Union, to be exact. The first step was made on April 24 this year when the Economic and Monetary Affairs Committee (ECON) of the European Parliament voted on its report on the proposal for a directive on bank recovery and resolution. This is a key pillar in the reform of EU banking legislation, following the agreement on the capital requirements and single supervisor package. Gunnar Hökmark, MEP, Sweden’s Conservative Party, was one of the new system’s architects. In the middle of May the deposit cuts issue was debated by Economic and Financial Affairs Council (ECOFIN) session chaired by Michel Barnier, European Commissioner for Internal Market and Services. On May 20 a group of lawmakers in the European Parliament’s economics committee overwhelmingly voted that, from 2016, large depositors in the EU might suffer losses if a bank gets into serious trouble. The plan was similar to a deal in Cyprus, where wealthy depositors at two banks took hits to save the country from bankruptcy. The European Parliament has joint say with the 27 countries in the EU on the law that would give regulators powers to impose losses on creditors and take other steps during a bank rescue. The legislation envisions creation of national resolution funds based on bank contributions. As of today the main provisions are:

1. Deposits under 100,000 euros would be spared.

2. A bank would dip into large deposits of over 100,000 euros once it had exhausted other avenues such as shareholders and bondholders.

3. The new banks bail out system will become effective in 2016.

4. The legislation envisions creation of national resolution funds based on bank contributions. Some lawmakers are calling for a Europe-wide resolution fund and the European Commission is due to propose such a fund in the coming months but that faces resistance from Germany.

5. Bank depositors are divided into reliable and risky. The confiscation measures are defined by what category a depositor belongs to.

The last provision is the most interesting one. There are no definite criteria for defining the depositors. But some analysts read the provision as follows.The reliable ones are «ours», that is those who belong to Eurozone. The risky ones come from outside. Evidently, the depositors from Russia will be considered to be risky account holders. This attitude towards the clients from Russia is not new. This spring the Russian Cyprus depositors started to look for «back-up airports» in Latvia, Lithuania, Estonia, Poland and some other states of Eastern Europe. A stern warning came from Brussels. The eurobeaurocrats said the bankers in Eastern Europe should keep away from dealing with Russian clients – the reason was that the Russian depositors’ sources of income did not meet the legitimacy requirements. So, there should be no surprise that the money of Russia’s citizens deposited in the European Union member countries will be constantly under the Damocles sword of confiscation.

Although I can't find the article at the moment, I am sure Christine Lagarde, of the IMF, proposed that governments, which are unable to sustain their debt obligations, should have the ability to force depositors holding over €100K to invest any surplus in government bonds. She made no mention of a per bank deposit so it was assumed that it would apply to total deposits, though whether this information is held anywhere is doubtful.

Regarding your second point, I think €100K is the best guarantee around at the moment but the returns on bank deposits are pretty poor. For better returns (and 5% pa is not unreasonable from AAA rated investments) you will not find the same level of guarantee should the investment vehicle collapse. On the other hand these investment vehicles (funds in most cases) are unlikely to be raided in order to bail out central banks.

Best advice is to spread your investments, not be overly greedy and keep any bank deposits below €100K. The only problem is that if everyone does this then the solutions anticipated by Michel Barnier and Christine Lagarde won't work and they'll have to dig deeper should the need ever arise.

Cheers IVV

Re: 100,000 limit & investments
 

Nonsense. The 4.2% I'm getting now isn't going to make me rich, but it's safe. Just wondering if there's anything better or similar I should know about.

Re: 100,000 limit & investments
 

Thanks for the other info.

The second part in bold is what I'm asking really. Where do you all spread your vast wealth to keep loss to a minimum? Do you go for low and safe or, at our time of life, are you risking the markets?

Re: 100,000 limit & investments
 

:rofl:

Re: 100,000 limit & investments
 

I'm surprised to see that you attribute the advice in your OP to me. I don't remember posting it and I'm not usually one to give out financial advice.

But I may have been referring to the long established system whereby a bank deposit of up to 100,000 euro, pounds or dollars depending, is insured by a central bank if the regular bank goes belly up. This is reflected in the EU policy suggestion reported by IVV above.

I don't think I would have said only to have 100,000 in banks, just not in any single one. I'm a complete incompetent when it comes to personal finances but I have a substantial amount in mutual funds, well diversified across risk level and across managers.

Err, what's a DAT account?

Re: 100,000 limit & investments
 

Opposite of DIS. You know, DIS and DAT..:(

Re: 100,000 limit & investments
 

I think I like you after all. But it was a serious question. I suppose it's some acronym for an investment instrument available in the UK, but I haven't lived in the UK for 38 years. Nor have I felt the need to stay current with investment instruments.

Mr. Google tells me its a Dental Aptitude Test, but that can't be right?

Re: 100,000 limit & investments
 

After all..?? :confused:

Only in France. CA bank fixed term deposit account over 4-5 years. DAT Libre. It's only available for 'new money' transferred to France.

Re: 100,000 limit & investments
 

Sometimes Google is not your friend...:lol:

Re: 100,000 limit & investments
 

I don't think this can be right. It's a treaty principle in the EU that you can't treat people differently based on origin, race or colour and the same must go for their money.

Re: 100,000 limit & investments
 

Ah, yes, but my money, before it hits the shores of fortress euroland with its rather toytown looking currency, is the mighty yen. Well, it was mighty once...:(

Re: 100,000 limit & investments
 

I did not know that.

My apologies if you thought my earlier response was a bit glib. I was jumping between things.

"New money" transferred into France means that you take the exchange rate risk. So a reasonable return, although I have no idea what a DAT account is. Against Sterling you would have lost more than that over the past year, and against the dollar.....

Against the yen that might look a much better bet of course.

IMO and that of many others, the Euro has a way to go yet although probably not for some time. The Yen is a closed book to me though. Probably fortunately.

Re: 100,000 limit & investments
 

Not at all. I just assumed you didn't know I was outside the EU.


And of course, you're right in so far as any DAT gains are balanced by exchange rate changes, but not exactly a lot of choices given that I have to get money to France in advance of my arrival.

Re: 100,000 limit & investments
 

Do you know if there's a maximum amount you can transfer into one of these accounts and can you post a link to a more detailed description (in French is fine...) Thx.

Re: 100,000 limit & investments
 

^^ I found it myself. The upper limit is 500,000 euro.

That should be enough. :rofl:

Re: 100,000 limit & investments
 

For this month?:ohmy:

Re: 100,000 limit & investments
 

Next June actually.

Re: 100,000 limit & investments
 

OP, its all about 'risk & reward'. Gilts, government bonds that pay less than the cost of living increases -hopefully the country doesn't go bust.

http://www.bloomberg.com/news/2014-1...-k-credit.html

Cash under the mattress (so to speak) in three different currencies depending where you live or in a single currency where you spend most of your time.

Even with 100K, 500K or a cool million to invest - do you want to have your investment somewhere that you know the risk is even as low as 1%, with or without FX fluctuations?

Preservation of capital is key.

Do not let anyone tell you of an investment that is 'guaranteed' - that only means, that the person telling you that has a personal gain.

Re: 100,000 limit & investments
 

which is your currency of choice - swiss franc or the euro?

Re: 100,000 limit & investments
 

:rofl::rofl::rofl:

Re: 100,000 limit & investments
 

I think that the risk to UK or French banks is now quite small because of the support from governments / central banks.
In 2008, I happened to have some large deposits (in excess of the guarantee limits) in a UK bank and I have to say that I had a very worrying week until the UK government bailed the bank out.
Today, I have my "risk" spread over a wide range of investment vehicles.
Cyprus was a particular case where the ECB did not want to bail out the Cypriot banks because there was a LOT of Russian money in the system amongst other reasons.
If, for example, the Bank of France tried to do the same thing where it was hurting the French upper/ political/ business class then all hell would be set loose. The recent AF pilots' strike would seem like a walk in the park.
During the financial crisis, I "lost" about 30% of my investment value although I had "gained" over 40% over the previous 3 years. Today, those investments are back at pre-crash levels and I didn't lose any capital - only growth.
Risk is not about all or nothing but about spreading "risk" to minimise potential loss which may not arise.
The investment strategy for €50k would be different from that for a cool €1M.

Re: 100,000 limit & investments
 

A very frightening time indeed.

The Bank of England is reported to be considering additional protection - up to a million.

Bank of England to protect deposits of up to £1m under new rules - Telegraph

Re: 100,000 limit & investments
 

My understanding is that this proposed guarantee is very limited in scope and is not intended to protect long-term deposits. :thumbdown:

Re: 100,000 limit & investments
 

+1
Quite correct. It is not for general deposits.

Re: 100,000 limit & investments
 

Yes true

But then, if one had a million, who would leave long term money in a bank anyway?

The point is surely that those of us who are selling a home to retire or move overseas have some additional protection?

Re: 100,000 limit & investments
 

Don't suppose you'll get many answers here :rofl:

Re: 100,000 limit & investments
 

As soon as you see, beyond the glaring headline of great news, something like 'under certain conditions' you can be absolutely sure you will not be the 1 in 1 million to meet these conditions.

Re: 100,000 limit & investments
 

Nor am I sure I would understand them.:(

Re: 100,000 limit & investments
 

Like a lot of people here I had never heard of a DAT (dépot à terme) but I as I had recently visited my crédit agricole to ask them about the best risk free investments and ended up opening a PEL at 2.5% I was slightly surprised about the suggestion that you could get 4.5% risk free return in France today. A brief check on the internet suggests that these DAT are not necessarily a good idea. For a start they are not specifically open to people coming from other countries. If you block your money for a long period (5 years) with penalities for early withdrawal everyone can get a highish rate of interest. The only DATs I could find offering something special to people entering France was a 15 month DAT that offered a increased rate of interest of 4.5 % for the first three months and the rate then fell to 1.5 % for the next 12 months. The interest on DAT is subject to income tax so basically my PEL is a better deal that a DAT - tax free interest and no penalties if I withdraw my money earlier. DATs are not recommended by any finance mags either. The capital in a DAT is guaranteed if the bank goes bust up to the normal limit. Hope this helps those looking for a safe haven for their cash

From the web - advice on DATs - Not recommended either for one month, or one year or three years

NOS CONSEILS 2014

C'est la moins liquide des solutions pour placer à court terme son argent. Une solution recommandable ni sur un mois, ni sur un an, ni sur trois !

En savoir plus sur http://votreargent.lexpress.fr/place...Gb1b30BMGKK.99

Re: 100,000 limit & investments
 

Risk Free and Crédit Agricole are not two things I would normally put in the same sentence, Thieving Bastards is two words I would use together mind:o

Re: 100,000 limit & investments
 

Um, did I say a DAT was risk free? I missed that part...

AND, I don't recall my mention of DAT being a sales pitch to anyone.

It might NOT be a good idea, but it is for me. Or I could leave it in Japan or UK and get about 0%. Much better, eh??

I don't care about 'specifically open to people from other countries' and didn't say that anyway. Open to 'new money' was what I've been told by CA. Interpret that your own way.

Well, yes, if anyone 'blocks' their money for 5 years everyone will, duh, get a higher interest rate. I don't need the money now, so where do you see the problem in that??

Finally, my DAT is tax free, France side and tax is a pittance here.

So, when you generalize and claim it's 'not a good idea', you should add that like most things it's an individual thing and depends on individual circumstances.

Plus, of course, since you know better perhaps you could point us all to far better returns...

Re: 100,000 limit & investments
 

In your second post you said that DAT were at least "safe" which I interpreted to mean risk-free

Otherwise apologies if you thought that I suggested that I knew better because I don't. As I said above your post made me think that the CA had been in fact "thieving bastards" to use the words of Chatter Static and had given me bad advice. In fact for me as an ex French resident and now living in Italy their advice was sensible.

For you living in Tokyo and not paying any tax the situation is obviously different. However, for anyone outside the EU betting on the Euro may not be a good idea as the general consensus is that the Euro will go down and you would in fact have been better off last year leaving your money in the UK at 0 %.

Re: 100,000 limit & investments
 

There was an ad for a company called Wellesley Finance last night offering very much higher returns.

They seem to be peer to peer lenders. You have to tie up your money for some years and the money is NOT GUARANTEED by the FSCS. Nor does the return seem to be guaranteed.

I certainly would not place a significant part of assets with them, but for a bit of rainy day money, might be worth a look?

What does the collective brain of BE think?

Re: 100,000 limit & investments
 

Peer to peer lending is for experienced investors. It is not suitable for casual investors because of the risks involved.
In every investment process there is an eventual winner and an eventual loser. In addition, you have to look at any fees or charges that are involved.
The company or adviser who facilitates the deal will always get their money regardless of what happens to your investment.
Don't invest in such schemes unless you can afford to lose the money.

Re: 100,000 limit & investments
 

If it's not guaranteed by FSCS or guaranteed return, it doesn't take any brain, let alone collective, to know to bin this one...

Re: 100,000 limit & investments
 

Interesting. I agree with Cyrian that this sort of stuff is ONLY suitable for those who know (or think they know:() what they are doing AND CAN AFFORD TO LOSE.

JWL certainly not the place to put house money and the like. And not in the least appropriate for what you are doing.

But it is a bond. Not vanilla but still a bond. ALL pension funds have a wide range of bonds and I certainly know some funds that have direct peer to peer in their portfolio. One of mine does.

There was quite a bit of work done twenty or so years ago on the default rate of various grades of bond right down to junk. It does not worsen as much as most people think. Those of course were principally corporate and sovereign bonds. I am not sure where this would be classified.

Re: 100,000 limit & investments
 

It all depends on your risk profile but those would tend to be Government Bonds or Corporate Bonds. Other types of "riskier" investments (e.g. peer-to-peer) would tend to be included within hedge funds which can also be included in a pension portfolio.
A Bond is no safer than any other investment - you are not guaranteed to get your money back.