Retired in Europe -- Where's the best place to park Euros?

[Retirement_Rookie]

Hopefully somebody will have encountered this problem before. I recently came into some euros (more than €100,000, less than €250,000). I don't want to change them into dollars because living in Germany I live in a Euro economy and although I have a pension, I want to have access to them.

German interest rates are horrible on savings. I don't see Switzerland as an option. I am not a Swiss resident and I remember the old joke "how do you make a small fortune in Europe? Give a Swiss banker a big fortune.."

What are safe European banks to park money in and obtain a good rate of interest? I don't want to go into the markets; I fear a correction. Just want to park money until I decide what to do with it. Any ideas? I've heard Luxembourg for one.. anybody recommend a bank in Luxembourg? Or elsewhere in Europe? I am comfortable in French and Spanish in addition to German so language isn't a barrier -- I am more worried about the safety of my money and the rate of return. Suggestions welcome!

 

[Alan]

I’m afraid I can’t help you with European banks but you mentioned that you did not want to go into the markets for fear of a recession. As a US citizen are you aware that investing in equity or bond funds will mean that the IRS will tax them punitively as PFIC’s? Individual stocks and bonds are just fine.

A popular website used here in the UK for the best savings and bond rates is
https://www.moneysavingexpert.com/ (note that against each bank is an indication if the deposits are insured). Is there not a German equivalent?

 

[Retirement_Rookie]

Alan, thanks a lot I wasn't aware of the PFIC element which is very important to know so I thank you. It appears that it's more complicated being offshore than I was aware of.

 

[Alan]

Alan, thanks a lot I wasn't aware of the PFIC element which is very important to know so I thank you. It appears that it's more complicated being offshore than I was aware of.

It is something that can easily catch folks out. The UK has something similar to PFIC taxation but there are lists of thousands of funds including many US ETF funds that “report into” the UK tax system so you can invest in US funds and have them receive the favorable tax treatment that equities get. Before we moved to the UK we converted our MF’s to ETF’s and keep all our market based investments in the USA. In the UK we buy bonds from the Post Office and also UK government bonds to get that little bit of extra interest, and those bonds are treated by the IRS like any other bonds.

 

[RISP]

A popular website used here in the UK for the best savings and bond rates is
https://www.moneysavingexpert.com/ (note that against each bank is an indication if the deposits are insured). Is there not a German equivalent?

Yes of course, there are plenty of sites comparing interest rates. You could try https://www.tagesgeldvergleich.net/rechner/tagesgeldrechner.html for example. It's just that there is no interest available in 'safe' European countries.

To the OP, I do not have an answer for you. Myself, I have been buying US government bonds and will accept the exchange rate risk.


Edit to add: You can see the yield curve for German treasuries here: https://www.bondsupermart.com/main/market-info/yield-curves-chart (not for the faint of heart!)

 

[dcoy]

Have a look at HSBC, I believe they offer foreign currency accounts.

 

[FIREd]

The best is probably to take advantage of promotional rates. In France for example, there are several banks offering up to 3% interests at the moment. But that rate is only valid for a few months. So you have to keep moving your money from bank to bank every few months to get those rates.

You might also want to look at CDs. In France, I see interest rates ranging from 0.85% for 3 months, 1.25% for 1 year, and up to 1.65% for 3 years.

 

[marko]

As a US citizen are you aware that investing in equity or bond funds will mean that the IRS will tax them punitively as PFIC’s? Individual stocks and bonds are just fine.

Alan, thanks a lot I wasn't aware of the PFIC element which is very important to know so I thank you. It appears that it's more complicated being offshore than I was aware of.

Nothing to contribute on this subject other than to point out that once again, the collective wisdom of this site has apparently just saved someone a lot of money!

This site saved me thousands when I first got started (and oftentimes still does)....forever grateful.

 

[gerntz]

I wouldn't see Swiss as an option either since they operate on their own franc currency.

 

[Alan]

Nothing to contribute on this subject other than to point out that once again, the collective wisdom of this site has apparently just saved someone a lot of money!

This site saved me thousands when I first got started (and oftentimes still does)....forever grateful.

Absolutely, I couldn’t even begin to calculate the money this site has saved or earned for me over the years.

When we first started thinking about splitting our time between the USA and UK a few years ago I joined a couple of expat sites and learned so much about the issues of Americans living abroad that saved us loads of time and money.

Good sites like this one are really good at sharing knowledge.

 

[Freedom56]

Hopefully somebody will have encountered this problem before. I recently came into some euros (more than €100,000, less than €250,000). I don't want to change them into dollars because living in Germany I live in a Euro economy and although I have a pension, I want to have access to them.

German interest rates are horrible on savings. I don't see Switzerland as an option. I am not a Swiss resident and I remember the old joke "how do you make a small fortune in Europe? Give a Swiss banker a big fortune.."

What are safe European banks to park money in and obtain a good rate of interest? I don't want to go into the markets; I fear a correction. Just want to park money until I decide what to do with it. Any ideas? I've heard Luxembourg for one.. anybody recommend a bank in Luxembourg? Or elsewhere in Europe? I am comfortable in French and Spanish in addition to German so language isn't a barrier -- I am more worried about the safety of my money and the rate of return. Suggestions welcome!

Why don't you just open a brokerage account that lets you hold foreign currencies such as a Schwab global account? You can then buy your investment products in Euros. We have a Citi global currency account that we hold Euros, Swiss Francs, and Canadian dollars for withdrawals during travel. We only live in Europe 2-3 months a year so, the Citi account is okay for us. We had to close our Swiss accounts several years ago. Since you are living in Europe, a brokerage account that lets you buy corporate bonds or bank notes may be a better option, if you are looking for some income from your investments. As you know, rates are pretty pathetic in Europe, however you can get some yield be buying individual investment grade bonds or preferred shares of European banks and insurance companies.

 

[Jollyquick]

Assuming you are a US citizen, you must educate yourself on the IRS FBAR and FATCA rules. Way too easy to run afoul unintentionally and the penalties can be devastating.

 

[Alan]

Assuming you are a US citizen, you must educate yourself on the IRS FBAR and FATCA rules. Way too easy to run afoul unintentionally and the penalties can be devastating.

+1

You will also need to file taxes in the USA offset by taxes paid in Germany as per the DTA between the USA and Germany

https://www.irs.gov/pub/irs-trty/germany.pdf

 

[Totoro]

Hopefully somebody will have encountered this problem before.

In the same boat.

What are safe European banks to park money in and obtain a good rate of interest? I don't want to go into the markets; I fear a correction. Just want to park money until I decide what to do with it. Any ideas?

Sadly, none.

Best option if you insist to go for the maximum in Europe is https://n26.com/en-at/savings -- just pay attention to the size of the country where you park your money. Even then none insure above 100k.

I did find a local business where I can park some money for 3.2% at two years duration, other than that it's just a matter of sitting it out I'm afraid.