Let me start by turning the tables for a moment… Imagine a French couple moving to the United Kingdom. They buy a house, settle there permanently and live their daily life entirely in pounds. Yet financially they continue to do everything in France. Their adviser is in Paris, their investments remain structured for the French system, and most of their assets stay concentrated there.
From a British point of view, that would seem barking mad. In fact, many people would probably question the logic of keeping everything financially tied to a country they no longer live in. No ISAs, no Premium Bonds, nothing aligned with the UK system at all.
Now, let’s bring that back to the point of this article. Naturally, having assets in one’s home country is understandable. After all, most wealth has been accumulated there over decades through pensions, property, savings, and investments. However, once you are living permanently in France, keeping the majority of your wealth tied to a single country and currency can create risks that are often overlooked.
The “Home Bias” Problem
Economists refer to this tendency as home bias; that is to say, the natural inclination for people to keep most of their money in the country they know best. For British expatriates in France, for example, this frequently means a portfolio dominated by:
- UK pensions
- UK property
- Sterling bank deposits
- UK-based investments and funds
While there is nothing inherently wrong with holding UK assets, problems arise when too much of your wealth is concentrated in one market, or one currency.
Living in Euros, Investing in Other Currencies
One of the most important considerations is currency exposure.
Once resident in France, most of your day-to-day expenses are paid in euros. Yet many expatriates continue to hold a significant proportion of their wealth in home currency-denominated assets.
This mismatch can create challenges over time. Exchange rates can move considerably, sometimes over relatively short periods. If sterling weakens against the euro, the value of UK-based income and assets may fall in real terms relative to your cost of living in France.
Diversifying investments across currencies can help reduce this risk and create a more balanced financial position aligned with your spending needs.
Another issue with heavy home market exposure is market concentration. This is particularly common and problematic for those from the UK because the UK stock market represents only a small portion of the global economy, yet many British people hold portfolios focused largely on domestic funds or companies.
A more diversified approach allows investors to participate in growth across multiple regions and sectors worldwide, rather than relying on the economic performance of a single country. Global diversification does not eliminate volatility, but it can certainly help reduce the impact of regional downturns and create a smoother long-term investment journey, so this is something we should all be focused on!
Structuring Investments for Life in France
Beyond diversification, it is also important to consider how investments are structured once you are resident in France.
Investment arrangements that are efficient in one’s home country are unlikely to receive the same treatment under French tax rules. Reviewing existing structures and aligning them with the French system can often reduce taxes, as well as provide administrative simplicity.
For example, for most French residents, investing through an assurance vie can provide a flexible and tax-efficient framework. When combined with globally diversified funds, it can form the foundation of a long-term investment strategy suited to life in France.
Balancing Familiarity With Opportunity
Keeping some home country assets can make sense, particularly when they relate to pensions or long-held investments. The key is to ensure that portfolios are properly balanced.
A well-diversified strategy typically spreads investments across:
- different regions
- multiple sectors
- various currencies, but predominantly euros
- a range of asset classes
This approach reduces reliance on any single market and positions you to benefit from opportunities around the world.
Relocating to France is not only a lifestyle change, it is also a shift in financial context. Assets that were perfectly appropriate while living in your home country will often benefit from a fresh look once your spending, taxation, and long-term plans are centred in France.
Taking time to review your overall exposure, including currency, geography, and investment structure, can help ensure your assets reflect your new life abroad, rather than your past one.
After all, successful investing is rarely about predicting the future. It is about building a portfolio resilient enough to navigate whatever the future brings.