If most of your savings are invested in your life insurance fund in euros, your profitability has been very low for a few years. To aspire to earn more, without taking too many risks, bet on real estate. “This asset has less volatility than the stock market, but, unlike the fund in euros, it does not offer a capital guarantee,” specifies Guillaume Arnaud, chairman of the Sofidy board of directors.
1/ SCPIs: purely real estate, but charged with fees
When buying shares in real estate investment companies (SCPI), you benefit from the experience of a professional manager. The latter acquires various properties (offices, shops, logistics, etc.), takes care of the management of your rent and then regularly pays you a part of the rent collected. Among all the investments, SCPIs show an interesting and relatively stable return over time. Last year, according to the French Association of Real Estate Investment Companies (Aspim), they contributed an average of 4.45% to savers.
Introducing it in your life insurance therefore has a pecuniary interest, and above all fiscal. Because as long as the rent remains within the contract, it is not taxed in your marginal tax bracket nor is it subject to social security contributions of 17.2%, as is the case when you own the property directly. In case of withdrawal or assignment of the contract, the taxation applicable to earnings is also the -very favorable- of life insurance. The other advantage is the greater liquidity of this investment, since the insurer agrees to redeem your shares at any time if you wish.
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Do not neglect, on the other hand, the weight of the limitations of this mode of arrest. First, you will not have access to the entire market, since not all SCPIs are eligible for life insurance. The choice of contracts is also limited, since, in general, “only those distributed to property clients allow such diversification”, recalls Marc Bertrand, CEO of Amundi Immobilier. Another black point, “insurers rarely accept SCPI arbitrations, savers almost always have to make new payments to buy shares,” emphasizes Sonia Fendler, president of Altixia Reim.
In addition, “its proportion in the total outstanding balance of the contract is also limited, generally around 20%”, he adds. Do not lose sight of the fact that the entry fees for life insurance will be added to the already high SCPIs. And that the income from the shares will not be collected by you, but by the insurer. Since you are not required to distribute everything to them, you can keep a share of the reserves, which will reduce the return on investment. Finally, if your acquisition of SCPI is through life insurance, you will not be able to finance it on credit or dismemberment. Recommended for those who are heavily taxed and looking for a real estate investment strategy.
2/ OPCIs: slight diversification, with liquidity
Launched fifteen years ago, the Real Estate Collective Investment Plans (OPCI) are hybrid investments. Its administrators must invest at least 60% in real estate (direct buildings or listed securities of real estate companies) and 40% in financial investments (including 5% to 10% in cash). “Unlike SCPIs, OPCIs are distributed almost entirely through life insurance,” says Pierre Schoeffler, senior adviser to the Institute of Real Estate and Land Savings (IEIF).
The advantage of putting it in your contract? As these are capitalization products, you will surely recover the full return. The advantages in terms of taxation and liquidity, related to holding through life insurance, are also important.
The other side of the coin, due to its composition, a possible low stock market performance would erase a large part of the profitability of the real estate pocket. Worse still, in the event of a downturn in equity markets, such as in 2020, the OPCIs would post a negative return and you would lose some of the invested capital. Although rare, this risk should not be overlooked. According to Aspim, while OPCIs returned an average of +4.4% in 2021, their return was -1.54% in 2020 and +5.4% in 2019. But behind these figures lurks stark disparities. Because, from one manager to another, investment strategies have nothing to do with it. Some risk their real estate pockets by stabilizing their portfolio with a heavy dose of cash, while others ensure investment security with real estate and take risks in the stock market. Therefore, these investments are more aimed at savers looking for a slight diversification into the real estate sector.
3/ SCIs: calibrated for life insurance, but not very transparent
The newest product in the “paper stone” galaxy, the Société Civile Immobilière (SCI) is on the rise. “This is a capitalization product accessible only in life insurance. Their managers invest exclusively in real estate, but with much more flexibility”, explains Pierre Schoeffler. In this way, they can buy entire buildings directly or through other civil companies, SCPI or OPCI shares, listed real estate securities, funds invested in stone, etc. , director of development of Primonial Reim France.
Its performance is still quite interesting, as it was 3.8% on average last year according to Aspim. But with very strong disparities: 9% of the market posted a return of 5% to 9% in 2021, while 21% of the market ranged between 1% and 3% return. This is where the complexity of this product lies: by offering complete freedom to managers, they can take significant risks, which should not be overlooked. Another point: ICS are expensive because, by investing indirectly, they pay off a cascade of costs that eat away at performance. They are reserved for well-advised clients, who seek diversification in stone, while accepting a dose of risk linked to conviction management.