Here is the amount you need per month to no longer work in France!

Here is the amount you need per month to no longer work in France!
Here is the amount you need per month to no longer work in France!

What is financial independence?

Financial independence is the ability to cover your needs and purchases without the need to actively work or depend on other sources of income. This generally means that your passive income, such as investments, dividends or annuities, is enough to cover your expenses.

Thus, we will not base our calculations on sky-high incomes, but rather a median income with which most French people can identify. The latest official data on the median salary according to INSEE gives us a net amount of around 2000 euros per month. This is the salary that we will use for our simulation.

How much capital is needed to earn 2000 euros per month passively?

There are several ways to earn returns passively. Whether through life insurance in euro funds, the stock market or real estate, it is necessary to calculate the average return obtained each year on each type of investment in order to estimate the size of the capital required.

Life insurance for risk-free returns

One of the best ways to get a return without taking risks is through life insurance and euro funds. These funds offer a return of around 3% per year. It’s not much, but it’s guaranteed! On this type of investment, you would need capital of 800,000 euros to obtain 24,000 euros per year, or 2000 euros per month.

Please note: this does not represent a net gain: when withdrawing the interest received, taxes must be deducted and their amount may vary depending on several factors, including the age of the life insurance contract.

Investing in the stock market to achieve financial independence

According to the Financial Markets Authority, the real return, i.e. inflation deducted, of CAC 40 shares (dividends reinvested) over the last 35 years has been around 7.2%. To earn 2000 euros per month, you would therefore need capital of “only” 333,300 euros. If we apply the single flat-rate deduction of 30% on capital income, the amount of capital necessary to earn 2,000 euros net of tax increases to 476,190 euros. Certainly, it is a high amount, but we are far from the 800,000 euros for life insurance!

All this is very attractive in theory, but in practice, you will need to be patient and show composure during bearish market periods. That said, it is an excellent strategy for building long-term wealth.

In the short term, you will unfortunately not be able to obtain good results by withdrawing 2000 euros per month from your capital. Because yes, this theoretical return implies that no withdrawals are made for several decades!

And what about real estate in all this?

Real estate is one of the French’s favorite investments. But what real estate assets are necessary to achieve financial independence?

The return on a real estate investment depends on the type of property and its location. Some cities in France offer a return of up to 6%, which is very interesting. To receive 2000 euros per month, you will therefore need capital of around 400,000 euros. Of course, this capital must be entirely available for investment: using a loan will mean that all or part of your rent will have to be used to pay the monthly loan payments.

Strategies to adopt to approach financial independence

Financial independence is a long-term goal. The good news is that in the world of investing, time is on your side. Certainly, building up significant capital is not within the reach of all salaries, but small streams make big rivers, and the adoption of a few good practices can make the difference over the years.

Living below your means

Income is the most important element in achieving financial independence. However, your expenses and your lifestyle are just as important. To start building savings, you must first have the ability to put money aside every month. To do this, it is necessary to establish a monthly budget and spend an amount less than your income. To get closer to your goal faster, avoid unnecessary spending and focus on your savings.

Invest regularly

The key to success is consistency. To achieve financial independence in the future, it is important to invest regularly. If you like to invest in the stock market, do it every month, without necessarily paying attention to short-term market movements. Another good strategy is to invest in dividend stocks, and reinvest those dividends in new stocks. Whatever your preferred investment method, make regular contributions.

Define aims

Setting well-defined financial goals is essential to achieving financial independence, as it allows you to give clear direction to your efforts. Goals provide both motivation and a measure of progress.

Invest in yourself

Your financial situation is not set in stone. It is always possible to invest in yourself to gain knowledge that can improve your income. Training, specialization courses, a career change or even networking can lead you to improve your financial situation over time, and thus allow you to increase your savings with a view to eventual financial independence.

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