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Post by Fletchsmile on Mar 20, 2018 11:29:38 GMT 7
For my portfolios overall I look for 7% p.a. on average, as my version of the 4% rule is to have 4% to take out and 3% left in for inflation/ smoothing peaks and troughs. As to what the 4% is based on, that has some flexibility in it. I expect it to increase over time (by about 3% p.a. on average), as I don't aim to run down my pot, and to have it remain intact. Although in later years I may change my view on that and start running it down. So it is more based on current portfolio. But some smoothing is necessary though in the growth of that 4% per annum take out as the current portfolio doesn't smoothly growth by 3% p.a. (after taking out 4%) One of the things I do is track my annual outgoings and measure what is needed vs what comes in, and adjust along the way. All in all the numbers have to have some flexibility, as returns, inflation, takeouts aren't nice and linear. What I find also is that my preference for dividend paying funds increases too. They sort of take out a lot of the decisions that otherwise arise of what to sell and when, if all your return otherwise came from capital. They provide a natural level of income, which should grow over time to help offset inflation. This is ultimately what I'm aiming for: income and growth in my assets. I see this as preferable to making decisions about what to sell if one has a capital growth only portfolio. While in theory I would be indifferent between income or capital growth, the practice is different. I didn't care much when wealth building, but taking out of a portfolio dividend paying funds are useful. These do bring tax and other considerations though. Thailand is helpful here for reducing potential tax in dividends compared to other locations, as are Singapore REITs, as are UK ISA and SIPP wrappings. Brings with it rebalancing questions though . Especially after crashes or corrections As rgs mentions, exchange rates are a factor too. I have around a third of my portfolio currently in THB equities. Most of the cash I hold is now in THB, as I don't want the cash reserve messed up by exchange rates. Buying a home/house/condo in Thailand also conveniently fixes living costs and reduces FX risk
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Post by rgs2001uk on Mar 20, 2018 21:40:14 GMT 7
Lots of great replies here. Fletch, good points about expenses - much easier to say you'll cut retirement expenses when you're my age than to actually do it when you're retired for sure, especially when you're paying for international school fees for more than one child. rgs20001uk, would having a large allocation to Thai equities have helped in that situation? Thai equities would protect against Thai inflation right? As an expat, I guess that's why it's important to have equities in the currency you're usually spending and well as your home currency and international stocks as well. What could be even worse is if that person planned on retiring at 65 GBP/THB with nothing invested in Thailand! As for the 4% rule, one thing that I overlooked is it assumes 0 capital left at the end of a 30 year retirement in the worst case scenario, which is pretty close to what someone would have gone through if they retired right at the peak of 2000. So he could be right on the glide-path to reach 0 at the end of 30 years. If you want to preserve some capital as well as push your retirement into the 60 year range (quite possible for early retirees) withdrawal rates of 3.25-3.5% are required. It doesn't seem like much of a reduction at first, but like Fletch pointed out taking 1% away from 4% is 25% of your spending. But 0.5% compounded over 60 years can have a huge effect on your ending value. I also found it interesting that as you look at longer time periods of 60 years, bonds become much more risky and 100% equities is actually the least riskiest. I wonder if in a couple decades there will be a lot of people who retired early on the 4% rule only to realize they're going to live a lot longer than they planned and they didn't realize their capital could be depleted around the 30 year mark. Of course all of that is based on past history and worst case scenarios, but the market has a way of messing with people as soon as things become predictable and easy and the little guy starts benefiting too much... This link has a lot more info: earlyretirementnow.com/2016/12/14/the-ultimate-guide-to-safe-withdrawal-rates-part-2-capital-preservation-vs-capital-depletion/Short answer, not necessarily, ever consider other options such as Singapore? I assume at this moment in time you are still working, and have capital to invest, if in Thailand, LTFs are your friend, if overseas I would be looking for capital growth as opposed to income. At some point you will reach either a or b. a, retired with a company pension/s using your savings to top up your lifestyle. b, retired with no pension/s and living off your savings. The obvious question to be asked,why retire in Thailand as opposed to your own country? I have said it before and will reiterate, Thailand, was not, is not and never will be a cheap place to retire to. You mention 65 baht to the pommie peso, I remember the days of 36/38 baht, 40 being the norm, if you got 42/44 it was a bonus. Many Brits wont care to admit it, the worst think to happen to the Brits was the Tom Yam Gung crisis, they rocked up here with their 500 quid a month pensions and thought they were lords of the manor. Moving onto more pressing matters, would Thailand still be as attractive at 30 to the pommie peso? Off the top of my head I can think of at least 3 other countries I would go to (all in Europe), my problem is, I have been here too long, and cant be assed learning to read write and speak another language, if anything ever happens to the mrs I am West Indies bound.
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Post by ludacris on Mar 21, 2018 9:15:20 GMT 7
I've looked at Singapore but never considered more than a small allocation. I was planning to have some of my emergency fund in Singapore dollars though until bitcoin became popular haha. That's another thread...
If I stay where I am now in Thailand I won't have a company pension and probably won't have a Canadian pension either. That's why I've been so vigilant with investing for retirement. Unlike pensions from the UK, Canadians can't contribute to ours from abroad. I know not getting a pension is huge since my grandma got it every month for 35 years and that's what she lived off.
I max out LTF's and RMF's every year. I think those are some of the best investments in the world and it's almost like getting an extra month's salary per year. And unlike a Canadian RRSP, as you I'm sure you know the capital gains are tax free when you do start selling.
I've never really given much thought to retiring anywhere else but Thailand or Canada (depending how investing goes of course). I never planned to live and work here - just came here on vacation when my airline went bankrupt. The industry was hit hard by both Sept. 11th and the financial crisis so I made a life for myself here and maybe it's time to look at other options for retirement.
I completely agree that Thailand isn't cheap. I do like the tax situation here though and for a single guy who's healthy and doesn't have kids it makes more sense financially to stay because of the low taxes (including no tax on income outside of Thailand if it's kept out for a year ie. UK dividends). But throw in a couple kids and international school tuition and maybe a health crisis, it makes more sense to go back home. My current plan if no major life changes happen is to have a reasonably comfortable life here while accumulating as much as I can and FIRE before most of my friends back home (if they ever can being stuck in the rat race).
FIRE - Financial Independent Retire Early. Lost of blog posts online that I follow.
What other countries would you consider retiring in?
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Post by rgs2001uk on Mar 21, 2018 15:36:39 GMT 7
in no particular order, Portugal, Italy or Cyprus are the three European ones I would consider.
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Post by Fletchsmile on Mar 21, 2018 16:28:39 GMT 7
It looks as though many Mixed Asset funds might reduce the risk of holding bonds An issue with such funds is that the fund manager is making calls based on her view of the economic climate. If she thinks bonds will perform better than equities, she'll increase the allocation to bonds, and vice versa. However, such calls are difficult to make. And if they are wrong, fund performance will suffer. At the moment I see no reason to hold conventional bonds since rising interest rates will inevitably mean their capital value falls. The Royal London fund is forced to hold 15% bonds (and they are right at this limit). I suspect the managers would be happier not to hold bonds at all at the moment. some of them seem to be only an incremental step up from holding cash And what's the problem with that? Some people want cautious investments with a better return than cash. For example, Ruffer Total Return describes itself as "The LF Ruffer Total Return Fund aims to preserve capital in all financial market conditions while delivering investment returns ahead of that from cash." Often the objectives will be even more explicit, e.g. LIBOR + x%. Ruffer's performance in recent years has been abysmal. 5 year performance is cumulatively about 13% in sterling terms. Decidely 4th quartile, and it's objectives are perhaps part of the problem. Twice nothing is still nothing The whole point of investing rather than keeping cash, is to obtain a return higher than cash. So it basically tells an investor nothing While this objective may have made sense a decade or so back, when interest rates are where they are now, it means nothing these days. Perhaps also a reflection that Ruffer has had its day, as Ruffer's better years were a decade or so back. In terms of protecting capital, it lost money in 3 out of 5 last 12 month discrete periods. www2.trustnet.com/Factsheets/Factsheet.aspx?fundCode=I0F09&univ=TFor someone based in the UK, they would likely fair better with a simple index linked bond passive ETF combined with a low cost world equities index fund. The fund manager shows negative alpha over 1 and 3 years. OCF on Ruffer is also 1.18% annually which is ridiculously high given about half the fund is index linked bonds (40%) and cash (8%) Throw in the exchange rate risk for someone living in Thailand and I would much prefer to hold THB cash than Ruffer.
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Post by Fletchsmile on Mar 21, 2018 16:58:59 GMT 7
As mentioned I wouldn't normally buy an IT at launch. Now it has launched though it has moved to a small discount of 2.6% as often happens after launch for most IT s www2.trustnet.com/Factsheets/Factsheet.aspx?fundCode=OTF7Y&univ=T&pageType=overview&skipre=1The main problem for me is that as it's brand new, there's of course no history, and not much data available. That said, JPM is a reputable fund management house. They have experience of running this type of fund. Krungrsi Income in Thailand for example feeds into a JPM Multi Asset fund. To date it has done pretty much what is says on the tin MATE's objective is appealing, and would be a good fit for what I'm looking for. 4% income + some capital gains for the future/inflation. Much more realistic than Ruffer. As mentioned we hold Krungrsi Income in Thailand with a similar mandate of 4% income take-out via auto-redemption, and potential for capital gowth. We also hold a JPM MA fund in Singapore, which actually pays divdends. In this case I borrow against it (max loan to value/LTV of 70%) at a cost of around 2% SGD or 3% USD. Dividends to date have been around 4% p.a. paid monthly therefore exceed the funding cost with some margin to spare. One criticism for someone based in Thailand is it's rather US and USD focused Trust size is small at only around GBP 90 mio , which may cause liquidity issues. But if someone is just going to hold and collect the income that may be less of an issue assuming they can get in at a sensible price on volumes they want But it's worth a thought and possibly dipping toes into. More so I'd say for someone looking for income to live off and potential for capital growth.
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Post by rgs2001uk on Mar 21, 2018 22:11:29 GMT 7
I've looked at Singapore but never considered more than a small allocation. I was planning to have some of my emergency fund in Singapore dollars though until bitcoin became popular haha. That's another thread... If I stay where I am now in Thailand I won't have a company pension and probably won't have a Canadian pension either. That's why I've been so vigilant with investing for retirement. Unlike pensions from the UK, Canadians can't contribute to ours from abroad. I know not getting a pension is huge since my grandma got it every month for 35 years and that's what she lived off. I max out LTF's and RMF's every year. I think those are some of the best investments in the world and it's almost like getting an extra month's salary per year. And unlike a Canadian RRSP, as you I'm sure you know the capital gains are tax free when you do start selling. I've never really given much thought to retiring anywhere else but Thailand or Canada (depending how investing goes of course). I never planned to live and work here - just came here on vacation when my airline went bankrupt. The industry was hit hard by both Sept. 11th and the financial crisis so I made a life for myself here and maybe it's time to look at other options for retirement. I completely agree that Thailand isn't cheap. I do like the tax situation here though and for a single guy who's healthy and doesn't have kids it makes more sense financially to stay because of the low taxes (including no tax on income outside of Thailand if it's kept out for a year ie. UK dividends). But throw in a couple kids and international school tuition and maybe a health crisis, it makes more sense to go back home. My current plan if no major life changes happen is to have a reasonably comfortable life here while accumulating as much as I can and FIRE before most of my friends back home (if they ever can being stuck in the rat race). FIRE - Financial Independent Retire Early. Lost of blog posts online that I follow.What other countries would you consider retiring in? I was thinking more along the lines of funds and investments available, as opposed to the limited options in Thailand. Concur with LTFs, dont like the new 7 year ruling, one thing I love about Thailand is the tax situation you mentioned. Are you CPL or PPL? Virgin and Cathay are always looking for pilots, just get yourself on a conversion course. If an engineer, head to the Middle East and score a MNC contract. One things for sure dont bother with Bombardier Canada, their wages suck. , some of these vloggers look like gypos, check out their clothing and where they are eating, they look like peasants to me,posting from, as the Don said, shithole countries, a 25 000 baht crown job would wipe them out. Dont believe me, head to Pattaya and check out the tramps eating in the foodcourt of Big C on Klang, 3 bottles of Archa, and soaking up the free air and wifi, want further proof, head to Mikes and check out tramp centran right across the road, must admit havent seen a decent jet ski rip off going down for a couple of years now, maybe the digital pikeys are getting their message heard.
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Post by Fletchsmile on Mar 21, 2018 22:33:00 GMT 7
Out of interest I just compared RICA to a combination of: L&G All Stock Index Linked Gilts Index 25% } To compare vs RICA's 48% in index linked bonds and cash L&G Global Inflation Linked Bond Index 25% } plus L&G International Index Trust 50% } To compare vs RICA's approx 40% in global equities www.hl.co.uk/funds/fund-discounts,-prices--and--factsheets/search-results/l/legal-and-general-all-stocks-index-linked-gilt-c-accumulation www.hl.co.uk/funds/fund-discounts,-prices--and--factsheets/search-results/l/legal-and-general-global-inflation-lnk-bond-indx-c-accumulation www.hl.co.uk/funds/fund-discounts,-prices--and--factsheets/search-results/l/legal-and-general-international-index-trust-c-accumulation [Edit for some reason clicking on the above links doesn't work, but cut and paste does] www2.trustnet.com/Factsheets/Factsheet.aspx?fundCode=I0F09&typeCode=FITRICA&univ=TCosts:- No initial charge for the 3 index funds vs just under 1% spread on RICA - No brokerage fee or stamp duty on 3 index funds vs 0.5% + brokerage fees on RICA So that's approx 1.5% more to get in and out for RICA - Annual fees of 3 index funds on HL after ongoing HL savings are 0.1%, 0.17% and 0.08% p.a. compared to RICA's 1.18% So that's approx just over 1% p.a. more for RICA Returns:L&G All Stock Index Linked Gilts Index positive in all 4 out of 4 of the last 12 month discrete periods L&G Global Inflation Linked Bond Index positive in 3 out of 4 of the last 12 month discrete periods L&G International Index Trust positive in 3 out of 4 of the last 12 month discrete periods but RICA positive in only 2 out of 4 of the last 12 month periods Only 4 years of data was available for the others, but given RICA was negative in the 5th 48m-60m 1 year discrete period I doubt it would have fared better over 5 years That RICA was negative in 3 out of 5 for 12 month discrete periods is abysmal for a fund which targets positive annual returns Cumulatively over 4 years reading the graphs approx: - International equities index +70% - Index Linked Gilts +45% - RICA +11% - Global Inflation Linked Bonds +9% So RICA marginally beats the inflation linked bond index and is way behind global equities and index linked gilts If someone had a 50%/25%/25% split on the index funds they'd have a weighted average return of around 49%, or over 4 times RICA in the last 4 years. In fact almost any reasonable split of these 3 funds would have significantly outperformed RICA, unless someone stuck it all in global inflation linked bonds. I have to say it baffles me that RICA still trades at a premium to net assets too after such an abysmal 5 years. Although it's premium has narrowed to only 0.79% vs a 2.25% 52 week average. I really can't see where it adds any alpha in its portfolio at all. If someone is hoping for a future crisis to make the numbers look good relatively again, THB cash looks more attractive to me.
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chiangmai
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Post by chiangmai on Mar 22, 2018 6:27:54 GMT 7
I've finally decided that there's no point in being invested in the markets unless your objective is to make a reasonable profit, the effort and the angst demand it. The idea, especially at my age, of balanced portfolio's and conservative investments, now seems like a nonsense, almost. That is not to say I intend to run out and invest heavily in Dodgy Dons Global Equity Fund or put thousands into a rare mineral mining venture in Patagonia, it does mean though that I can set aside products such as RICA and Troy Trojan and many of the ultra-conservative funds, it also means I can set aside most bonds, finally!
Unfortunately, my long list of funds that interest me are mostly all IT's and this is not my first choice way to hold an investment, regardless, the list includes, Scottish Mortgage, Monks, Finsbury Income and Growth and BG Sustainable Growth 85/15 (UT) and I continue now to think along those lines rather than a more risk-averse approach.
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Post by rgs2001uk on Mar 22, 2018 21:31:27 GMT 7
^^^ sorry to hear that, sounds as if you were just unlucky, getting into the markets at the wrong time.
Heres an extract of an e-mail I had from my stockbroker last week, after I offloaded, Unilever and Diageo, reinvested in Witaan and Croda.
Dear xxxxxxx
Thank you for your email.
Investing in individual shares certainly carries a degree of risk, hence why I am constantly banging on about diversification!
It is not uncommon for investors to gradually migrate away from individual equities as they get older. Investment and unit trusts provide a useful way of maintaining equity exposure, but without the same levels of stock specific risk. This is an area where xxxxxx have traditionally done well and should form an important cornerstone of portfolios in the future.
I look forward to catching up again soon.
Kind regards.
The above is from a firm of stockbrokers, old and established, I dont think they advertise themselves as IFAs
As you know I also hold Scot Mortagage and Monks, along with Wiatn and Alliance, they are all for capital growth, If I wanted regualr income I would look elsewhere.
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Post by Fletchsmile on Apr 23, 2018 17:09:52 GMT 7
Just had a look at swapping HDIV to IPE. One of the things I hate about ITs sometimes. The spreads are wide when I look at both HL and StanChart quotes. IPE bid-offer 76.4 - 78.4 (approx 2.5% spread) HDIV bid-offer 89.6 - 91.4 (approx 2% spread) Not that many trades going thru either and volumes look a bit weak. All recent trades are on the buy side for both too. So while one side might go thru easily the other may be some waiting around and may not go thru at all, which gets annoying In contrast for a unit trust I'd probably be doing both based on NAV with no bid-offer spread to suffer, and no messing around = knowing both sides will go thru at fair prices . Guess I'll have to be patient, as I don't want to suffer those spreads and then get caught only one side going thru. Next thing you know the day is over, and tomorrow the market shifts unfavourably for the gap Well today I became the proud owner of 1 share in IPE . My order was finally "part-filled". I finally sold HDIV at an acceptable price on 6 March. OK I hadn't been doing every day since 12 Feb but had tried most days over a couple of weeks Since then I'd been trying every day to buy IPE at around mid-price so I didn't suffer the outrageous 2.5% spread. I'd even set a good til cancel trade. Today it shows as 76.60 - 78.4, compared to 76.4 - 78.4 on most days. So after a further 10 days, I finally got 1 share at 77.4 . At this rate I wonder if I'll still be alive when my order is fully completed WaF Joke This was more about curiousity and testing things out than anything. We're only talking a few thousand pounds. But before putting further money I wanted to see if I could enter/ exit investment trust bond funds easily in difficult times. February's events seemed like a mild trial run The answer was a resounding no. So I've reached the conclusion to stay away from Investment Trust bond funds in future. For these 2 their size is only about THB 125mn to THB 150mn. A very strong argument for the larger more liquid unit trusts as a vehicle for bonds, if someone wants a collective investment rather than the individual bonds. While the IT bond funds managed are OK. The liquidity just isn't there, the spreads at 2.5% are outrageous, and it's a pain in the arse waiting for decent volumes. Charges aren't cheap either, I suspect due to their sub-optimal size not allowing economies of scale. Had it been a real crisis in February and had I really wanted to exit or enter serious money, I would have been seriously p*d off. Bonds in particular for me are held among other things for liquidity purposes. Ease of entry/exit during a crisis is well worth bearing in mind for your investments. For bond funds in future I'll stick to unit trusts for the increased certainty, low spreads and liquidity [Edit: forgot to add the stamp duty of 0.5% on purchase too making entry charges for IT bond funds even worse] Finally got the remainder of my allocation of IPE today @77. A key factor was it went xd today. So I guess that created more sell demand than usual. The liquidity on bond ITs seems often to be very thin. Add the div back though and I've still paid top end. The plan is just to hold long term and collect the divs, as the yield is 6.x% So the key takeaway: In the UK my vehicle of preference for bond funds would be unit trusts, which avoids the ridiculous hassles I've had on bond ITs. IT bond funds are definitely not something to be relied on for liquidity, and during correction periods/ crisis likely to be worse. As I bought thru Singapore though, my options on sterling bond UTs are more limited, hence the IT route.
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AyG
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Post by AyG on Apr 23, 2018 17:58:32 GMT 7
Finally got the remainder of my allocation of IPE today @77. Just curious, but Bloomberg is currently showing IPE trading at a premium of 8.22% (that's with a price of 75.4). Do you feel comfortable with that? Add in the high annual charge (1.24% in 2017) and the performance fee, given that you're simply buying Read/Causer's expertise, this is a very expensive way of doing it.
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Post by Fletchsmile on Apr 23, 2018 18:29:20 GMT 7
Finally got the remainder of my allocation of IPE today @77. Just curious, but Bloomberg is currently showing IPE trading at a premium of 8.22% (that's with a price of 75.4). Do you feel comfortable with that? Add in the high annual charge (1.24% in 2017) and the performance fee, given that you're simply buying Read/Causer's expertise, this is a very expensive way of doing it. Estimated NAV was 74.X, so which would be around 4%ish on my 77. I dislike the lack of transparency around NAV as well BTW. No I don't like buying at premiums, but no choice really at the moment if I want a bond IT The way I looked at it though was I sold HDIV (previous long term hold) at 5% premium, and the price is now 3p lower than when I sold. So whether it was 4/5/6/7/8% premium on IPE I've mainly swapped one premium for another. In this case 2 wrongs cancelled out to make an OK right I had hoped to replace HDIV straight away but it's taken 2 months to get in IPE !!! I had no bonds in my IT portfolio and had been that way for about 2 months since selling HDIV. Just sat on the cash earning next to nothing. I wanted to get the yield on my IT portfolio back to where it was before selling HDIV and have some bond exposure + higher income. The portfolio is essentially for generating income + some capital growth Investment trusts aren't really a great way of getting exposure to bonds. If via the UK I would much preferred to buy one of Read/ Causer's unit trusts. Their performance tho on IPE has been very good. Just limited choice via Singapore on sterling based bond funds, and I didn't want to ship the money back to UK just to buy a unit trust. Price seems to have dropped another couple of pence since I finally got in Another example of the dangers of investment trust pricing and liquidity issues. I did look at the mixed asset space, but nothing really of interest there either. ITs seem best suited to equity investment.
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Post by rgs2001uk on Apr 23, 2018 23:12:14 GMT 7
^^^ if I want vegetables I go to the greengrocer, If I want meat I go to the butcher shop.
Go FTSE go.
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Post by rgs2001uk on May 14, 2018 21:12:28 GMT 7
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