cocoon
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Post by cocoon on Apr 28, 2018 12:24:40 GMT 7
I recently moved back to Bangkok. My salary is paid on a local Bangkok account here. I am looking to invest ca. 75k THB per month (my net free cash flow).
So far, all my savings are invested back home in a mix of ETFs and low-interest cash account. I am not looking to make big bucks; I want to realise low/mid returns on my savings in the long run (~25 yrs) for a low risk and low time investment. Thus I invested in MSCI World (or similar) ETFs so far.
I normally split:
- 70-80% ETFs (either MSCI World or split again into NA, EU, Emerging Markets, etc.)
- rest goes into a low-interest cash savings account
Questions:
1. Any ideas how I could do that or something similar here in Thailand? Are those ETFs available here at low costs?
2. I understand there are certain investment products which i can use to claim up to 500k THB in my income tax declaration. Any info on that?
3. Just to make sure, transferring the money back home to invest it there wouldn’t make much sense, right? Or do you know of any low-fees ways to transfer money back home?
4. Any other thoughts?
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Post by Soutpeel on Apr 28, 2018 13:50:27 GMT 7
What till Fletch gets on he will answer all your questions on this...this sort of stuff is his business... I am good at spending the stuff...not so good on investing it  |
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siampolee
Detective
Alive alive O
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Post by siampolee on Apr 28, 2018 14:14:16 GMT 7
Likewise, I am good at spending the stuff...not so good on investing it, but 'er wot shouts and spends the money is better than me at spending the stuff.  Mind you money was made round in shape so as to freely go around!!!! |
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Post by Soutpeel on Apr 28, 2018 16:50:42 GMT 7
Likewise, I am good at spending the stuff...not so good on investing it, but 'er wot shouts and spends the money is better than me at spending the stuff.  Mind you money was made round in shape so as to freely go around!!!! My latest to get mega rich is playing crypto-currencies and i am the proud owner of several thousand XRP tokens..and the Aston DB-11 is on order...and RGS had assured me when i taken delivery he will prostate himself on ground in front of the Aston Badge What could go wrong ?  |
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AyG
Crazy Mango Extraordinaire
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Post by AyG on Apr 28, 2018 18:44:01 GMT 7
You don't mention where you intend to retire. That would make a massive difference to in what you should be invested.
Foreign ETFs are available through Thai brokers, e.g. Phillips POEMS. However, personally I prefer to invest offshore (mostly Luxembourg in my case, but some people may prefer Singapore or Hong Kong). Avoids any issues with taxation of dividend income. Costs can be lower, too.
FletchSmile has previously written about the tax advantages of LTFs and RMS. I suggest you do a search here.
20% in cash is crazy for (almost) anyone. Inflation is eroding the value of your savings every year.
Depending upon available markets, look at the Vanguard LifeStrategy products. The US LifeStrategy Growth Fund or the UK LifeStrategy 80% Equity fund may well be a good fit to your style of investing. (They probably have similar products in other countries. I haven't checked.)
Transferring money out of Thailand can be a pain and is not always possible. I suggest you read up on the subject and the documentation required.
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Post by Fletchsmile on Apr 29, 2018 19:29:50 GMT 7
I recently moved back to Bangkok. My salary is paid on a local Bangkok account here. I am looking to invest ca. 75k THB per month (my net free cash flow). So far, all my savings are invested back home in a mix of ETFs and low-interest cash account. I am not looking to make big bucks; I want to realise low/mid returns on my savings in the long run (~25 yrs) for a low risk and low time investment. Thus I invested in MSCI World (or similar) ETFs so far. I normally split: - 70-80% ETFs (either MSCI World or split again into NA, EU, Emerging Markets, etc.) - rest goes into a low-interest cash savings account Questions: 1. Any ideas how I could do that or something similar here in Thailand? Are those ETFs available here at low costs? 2. I understand there are certain investment products which i can use to claim up to 500k THB in my income tax declaration. Any info on that? 3. Just to make sure, transferring the money back home to invest it there wouldn’t make much sense, right? Or do you know of any low-fees ways to transfer money back home? 4. Any other thoughts? 1. ETFs are available in Thailand, but the range is more limited. Unit trusts/mutual funds are an alternative type of collective investment fund which would fulfill the same purpose. Costs in Thailand are generally a bit higher than the best value for money products in say UK or US, but not unreasonable. 2. Yes Long Term Equity Funds (LTFs) and Retirement Mutual Funds (RMFs) will get you tax relief at your marginal rate of tax. Some differences: - LTFs generally have to invest at least 70% in Thai equities, but have a shorter holding period. It used to be 5 they had to cross 5 calendar years, but a couple of years back this was changed to 7 for new investments. So you could invest say 29 December 2018 and it counts a full calendar year for 2018, and you could take out 2 Jan 2024. That would fulfill the 7 year rule. There is no need to contribute every year if you don't want Arguably the best Thai equity funds are fund in Thailand, so if someone is throwing you a tax bonus on top it makes them one of my favourite investments Living in Thailand makes sense to have THB exposure, and as you are saving/investing long term equity based investments fit with that. - RMFs you have to hold until after age 55 and minimum of 5 years. Once started you must in also invest a minimum of 5k a year (or 3% of salary if lower) to retain the benefits. The choice of funds is wider and include global equities, bonds, gold funds etc. i.e doesn't have to be mainly Thai equities so useful to diversify You can invest up to a max 500k a year in each of LTFs and RMFs (or 15% of your earned income if lower). For RMFs to calc the max you must also take into consideration any contributions to Thai pensions schemes 3. I've been buying Thai based mutual funds from net free cashflow for about 20 years. I find the ease of buying with money earned here, tax situation, admin etc easier than shipping money back overseas, buying a funds hold it, sell it then bring money back. Whether it makes sense or not will depend on your own situation, access to markets, tax etc etc. For me broadly I found it made more sense to invest in Thailand with money earned in Thailand. LTFs in particular make a compelling case because of the tax benefit, which you wouldn't get if sending money overseas 4. Quite a lot of other things to think about, and I'll pick out some of the other threads we've had on here, which would be worth a read. Cheers Fletch  |
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Post by Fletchsmile on Apr 29, 2018 19:42:15 GMT 7
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Post by rgs2001uk on Apr 30, 2018 15:05:16 GMT 7
If you are an American I would consider investing in mutual funds.
As mentioned, forget about the cash account, its basically throwing money away.
If you are working for a large MNC with a final salary pension scheme, I would be shovelling money in as fast as I could.
Not mentioned, how long are you here for?
By investing in Thailand you may well be limiting your choices and missing out on better performing products back home.
What are your coworkers dong with their cash, if they are investing in upcounty mansions or pineapple farms, run a mile.
Be wary of any farangs inviting you to invest money over here, avoid like the plauge.
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cocoon
Crazy Mango
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Post by cocoon on May 1, 2018 10:55:16 GMT 7
Lots of good information here, thanks a lot. Please give me some time to go through everything. Maybe one general question: Is there any good summary of what investment products exist in Thailand and their cost, taxation, risk profile, asset class, etc.? With regards to your questions: If you are an American I would consider investing in mutual funds. EU Citizen here 😉 As mentioned, forget about the cash account, its basically throwing money away. I get your point and in principle I agree. I am going to invest my remaining cash position back home in the same ETF position that I already started to build (see above). If you are working for a large MNC with a final salary pension scheme, I would be shovelling money in as fast as I could. I am working for a large MNC but under a local contract. There’s no salary pension scheme but a provident fund. By investing x-y% of my salary, my employer adds another z% on top. However, I have to stay with the company 5+ years, otherwise I will only get back my own contributions. Money is invested in a Kasikorn product that lets you split between equity and bonds depending on how much risk you wanna take. Not mentioned, how long are you here for? By investing in Thailand you may well be limiting your choices and missing out on better performing products back home. To be honest, I don’t know. I love it here, but I am single, no kids, never married, mid-30ies. So many things can happen. I can see myself retiring here, but I am 99% sure that I would go back home should I ever have kids (which I currently don’t plan but also can’t foresee). With regards to better performing products back home, I was so far focused on boring long-term investment in World-ETFs. They can be had at very low cost (0.5%) and should perform at ~5-7% long-term. Boring and low-return, but rather low-risk and easy to manage. I could see myself play with stock-picking, but that would really be just a small position to fulfill my gambling needs (while I feel comfortable doing through fundamentals, I don’t have the time to do it properly for enough stocks). However, personally I prefer to invest offshore (mostly Luxembourg in my case, but some people may prefer Singapore or Hong Kong). Avoids any issues with taxation of dividend income. Costs can be lower, too. (...) Transferring money out of Thailand can be a pain and is not always possible. I am confused. How do you invest offshore, if transferring money out Thailand can be a pain and is not always possible? Personally I’ve never had an issue transferring money to my bank account back home (did it with a larger sum some years back when I quite my last job here and went back home). But I’d have to pay (afair) 1,000 THB or so fees which only makes sense when transferring a larger sum. Do it every month and you’d already be eating up a bit of your returns. Also, not sure if offshore makes sense for me (though I’m more than happy to explore that). I currently only pay taxes in Thailand, not in my home country, because I am based here permanently. So would offshore really make sense? |
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AyG
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Post by AyG on May 1, 2018 11:46:46 GMT 7
I am confused. How do you invest offshore, if transferring money out Thailand can be a pain and is not always possible? Personally I’ve never had an issue transferring money to my bank account back home (did it with a larger sum some years back when I quite my last job here and went back home). But I’d have to pay (afair) 1,000 THB or so fees which only makes sense when transferring a larger sum. Do it every month and you’d already be eating up a bit of your returns. Also, not sure if offshore makes sense for me (though I’m more than happy to explore that). I currently only pay taxes in Thailand, not in my home country, because I am based here permanently. So would offshore really make sense? The "transferring money ... can be a pain" was really referring to large sums. For example, if you amassed a lot of wealth in Thailand, then decided to go to another country, you could have a problem. If you're investing 75,000 monthly and have to pay 1,000 for the transfer, that's only 1.3%. Given the difference in charges between Thailand and developed countries, you'd recoup that in a year or two. Alternatively, you could make transfers every 3 or 6 months. By investing offshore you'd pay no taxes anywhere in the world, which is nice. (Not true for Americans, Libyans, North Koreans, and Eritreans who get taxed on their worldwide income.) |
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Post by Soutpeel on May 1, 2018 13:44:57 GMT 7
I am confused. How do you invest offshore, if transferring money out Thailand can be a pain and is not always possible? Personally I’ve never had an issue transferring money to my bank account back home (did it with a larger sum some years back when I quite my last job here and went back home). But I’d have to pay (afair) 1,000 THB or so fees which only makes sense when transferring a larger sum. Do it every month and you’d already be eating up a bit of your returns. Also, not sure if offshore makes sense for me (though I’m more than happy to explore that). I currently only pay taxes in Thailand, not in my home country, because I am based here permanently. So would offshore really make sense? The "transferring money ... can be a pain" was really referring to large sums. For example, if you amassed a lot of wealth in Thailand, then decided to go to another country, you could have a problem. If you're investing 75,000 monthly and have to pay 1,000 for the transfer, that's only 1.3%. Given the difference in charges between Thailand and developed countries, you'd recoup that in a year or two. Alternatively, you could make transfers every 3 or 6 months. By investing offshore you'd pay no taxes anywhere in the world, which is nice. (Not true for Americans, Libyans, North Koreans, and Eritreans who get taxed on their worldwide income.) Investing and opening an "offshore" account even for those who dont pay tax on worldwide income can be a bit of a pain these days, go back a few years and for the "princely" sum USD 25k one could have a full blown account in Singapore, these days they want USD 200k off you and one has to provide tax numbers and declarations as to your tax residency to the Singapore tax man, your still not paying any tax in Sing, but they have all your details on file because of the Septics and the IRS |
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AyG
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Post by AyG on May 1, 2018 14:03:02 GMT 7
Investing and opening an "offshore" account even for those who dont pay tax on worldwide income can be a bit of a pain these days, go back a few years and for the "princely" sum USD 25k one could have a full blown account in Singapore, these days they want USD 200k off you I'm not sure where you're getting your information from. The minimums are way less than that. Saxo Singapore has a minimum of SGD 3,000 ($2,300). Saxo Hong Kong, $2,000. OCBC Securities (Singapore) has a zero minimum if you're over 21 years old. I believe Internaxx (in Luxembourg) also has no account minimum. It's usually only where there's an associated bank account that the minima become crazy. |
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Post by Soutpeel on May 1, 2018 18:08:49 GMT 7
Investing and opening an "offshore" account even for those who dont pay tax on worldwide income can be a bit of a pain these days, go back a few years and for the "princely" sum USD 25k one could have a full blown account in Singapore, these days they want USD 200k off you I'm not sure where you're getting your information from. The minimums are way less than that. Saxo Singapore has a minimum of SGD 3,000 ($2,300). Saxo Hong Kong, $2,000. OCBC Securities (Singapore) has a zero minimum if you're over 21 years old. I believe Internaxx (in Luxembourg) also has no account minimum. It's usually only where there's an associated bank account that the minima become crazy. Thats what i meant with associated bank account... |
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cocoon
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Post by cocoon on May 1, 2018 18:42:12 GMT 7
The "transferring money ... can be a pain" was really referring to large sums. For example, if you amassed a lot of wealth in Thailand, then decided to go to another country, you could have a problem I think it was around $60-70k last time. No problem at all. If you're investing 75,000 monthly and have to pay 1,000 for the transfer, that's only 1.3%. Given the difference in charges between Thailand and developed countries, you'd recoup that in a year or two. Not sure how you invest your money and what returns you realise. For me, 1.3% is a lot and way too much (see above). Agree I could do it every 6 months or so. By investing offshore you'd pay no taxes anywhere in the world, which is nice. (Not true for Americans, Libyans, North Koreans, and Eritreans who get taxed on their worldwide income.) I think that doesn’t apply for EU citizens. Once I move back to my home country, I would be taxed based on my worldwide income. While I’m not living in my home country, I am not taxed there. So I’m not sure if offshore would really make sense. |
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Post by rgs2001uk on May 1, 2018 21:10:53 GMT 7
Lots of good information here, thanks a lot. Please give me some time to go through everything. Maybe one general question: Is there any good summary of what investment products exist in Thailand and their cost, taxation, risk profile, asset class, etc.? With regards to your questions: If you are an American I would consider investing in mutual funds. EU Citizen here 😉 As mentioned, forget about the cash account, its basically throwing money away. I get your point and in principle I agree. I am going to invest my remaining cash position back home in the same ETF position that I already started to build (see above). If you are working for a large MNC with a final salary pension scheme, I would be shovelling money in as fast as I could. I am working for a large MNC but under a local contract. There’s no salary pension scheme but a provident fund. By investing x-y% of my salary, my employer adds another z% on top. However, I have to stay with the company 5+ years, otherwise I will only get back my own contributions. Money is invested in a Kasikorn product that lets you split between equity and bonds depending on how much risk you wanna take. Not mentioned, how long are you here for? By investing in Thailand you may well be limiting your choices and missing out on better performing products back home. To be honest, I don’t know. I love it here, but I am single, no kids, never married, mid-30ies. So many things can happen. I can see myself retiring here, but I am 99% sure that I would go back home should I ever have kids (which I currently don’t plan but also can’t foresee). With regards to better performing products back home, I was so far focused on boring long-term investment in World-ETFs. They can be had at very low cost (0.5%) and should perform at ~5-7% long-term. Boring and low-return, but rather low-risk and easy to manage. I could see myself play with stock-picking, but that would really be just a small position to fulfill my gambling needs (while I feel comfortable doing through fundamentals, I don’t have the time to do it properly for enough stocks). However, personally I prefer to invest offshore (mostly Luxembourg in my case, but some people may prefer Singapore or Hong Kong). Avoids any issues with taxation of dividend income. Costs can be lower, too. (...) Transferring money out of Thailand can be a pain and is not always possible. I am confused. How do you invest offshore, if transferring money out Thailand can be a pain and is not always possible? Personally I’ve never had an issue transferring money to my bank account back home (did it with a larger sum some years back when I quite my last job here and went back home). But I’d have to pay (afair) 1,000 THB or so fees which only makes sense when transferring a larger sum. Do it every month and you’d already be eating up a bit of your returns. Also, not sure if offshore makes sense for me (though I’m more than happy to explore that). I currently only pay taxes in Thailand, not in my home country, because I am based here permanently. So would offshore really make sense? Not going to knock your way of thinking, for the simple reason I am doing exactly the same. I am a Brit, and as a way of diversifying my assets have been looking at Nth America and Europe, I dont touch, gold, or crypto currencies, as for Emerg Markets, thats a discussion that has been had on here before, personally, I wont be putting any more into them. I am heavily invested in Investment Trusts, Witan, Monks, Scottish Mort, Alliance are just some of them. Over the last year or so I have been offloading my individual shares, and reinvesting in ITs. I dont want to rain on your parade or burst your bubble, you are lucky you have landed a MNC gig, too be honest as much as Thailand is a great place to live and things are happening in Asia, its not the be all and end all. I would use your opening as a learning curve and stepping stone onto better things, eg, a promotion or two above your present pay grade, or better opportunities elsewhere, have known guys your age age move onto openings in Singapore, Hong Kong or Sydney. Thailand and Asia is littered with grumpy old men who resent young guys like you, you are the future, these coffin dodgers go into work everyday hating it, counting out the days til they retire, promotion has passed them by, dont become one of them. |
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