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Post by Fletchsmile on May 2, 2018 15:28:15 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. 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.) Never had any real problems transferring money outside Thailand either. A bit of bureaucracy on the paperwork sometimes but no big deal. If OP has been working here that solves most of the issues straight up. Just keep copies of his work permit, tax returns, salary summaries and Twee 50 (annual salary summary from employer). The same docs can often be used for separate transfers. Monies are fungible so doesn't really matter too matter as long as you have at least one legit source such as work. On the costs of transferring it out, investing it offshore and bringing it back again, 1.3% would way under estimate the cost: - Firstly you have bank transfer costs out then to bring it back again you pay again. If your objective is to live in Thailand then ultimately you spend most of your cash here so need to remit back to Thailand at some point - Secondly and often most importantly, Don't overlook the FX costs in doing so either. They need to change from THB to FCY when sending out, then from FCY to THB when bringing back. That's 2 sets of spreads. for retail investors those FX spreads could easily be 1%-2% each way, particularly if smaller amounts. These costs are a key reason I decided to invest for my wife and kids in Thailand on smaller amounts with money earned in Thailand and not remit overseas and back again. The idea of saving up several months and doing in one go might also seem OK in theory. But let's say you earn 6% or 12% p.a. on average on your portfolio. Oversimplifying that means on average you lose 0.5% to 1% for every month you delay investing just to save on bank fees. For tax, investing offshore depends on various factors and can easily become more complex. Thailand can be very straight forward if you pick the right products. No capital gains tax, no income tax, inheritance tax unlikely for many people unless THB 50mn up. So no need to go offshore just for no tax. We pay very little tax at all on our Thai based investments. The only exception is 10% WHT on dividends on one or 2 funds we hold. That's easily avoided if a priority by selecting accumulation units, or units with auto-redemption options. You also have annual allowances and tax free bands before the 10% kicks in as you can elect to be taxed at your marginal rate, which can be zero
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Post by Fletchsmile on May 2, 2018 15:44:15 GMT 7
Based on what OP has written so far, seems similar to my earlier days here. I started investing pre-LTFs and RMFs but used similar concepts. In terms of investing, the first thing I would do each month was "pay yourself first" combined with "baht cost averaging". By pay yourself first I mean invest your money as soon as you get your pay cheque then start spending. Don't spend first and save/invest what's left. Too easy to overspend . The baht cost averaging is a nice discipline to make sure you actually put money away, plus reduces risk by averaging. Once LTFs came in, my first priority was invest the max I could each month in LTFs to get the tax break. I would invest THB 50k a month for 10 months and get HR to adjust my payroll in Nov and Dec to reflect that my tax bill should be lower. More sophisticated companies could do estimates as you went along throughout the year. Both methods are preferable though to claiming back tax after year-end. i.e. Get HR or accounts to adjust your tax within the year. Don't wait to claim it back afterwards. By doing 10 months I had less outgoings around Xmas as well enough time to adjust the tax. Also December tends to be a month where Thai equities gain. So many Thais leave it to the last minute to get the tax advantage. In doing so, they miss a year's growth and invest when markets are often higher. Start monthly in Jan. Your money is invested for longer. After you've maxed out LTFs then consider other investments. When younger I didn't bother with RMFs as I wasn't sure where I would be aged 55, so preferred the flexibility. Whereas LTFs you can just pop back any time and collect providing you met the holding period. As I came closer to 55 though, I started maxing out on RMFs as well as a second priority. 3 key reasons: 1) Closer to 55 so the holding period is less of a worry 2) I have committed to Thailand so no longer need the flexibility 3) RMFs offer a wider choice to diversify. You can get a bit top heavy on Thai equities eventually with only LTFs If you do eventually become concentrated on Thai equities because of LTFs, you can simply sell some and invest in other assets inside or outside Thailand. Grabbing the tax reliefs on LTFs because of the relatively shorter holding period and later RMFs served me very well. If you need to after the 7 calendar year holding period on LTFs you can also sell and invest again in a new LTF to get tax relief again, as long as still working and you don't exceed the max 500k or 15% of your salary. Cheers Fletch
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Post by rgs2001uk on May 2, 2018 20:26:36 GMT 7
For the OP, heres two companies to consider. The first I have been using for about 20 years. www.aberdeen-asset.co.th/en/thailand/The second only recently after ING pulled out. www.uobam.co.th/en/homeThankfully, they are right next to each other in Bkk, visit one in the morning, the other in the afternoon. Despite what you may read elsewhere, these people know their job, they speak perfect english and will guide you to what best suits your needs.
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cocoon
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Post by cocoon on May 9, 2018 19:06:07 GMT 7
Thanks for all the information. I had a brief look, also at some of the brokers/banks out there. Not sure if I’m missing something here, but I couldn’t find any broker that’s offering something as plain and simple as a MSCI World ETF.
Just finding information is a pain in the ass. I can read Thai, but I read super slowly and lack vocabulary, especially formal and technical terms. Isn’t there a simple list telling me what funds they sell, what asset classes are in that fund, what the TER or fee structure is, how much a trade costs, and what others fees there are (opening account, annual fee, etc.)?
Even worse, all funds I found all seem to charge like 2% every year. Again, am I missing something, or is it really that expensive here? I am used to TER of 0.25-0.45%. Paying 2% fees means I have to make 2% more return just to cover the costs of paying some fund manager that’s hardly going to beat the market anyways.
Am I looking for something that doesn’t exist here in Thailand? Do they really only have actively managed funds here?
Isn’t there something as simple as:
- Online account with e-trading function - No opening or annual fee - MSCI World ETF - Buy/Sell for e.g. 500 Baht per transaction - TER < 0.45%
😟
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AyG
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Post by AyG on May 10, 2018 9:04:11 GMT 7
How about:
- Open an account with TMB Asset Management. Can be done at any branch of TMB. This will give you an online account with e-trading. - The account has no opening or annual fees - Buy their World Equity Index fund which invests solely in Lyxor UCITS ETF MSCI WORLD Index ETF. - No purchase or redemption fee (though there is a modest bid/offer spread - < 0.75%)
The only hitch is the TER, which is the fees at just over 1%.
Other asset management companies have similar products.
Alternatively:
- open a brokerage account with access to overseas markets (e.g. Asia Plus, Nomura Capital, Phillips POEMS) - AFAIK, none of these has an opening or annual fee - Buy iShares MSCI World UCITS ETF [IWRD] on the London Stock Exchange - Brokerage cost is 0.5% on purchases and sales with Asia Plus. There's also a 0.5% stamp duty to pay on purchases - TER is 0.5%
If you're happy with a swap-based ETF (personally I'm not), then Lyxor MSCI World UCITS ETF has a lower TER of 0.3%. WLDD on the London Stock Exchange.
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cocoon
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Post by cocoon on May 10, 2018 14:04:20 GMT 7
The only hitch is the TER, which is the fees at just over 1%. 1.2% even. Pretty expensive for an ETF (1% more than what I would pay in Europe). Anyway, thanks for the info. In the end, it’ll come down to comparing different options from a fee perspective I guess, such as: - buying the ETF in Thailand at a higher TER but without wiring fees and FX cost - transferring money to a broker overseas causing wiring fees and FX costs but lower TER Is anyone using Interactive Brokers?
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AyG
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Post by AyG on May 10, 2018 14:38:38 GMT 7
No. 1.1% according to Morningstar Thailand. Perhaps you're looking at the maximum fees, rather than the actual ones?
And you wouldn't pay 0.2% in Europe. I previously mentioned that the TER on iShares IWRD is 0.5%.
And you're apparently overlooking the option of using a Thai broker to buy an offshore ETF. No wiring fees, and the FX is handled for you.
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Post by Fletchsmile on May 14, 2018 17:56:29 GMT 7
Thanks for all the information. I had a brief look, also at some of the brokers/banks out there. Not sure if I’m missing something here, but I couldn’t find any broker that’s offering something as plain and simple as a MSCI World ETF. Just finding information is a pain in the ass. I can read Thai, but I read super slowly and lack vocabulary, especially formal and technical terms. Isn’t there a simple list telling me what funds they sell, what asset classes are in that fund, what the TER or fee structure is, how much a trade costs, and what others fees there are (opening account, annual fee, etc.)? Even worse, all funds I found all seem to charge like 2% every year. Again, am I missing something, or is it really that expensive here? I am used to TER of 0.25-0.45%. Paying 2% fees means I have to make 2% more return just to cover the costs of paying some fund manager that’s hardly going to beat the market anyways. Am I looking for something that doesn’t exist here in Thailand? Do they really only have actively managed funds here? Isn’t there something as simple as: - Online account with e-trading function - No opening or annual fee - MSCI World ETF - Buy/Sell for e.g. 500 Baht per transaction - TER < 0.45% 😟 ETFs are relatively new in Thailand. Think back say 20 years in UK/Europe Most of the ETFs quoted on the Thai Stock Exchange are local (Thai) equity ETFs. Personally I prefer paying that extra 1% on the TER for an active managed fund when it comes to Thai equities. UOB Good corp Gov, Bualuang, Krungsri etc have funds that regularly come in the top 10 and outperform the index. ETFs are a good choice in large developed efficient markets, like S&P 500, where it's hard to find alpha, and identify the top performers consistently. Thailand isn't like that, and in my view active is better for Thai equities You can find a list of ETFs quoted on the Thai stock exchange below, using the screener provided www.set.or.th/set/etfscreener.do?language=en&country=USFor ETFs on foreign exchanges, if you really want a foreign ETF you are likely going to need an account outside Thailand. What fund management companies tend to do in Thailand is package these foreign ETFs as unit trusts. eg the ones I bought for my kids. More expensive of course than going direct overseas, but as you mention no wire fees, exchange fees, hassles etc. eg on this thread reply #10 TMB SET50 fund = Thai equities, - SET 50 Index tracker - Total Annual Fees: 0.63 p.a. - No front end or back end fee. Current bid-offer spread of only 0.1% www.tmbam.com/home/en/mutual-fund-detail.php?f=392TMB World Equity Index Fund = Global Equities - Lyxor UCITS ETF MSCI WORLD Index tracker - Total Annual Fees: 1.11% p.a. - No front end or back end fee. Current bid-offer spread of only 0.1% www.tmbam.com/home/en/mutual-fund-detail.php?f=144TMB Emerging Markets Equity Index Fund = Emerging Market equities, - iShares MSCI Emerging Markets ETF - Total Annual Fees: 1.10% p.a. - No front end or back end fee. Current bid-offer spread of only 0.1% www.tmbam.com/home/en/mutual-fund-detail.php?f=145TMB Property Income Plus Fund = REITs, property sector - a fund with a few threads already on BigMango - Total Annual Fees: 1.19% p.a. - 1% front end fee. No back end fee. Current bid-offer spread Read more: bigmango.boards.net/thread/6933/saving-investing-kids-thailand#ixzz5FTM58Oc7Thailand simply isn't as advanced/ developed in terms of foreign equity investment choices. They are better value than say 3 decades back in the UK where unit trusts had horrendous 5% initial charges (many in Singapore still do BTW), but haven't yet reached the stage of discount brokers, zero initial charges and many ETFs. Typically you'll pay around 1.5% p.a. give or take and 0%-1% up front. So best bet as mentioned in posts above is go first for Thai equity LTFs. The tax saving will far outweigh this extra annual charge. Your foreign equities, unless using an RMF for tax benefits again, may well be cheaper overseas equities.
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Post by Fletchsmile on May 14, 2018 18:15:48 GMT 7
Another route is Thai securities trading companies that offer access to offshore markets. Again relatively new (last few years). They tend to be more targeted at Thais. But for example, Asia Plus offers access to 25 stock exchanges in 22 countries. These would provide access to ETFs listed on these exchanges. eg Asia Plus global investment inv4.asiaplus.co.th/asps/product-inside.php?id=8This link gives more details: inv4.asiaplus.co.th/asps/upload_editor/doc/Products%26services/overseas-investment-asiaplus.pdfAs you can see it gives access to key US, UK, Asia and other markets. Commission is generally 0.5% per trade with Asia Plus, but if you manage to open an account, given the choice of markets you should be able to get the ETFs you want. 0.5% is probably higher than you'd pay overseas, but again you have to think about the market you're accessing from. Thailand isn't that developed, the customer base is smaller, so fees relatively higher. What you generally won't get though (with a few exceptions) is global equity ETFs managed here onshore by Thai equity managers. You're basically buying overseas products on overseas exchanges, just your broker is a Thai company.
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Post by rgs2001uk on May 14, 2018 20:24:18 GMT 7
Thanks for all the information. I had a brief look, also at some of the brokers/banks out there. Not sure if I’m missing something here, but I couldn’t find any broker that’s offering something as plain and simple as a MSCI World ETF. Just finding information is a pain in the ass. I can read Thai, but I read super slowly and lack vocabulary, especially formal and technical terms. Isn’t there a simple list telling me what funds they sell, what asset classes are in that fund, what the TER or fee structure is, how much a trade costs, and what others fees there are (opening account, annual fee, etc.)? Even worse, all funds I found all seem to charge like 2% every year. Again, am I missing something, or is it really that expensive here? I am used to TER of 0.25-0.45%. Paying 2% fees means I have to make 2% more return just to cover the costs of paying some fund manager that’s hardly going to beat the market anyways. Am I looking for something that doesn’t exist here in Thailand? Do they really only have actively managed funds here? Isn’t there something as simple as: - Online account with e-trading function - No opening or annual fee - MSCI World ETF - Buy/Sell for e.g. 500 Baht per transaction - TER < 0.45% 😟 ETFs are relatively new in Thailand. Think back say 20 years in UK/Europe Most of the ETFs quoted on the Thai Stock Exchange are local (Thai) equity ETFs. Personally I prefer paying that extra 1% on the TER for an active managed fund when it comes to Thai equities. UOB Good corp Gov, Bualuang, Krungsri etc have funds that regularly come in the top 10 and outperform the index. ETFs are a good choice in large developed efficient markets, like S&P 500, where it's hard to find alpha, and identify the top performers consistently. Thailand isn't like that, and in my view active is better for Thai equities You can find a list of ETFs quoted on the Thai stock exchange below, using the screener provided www.set.or.th/set/etfscreener.do?language=en&country=USFor ETFs on foreign exchanges, if you really want a foreign ETF you are likely going to need an account outside Thailand. What fund management companies tend to do in Thailand is package these foreign ETFs as unit trusts. eg the ones I bought for my kids. More expensive of course than going direct overseas, but as you mention no wire fees, exchange fees, hassles etc. eg on this thread reply #10 TMB SET50 fund = Thai equities, - SET 50 Index tracker - Total Annual Fees: 0.63 p.a. - No front end or back end fee. Current bid-offer spread of only 0.1% www.tmbam.com/home/en/mutual-fund-detail.php?f=392TMB World Equity Index Fund = Global Equities - Lyxor UCITS ETF MSCI WORLD Index tracker - Total Annual Fees: 1.11% p.a. - No front end or back end fee. Current bid-offer spread of only 0.1% www.tmbam.com/home/en/mutual-fund-detail.php?f=144TMB Emerging Markets Equity Index Fund = Emerging Market equities, - iShares MSCI Emerging Markets ETF - Total Annual Fees: 1.10% p.a. - No front end or back end fee. Current bid-offer spread of only 0.1% www.tmbam.com/home/en/mutual-fund-detail.php?f=145TMB Property Income Plus Fund = REITs, property sector - a fund with a few threads already on BigMango - Total Annual Fees: 1.19% p.a. - 1% front end fee. No back end fee. Current bid-offer spread Read more: bigmango.boards.net/thread/6933/saving-investing-kids-thailand#ixzz5FTM58Oc7Thailand simply isn't as advanced/ developed in terms of foreign equity investment choices. They are better value than say 3 decades back in the UK where unit trusts had horrendous 5% initial charges (many in Singapore still do BTW), but haven't yet reached the stage of discount brokers, zero initial charges and many ETFs. Typically you'll pay around 1.5% p.a. give or take and 0%-1% up front. So best bet as mentioned in posts above is go first for Thai equity LTFs. The tax saving will far outweigh this extra annual charge. Your foreign equities, unless using an RMF for tax benefits again, may well be cheaper overseas equities. Probaly the main reason the majority of my assets are held overseas, lack of choice here in Thailand.
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Post by rgs2001uk on May 14, 2018 21:14:32 GMT 7
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FIREinTh
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Post by FIREinTh on May 16, 2018 22:46:29 GMT 7
I completely agree with everything that's been said about LTF's and RMF's. They're the closest the average person will ever get to free money. Other countries have tax-deductible investments as well, but when you retire the capital gains you earned will then be taxed. This means in Thailand your tax-deductible investments will not only save you money on your taxes, they will grow tax-free during your working years, and when you sell, your gains will also be tax-free. That's hard to beat anywhere in the world! You can also take a look at Interactive Brokers for investing outside of Thailand. They're truly low-cost and you can access international markets. I use them for investing in Unit Trust on the London Stock Exchange that others have talked about. And like Fletch mentioned, I've had no problems sending money outside of Thailand while having a work permit. Since you've got a job in Thailand and can save a lot of money per month, I would definitely look at FIRE if you haven't heard of it already. It stands for Financially Independent Retire Early, and there's a global community of people following that lifestyle. In a nutshell, instead of saving 10-15% of your salary like most experts recommend, you save 50-75% while minimizing your expenses and then retire early using the 4% rule. You're in a great position to follow that since you make a good salary, you can save on taxes with LTF's and RMF's, and you can lower your living expenses while in Thailand. Even if it's not for you, the basic concept of lower expenses while maximizing investments will still benefit you. A great place to get started in the Reddit Financial Independence FAQ: www.reddit.com/r/financialindependence/wiki/faqFor more specific information for Thailand you can check out: fireinthailand.com
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AyG
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Post by AyG on May 17, 2018 8:01:33 GMT 7
I use them for investing in Unit Trust on the London Stock Exchange I bet you don't. Perhaps you meant investment trusts?
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FIREinTh
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Post by FIREinTh on May 17, 2018 10:58:50 GMT 7
I use them for investing in Unit Trust on the London Stock Exchange I bet you don't. Perhaps you meant investment trusts? Yes, thanks. It's too late to edit my above post so hopefully that's cleared up here. The Canadian in me always wants to call them closed-end funds.
Actually, believe it or not, you can buy mutual funds through Interactive Brokers. Hundreds are available to US residents and non-residents still have access to a few fund managers. I've never bought a mutual fund through them though.
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