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Post by rgs2001uk on Jun 18, 2018 22:00:09 GMT 7
Ok , lets start from the very beginning,
How old are you? Nationality? Where do you work, lets assume teecha at an international school picking up lets say 150k baht per month. Where are you on the carrer path/promotion ladder? Where do you think your next posting will be? Married or single?
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sophie
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Post by sophie on Jun 18, 2018 22:26:23 GMT 7
40 y old from Germany, no intention going back there, BKK hotel business. Where on the career ladder: stuck it seems Next posting: South of Europe Happily married
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Post by rgs2001uk on Jun 18, 2018 22:41:37 GMT 7
Sth Europe, I have been considering, Portugal, Italy and Cyprus, but need to check up on the taxes.
Hospitality management it would appear, have you considered schooling costs. Happily married, glad to hear it, what does your spouse think?
What are your fellow farang workers doing with their hard earned cash?
Known a couple of girls on here, one invested in Benson & Hedges and Blue Label, the other invested in Repulse Bay real estate, I would think you fall some where in the middle of these two extremes.
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Post by Soutpeel on Jun 19, 2018 6:05:47 GMT 7
thanks AyG I'd like to spend my savings partly (50%) between 5-10 years from now and the rest is for retirement ... You recommend Luxemburg, is that the best choice in Europe? Why would you recommend that particular country? What Id probably be looking for is something low maintenance, where i can invest my money in some funds for a long term without having to play around with it too much... I read somewhere that passive index funds usually perform as well as actively managed funds is that so? Is that a good option for me? Thanks for the advice! One more - of course i can prove that the money comes from salary in thailand - with that no problem to transfer abroad? I heard from a friend here that the bank wanted to see some kind of invoice, proof that youre buying something abroad, otherwise they wouldnt let him transfer. (That was SCB i think) If you have a work permit, you dont need any proof to transfer, all you tick is the " support family" box and given em a copy of your WP ...ie the purpose of the transfer is for your family overseas, if you dont have a WP, thats were the troubles can start with many banks
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chiangmai
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Post by chiangmai on Jun 19, 2018 8:05:23 GMT 7
If you specify on the transfer form that its purpose is investment and you make it clear to the bank this is the case, repatriation should not be an issue. Similarly, if the purpose is to buy a condo. and that is clearly stated at the time of transfer, sending the funds out later is not an issue. There's a lot of false information and horror stories floating around on this subject and I suspect that many have no basis in fact. What I can say is that I've had no problem exporting funds that I've brought into the country but I have a good relationship with the same bank for many years plus I have all the original paperwork.
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AyG
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Post by AyG on Jun 19, 2018 14:13:39 GMT 7
Any advice on the kinds of things that are important to look out for when doing research on funds? Fund selection is a subject about which tomes could (and have been) written. And there's no one “right” way to do it. Here are a few things I look for when selecting a fund. What's the fund's track record? Ideally I need performance data for the last 10 years, which approximates to a full economic cycle. (Some fund manager styles work better than others at different stages of the economic cycle.) Has this performance outperformed ETFs in a comparable sector? If not, then ETF is the way to go. (This should also screen out closet index tracking funds.) (I also compare with comparable investment trusts - I generally prefer investment trusts over open ended funds since they typically outperform open ended funds.) Has the same fund manager been in place for the last 10 years? If not, I then need to look at his/her performance with previous funds managed. This performance must be managing the same type of fund. For example, Bolton's previous experience was irrelevant to managing a Chinese investment trust. Is the fund manager likely to retire soon? Do I understand why the fund manager has outperformed over 10 years? And if so, has he/she used a consistent approach? Does the fund have high turnover? If so, you're relying upon the fund manager's stock picking skills to be right time and time again. That's a big ask. I prefer low turnover. Similarly, is the fund manager selecting stocks for their long term potential, or for more short term gains. Is the fund manager a star name? These I generally avoid. Their funds tend to attract a lot of money very quickly, and the fund manager has to change his/her strategy to accommodate the inflows. Similarly, has the fund been widely hyped in the financial media? This for me is a big red flag. Such hype is either (a) paid for behind the scenes by the fund management house, or (b) a response to spectacular, recent, short term performance. How big is the fund? Large funds have a smaller universe of securities from which they can buy. This is particularly problematic for funds investing in mid and small cap stocks. What securities are in the top 10 investments? If I see a lot of technology stocks (which I believe are in bubble territory) or mining/commodities stocks (which I believe to be excessively volatile and unpredictable), I will avoid the fund. Are these investments similar to another fund I already hold? I want to avoid overlap. Is the fund sitting on a large amount of (dead weight) cash? Are the charges reasonable? I'm happy to pay more than average charges if the strategy being run warrants it. (Small cap strategies, for example, are more expensive to implement.) I'm also happy to pay more if the strategy has produced prolonged superior performance. I certainly don't chase the lowest charges. Does the fund manager invest in her/her own fund? Doing so shows confidence, even if sometimes misguided. Also, I noticed in an earlier post AyG you mentioned that it's better to convert baht to GBP and trade on the London Stock Exchange, is there a particular reason for this? The London Stock Exchange has the widest range of equities, investment trusts and ETFs of any European exchange. It also has high volumes (meaning good liquidity and smaller bid/offer price spreads), and can be traded on very cheaply. No other European exchange comes close. I rule out US exchanges because of the tax situation.
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AyG
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Post by AyG on Jun 19, 2018 14:24:31 GMT 7
OK so let's start at the very beginning: I think id be comfortable with something not too conservative, not too aggressive. Somewhere in between. How about Equity: 60% Bonds: 20 % Property: 10% Cash: 10% Is that a good place to start? It's a good place to start. However, it's what you do within the sectors that makes a difference. If the 60% equities is all Russian oil stocks, or Venezuelan coffee producers, you'll almost certainly have a much bumpier ride than investing in global large cap stocks. Generally it's best to have a substantial holding in your home market (in your case, I think that's probably Eurozone equities). I've previously written that I (and many far more experienced investors) think conventional bonds are a poor investment and should form no part of a modern portfolio. Index linked bonds do have a place, but not at 20%. Consider exposure instead to infrastructure. Infrastructure investments typically increase their income in line with inflation giving an important element of protection. (They also have the prospect of capital appreciation.) Property would need to be physical property to have a meaningful diversification effect; property shares are much more closely correlated with general equities. And if, as I suggest, you keep 50% of your savings in cash for short term needs, there's probably no need for 10% cash in the investment part of your wealth.
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chiangmai
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Post by chiangmai on Jun 19, 2018 15:00:03 GMT 7
I've had very good results from:
Lindsell Train Global Equity Fund B GBP (Inc) IRE -IE00B3NS4D25 Baillie Gifford International B (Acc) - GB0005941272 Fundsmith Equity Fund Class T (Acc) - GB00B4Q5X527
You must, however, throw those into your melting pot and decide for yourself.
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Post by Fletchsmile on Jun 20, 2018 15:14:31 GMT 7
One of the first questions I'd ask is: have you set yourself up some sort of emergency fund? What happens if you lose your job, have a serious illness, accident, get pregnant and have a baby, take time out etc. What will you do until you get back to work? It usually makes sense to have a few months of salary/outgoings put by in cash.
You mentioned THB 1mn in savings. Is that enough to cover the things that could come up? It sounds a good start, but depends on your outgoings, whether you have medical insurance, family plans, thinking of putting down a deposit on a home etc
As you mentioned you are married, you would have some fall back on your husband I suppose, in the same way he would on you. But at the same time, if something happens to him you may also need to draw on your emergency fund to support him. ... and if something happened to you both at the same time, what happens? You both lose your job. Joint car accident etc. So one of the first things I would consider is whether any cash reserves you have are enough. Not particularly exciting and won't necessarily make you rich, but with two key benefits: 1)Funds in the event of an emergency, or even just possible upcoming events, to tide you over short term 2)If you have sufficient funds in cash, you will then be able to invest more confidently. Able to sleep better if something goes wrong. But also able to invest more long term and ride out difficult times where your investments may be doing badly. Sleeping easier without worrying about day to day fluctuations. Worse still if you needed the money due to an unforeseen circumstance, you may have to sell at the very wrong time. Holding cash may generate in itself lower returns, but on the other hand it allows you to take more risk (and potentially more return) with what you do actually invest.
So first consider do you have enough of a cash fund to draw on as necessary, that would allow you to invest better and with more confidence?
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Post by Fletchsmile on Jun 20, 2018 19:11:31 GMT 7
..... One more - of course i can prove that the money comes from salary in thailand - with that no problem to transfer abroad? I heard from a friend here that the bank wanted to see some kind of invoice, proof that youre buying something abroad, otherwise they wouldnt let him transfer. (That was SCB i think) If you have a work permit, you dont need any proof to transfer, all you tick is the " support family" box and given em a copy of your WP ...ie the purpose of the transfer is for your family overseas, if you dont have a WP, thats were the troubles can start with many banks You hear a lot of horror stories about how difficult it is to get your money out of Thailand. Just keep the paperwork though and it's no big deal. I've done it on quite a few occasions.
If you've been working just keep copies of things like your work permit. It's cancelled when you finish work but you can easily just scan it or photocopy it beforehand.
Also scan/ photocopy things like your tax returns, salary slips and Twee50 (annual summary of income from your employer). When you hand in your tax return each year to the revenue office for a very small fee you can request a photocopy that they stamp.
One thing to bear in mind though, is that for many things you have to be here in person to make the transfer or at least to set it up/ So if you're planning never to come back to Thailand, send the money out before you leave. Doing stuff "online" will often require certain hard copy forms to be completed.
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Post by Fletchsmile on Jun 20, 2018 19:24:38 GMT 7
What you invest in and where will depend on a lot of factors, like your age, attitude to risk, where you will eventually settle, time frame etc.
Generally if you're not going to settle in Thailand long term or at least visit frequently in the future, then it would like make more sense to park your investments elsewhere. Thailand's choice of investments is more limited than other countries and you can often find better choices elsewhere.
One big factor that may change that decision though is tax.
You mentioned you were from Europe. You may find that tax on investments in Thailand are more favourable than your home country. Thailand has very low taxes on investment returns. In most cases you can simply buy unit trusts/ mutual funds that don't pay dividends and you wouldn't pay any capital gains tax or income tax in Thailand. i.e tax free Whether you pay other countries' tax on investments you hold here will also depend on your nationality and domicile. eg although a US citizen wouldn't pay any capital gains tax or income tax in Thailand. They would however, be captured by US tax rules on income etc from outside US. You need to understand whether your country is like that
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Post by Fletchsmile on Jun 20, 2018 20:00:36 GMT 7
Sophie, The biggest exception to not investing in/via Thailand in your case may be where you can get tax relief for doing so. You mentioned you earn income here, and you have 80k a month to invest. Based on that, I'm guessing you earn somewhere between THB 1million to 4 mn per annum. So your top rate/ marginal rate of tax would be 25% to 30% One of the most useful investments to you could therefore be Long Term Equity Funds (LTFs). You should seriously consider these for part of your investments LTFs are basically unit trusts/mutual funds that invest mainly in Thai equities. You then get tax relief at your marginal rate of tax. You can invest up to the lower of 15% of your eligible income/salary or 500k max. As an example, if you earned 2mn per year you could invest up to 15% x 2mn = 300,000 per year, and reduce your tax bill by 25% of 300,000 = 75,000 per year. So your 300k investment actually costs you only 225k. You must hold the investment during 7 calendar years. In practice that could be just over 5 years total if you invested on say 27 December 2018 and sold on 3 January 2024. You hold in 7 calendar years 2018/19/20/21/22/23/24, but actually hold just over 5 years. This would fit with the time horizon you mention, but if you will likely want the money before that 5-7 years it wouldn't be suitable. So in effect, the cost to you is 225k, and get 33% added to it free by the Thai revenue, providing you hold throughout the time. If you're investment does nothing, and doesn't go anywhere you have a 33% gain after that 5-7 years. In reality as the money is invested in equities the value would go up and down. It is possible that your investment falls in value, but you have a 33% tax cushion against that. The probability of Thai equities being higher 5-7 years from now is ball park 90%. So most likely you will have a gain on your investment plus the tax benefit. I've been buying LTFs since they first came out in the mid-2000's and happily holding and collecting the tax benefit every year I've worked in Thailand. They have been my first choice in investing because of the tax benefit. In addition to the tax benefit I've had substantial equity returns on the funds. My favourite LTF is UOB Good Corporate Governance Fund. As at end of May, it was up 39% over 5 years, 136% over 7 years and 285% over 10 years. These numbers exclude the tax benefit and as they say past performance s no guarantee of future performance The worst year I ever had was 2008 when it fell 34% as markets globally tanked during the GFC. Even in that worst of years though the tax benefit of 33% you would have got would have cancelled that out, so after tax you would still have been OK.(2009 it rose by 75%). You are interested in long term returns though, so don't focus on any single year. So while someone might say (Thai) equities are risky, and THB will give you exchange rate risk. The tax benefit will go a large way to compensating these risks even in sever times. For anyone earning in Thailand and paying tax, I'd say seriously consider putting some money in these. They may not suit everyone, but are worth a serious look. You can start and stop any time. But make sure you can hold full term, otherwise there can be penalties. If you have 80k a month, it could be a good option for the first say 25k a month (or whatever 15% of your salary is) as part of your investments given the very nice tax benefit. At 25k out of 80k it's around 30% of your investment each month. The other 55k you would likely be best off investing outside Thailand. Again it may be a high weighting in Thai equities, which I wouldn't do without the tax benefit, but with the tax benefit it made a lot of sense to me, and over the last decade or so become one of my largest holdings I like UOB Good Corporate Governance fund and it has regularly been in Thailand's top10 LTF funds - frequently beating the SET index. It is 100% invested in equities. There are LTFs however that invest 70% in equities and 30% in bonds, if you prefer lower risk. I would rather get 100% equities and tax relief on that though, and buy bonds if any somewhere else On the fund: www.uobam.co.th/en/mutual-fund/90034/CG-LTFOn the tax benefits: www.uobam.co.th/en/tax-benefit/ltf
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AyG
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Post by AyG on Jun 20, 2018 20:06:54 GMT 7
Whether you pay other countries' tax on investments you hold here will also depend on your nationality and domicile. eg although a US citizen wouldn't pay any capital gains tax or income tax in Thailand. They would however, be captured by US tax rules on income etc from outside US. You need to understand whether your country is like that There are only two countries which tax nationals' worldwide income, the United States and Eritrea (though the Eritrean tax rate is just 2% for non-residents). As long as the OP keeps her investments in a tax haven such as Luxembourg there will be no tax to pay.
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AyG
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Post by AyG on Jun 20, 2018 20:09:53 GMT 7
One of the most useful investments to you could therefore be Long Term Equity Funds (LTFs). You should seriously consider these for part of your investments Since the OP is planning on returning to Europe in 2 years, would LTFs still be an appropriate investment? Even if the OP wanted to stay invested in Thai mutual funds, she would also need to maintain a Thai bank account to take the proceeds after the minimum holding period, and then arrange a funds transfer to her new country from afar.
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sophie
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Post by sophie on Jun 20, 2018 21:36:12 GMT 7
Thanks for the info, sounds like the LTF provides a really nice tax benefit indeed. However, we are not planning to stay in Thailand, and arranging a transfer of funds in 7 years might be a hassle indeed. Making sure we have enough of emergency cash reserve makes sense - this i might need to rethink. Wouldnt be good if we had to sell at the wrong time! So there's a couple if things i need to figure out: 1) Most efficient and cost effective way to transfer money from Thailand to Luxembourg (if that's the best destination ...) + determining frequency of the transfers. Monthly will probably be too expensive in fees. This is someting i can easily find out, we have accounts with several banks, i can ask around. 2) How much to transfer - i still think 80,000 THB / month is a good starting point - and part of the 1M, maybe half 3) The most important question : what to invest in. I had a look at the list of funds that internaxx provides Good grief, so many! Where does one start!? I have quite some researching and studying to do. No wonder so few people i know invest their money in funds , it gets overwhelming for someone with little previous exposure to investments I read somewhere about lifecycle funds, where based on some variables like age and risk profile this 1 fund does everything for you. Is that a good option ? Or should one seek a financial advisor? I dont think i qualify for 'private banking' with these amounts Only thing i know so far is that i would like mostly equity (about 65% or so) and the rest infrastructure, property and bonds. And a substantial part in eurozone equities as we will live there.
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