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Post by rgs2001uk on Jun 20, 2018 22:19:16 GMT 7
Sophie, where were you recruited from, sent here by a large MNC to work here or recruited locally?
If sent here from overseas, why not have your salary paid into a bank account in Germany and pick up a local overseas allownace for living here? Why not have your salary paid into an acount in say Singapore or Hong Kong?
What about your husband?
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sophie
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Post by sophie on Jun 21, 2018 9:10:19 GMT 7
I was recruited locally and was only able to receive salaries in Thailand unfortunately....
Something i thought of last night:
What if i move to southern europe (for example spain) in 3 years or so, again for a couple of years
Would it still be ok to send savings to Luxembourg and would i still enjoy the same tax advantage?
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AyG
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Post by AyG on Jun 21, 2018 9:37:51 GMT 7
What if i move to southern europe (for example spain) in 3 years or so, again for a couple of years Would it still be ok to send savings to Luxembourg and would i still enjoy the same tax advantage? The reason that having your investments in Luxembourg whilst being resident works because (a) Luxembourg doesn't tax your investments, (b) Thailand doesn't tax offshore investments*, and (c) your home country doesn't tax the worldwide income of non-residents. Once you move to, say Spain - when you're resident in Spain, Spain will tax your offshore investments. (a and b above remain true.) You'll still be able to send savings to Luxembourg, but won't have the same tax advantage. Income tax is pretty unavoidable living in Europe. However, a number of European countries don't charge capital gains tax (CGT), so if in the future you move to work in one of these countries (e.g. Belgium, Switzerland, Netherlands, Greece, Austria, Portugal), you could realise the capital gains and then reinvest to avoid CGT. * That's a slight simplification, but is good enough for now.
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Post by Fletchsmile on Jun 21, 2018 10:15:18 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. The first sentence is not the full picture at all. They tax non-residents (for tax purposes) on worldwide income is what it should read.
The second sentence is incorrect. There are a wide range of countries that will tax residents (for tax purposes) on worldwide income. That would include Luxembourg in the absence of any DTA
eg should someone go to work in Indonesia they become taxed on worldwide income. There are other countries with similar rules
If an expat moves country it's always best to check what the rules are for their nationality, domicile and country of tax residence. There are way more than 2 which capture worldwide income
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Post by Fletchsmile on Jun 21, 2018 10:31:32 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. As mentioned the tax benefit outweighs most of the disadvantages to make it appropriate for many people, if they are prepared to hold for the mid/long term = 5-7 years up
It's not particularly difficult to do so either. In the past I was uncertain whether I would return to stay in Thailand, but still considered LTFs worthwhile, and took them out.
Maintaining a bank account is very easy. Actually just maintain two accounts with say 5k each in at the same bank (or whatever the minimum happens to be for the account with that particular bank) then set up internet banking. Then just transfer 1 baht between the accounts every few months. As it's the same bank you won't even have to worry about OTPs for transfers. Just need to log in. Even if someone let the account go dormant it's not difficult to reactivate. That can be done when you come to collect the proceeds.
An LTF can be held as long as you want. 7 calendar years (and 5+ to 7 years actual holding) is just the minimum.
With someone like UOB you can set up their online service to buy and sell funds online. So once you've met the minimum holding period, you can sell any time you feel like it from anywhere in the world with an internet connection. The cash then sits waiting for you.
As mentioned in an earlier post, to transfer money out of Thailand usually requires a physical presence at a bank somewhere along the line. So basically you're looking at a trip to Thailand at some date in the future to collect your money. No big deal at all.
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Another product to consider is retirement mutual funds (RMFs). These give the same tax benefits as LTFs. The advantage is that they allow a wider range of investments such as international equities, bonds, gold ETFs etc.
The big disadvantages though are on flexibility and holding period. They need to be held until age 55, (and min 5 years) and must invest at least 5k a year to 55 once you start with them, though it is possible to waive some times. Penalties for non-compliance are more complicated.
So in OP's case you really need to lock them away for 15 years or so. Around her age, I decided they were too inflexible and not appropriate for me, particularly as I might leave Thailand.
If I left I could see myself coming back for a trip to collect LTFs, but really didn't want to be waiting around 15 years for RMFs. 15 years was too long, and I might have needed the money before then for a home, kids, etc etc. 5-7 years LTF OK, but not 15 years RMF despite the wider choice.
So RMFs are worth a thought for some, but likely to be less appropriate for younger foreigners not committed to Thailand. So less likely to be what OP is looking for in her case
Have to add though, after committing to Thailand and when older and closer to 55, I maxed out on these as well as LTFs. I always went for LTFs as first choice though
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AyG
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Post by AyG on Jun 21, 2018 10:31:33 GMT 7
Sophie
Whilst I'm not 100% happy with your asset allocation, I'll take that as a starting point and give you an example of how I'd tackle your investment situation, taking a fairly conservative approach. Note that this is not a recommendation, just a suggested approach.
For the purpose of this exercise I've just looked at Morningstar 4-5* rated funds (rather than doing a full analysis)
All the following investments are denominated in EUR and available on Internaxx.
Starting with the 60% equity, I'd want much of that to be in my home economy – in your case Eurozone Europe is as close as we can get.
The rest of the equity portion I'd invest in a global fund. In doing so, I'd pick one that wasn't overly invested in the USA.
My starting point would be 2/3rds in the home market, and 1/3rd global. However, since the global fund would also invest in Europe, I'd reduce that slightly. That gives me 35% Europe, 25% global.
I would consider:
For Europe: BlackRock Global Funds - Euro-Markets Fund D2
For Global: Pictet - Global Megatrend Select
For the 20% bonds, I'd go for a Diversified or Flexible fund where the fund manager(s) can use their skills to change the types of bonds they hold. Again just looking at 5* rated funds, I'd consider
Invesco Funds - Invesco Euro Bond Fund A Accumulation EUR
or
Schroder ISF EURO Bond C Acc EUR
Note that both are accumulation units, so you don't have any income to be subject to income tax when you move to Europe.
For 10% property, Internaxx doesn't have any physical property funds, so you'd be stuck with property share funds. There's only two that fit the bill:
Janus Henderson Horizon Pan European Property Equities Fund H2 EUR
and
Janus Henderson Horizon Pan European Property Equities Fund H3 EUR
(I don't know the difference between them.)
I would probably be tempted to replace the 10% property with 10% infrastructure*. Internaxx doesn't offer a suitable fund, so I'd consider the following ETF which you can buy through Internaxx. :
Lyxor FTSE Developed Europe Infrastructure UCITS ETF [MAKE]
The EUR class of this ETF is traded on Euronext.
Hope that's all clear. Any questions, just ask.
* Property and infrastructure have similar characteristics in that they both act as an inflation hedge. As inflation rises, property owners can increase their rent, whilst infrastructure owners can increase the charges to their users. However, for property this only applies to investments in physical property – not property shares. This is why I prefer infrastructure over property shares.
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AyG
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Post by AyG on Jun 21, 2018 10:39:49 GMT 7
The first sentence is not the full picture at all. They tax non-residents (for tax purposes) on worldwide income is what it should read.
The second sentence is incorrect. There are a wide range of countries that will tax residents (for tax purposes) on worldwide income. That would include Luxembourg in the absence of any DTA In my defence, my first sentence "There are only two countries which tax nationals' worldwide income, the United States and Eritrea" is correct. My second sentence is, of course, completely wrong. Not sure what I was thinking.
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Post by Fletchsmile on Jun 21, 2018 10:55:40 GMT 7
The first sentence is not the full picture at all. They tax non-residents (for tax purposes) on worldwide income is what it should read.
The second sentence is incorrect. There are a wide range of countries that will tax residents (for tax purposes) on worldwide income. That would include Luxembourg in the absence of any DTA In my defence, my first sentence "There are only two countries which tax nationals' worldwide income, the United States and Eritrea" is correct. My second sentence is, of course, completely wrong. Not sure what I was thinking. Don't want to be too picky but...
as mentioned they are the only 2 that tax non-resident (citizens/nationals) on worldwide income, and it's important to include that non-resident element together with the worldwide income on citizens to understand the full picture. There are plenty of others that tax their citizens/nationals on worldwide income if they are tax resident in their country of nationality.
The countries OP needs to watch for in particular are those that tax foreigners who are tax resident on worldwide/foreign income. These include many of the Europeans like if she went to work in Spain, Greece, Netherlands, Portugal etc
wiki gives a good summary and does it reasonably clearly. Only covers income tax though. Not inheritance tax or capital gains tax
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sophie
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Post by sophie on Jun 22, 2018 19:19:10 GMT 7
Sophie Whilst I'm not 100% happy with your asset allocation, I'll take that as a starting point and give you an example of how I'd tackle your investment situation, taking a fairly conservative approach. Note that this is not a recommendation, just a suggested approach. Thanks for the suggestions AyG, what would you change about the asset allocation to make it better? I have about 1 M THb parked in an australian savings account due to a previous job there, a country we dont plan to go back to (but who knows?) Maybe it would be better to move that to Luxembourg too, ot are there adventages to having money in different corners of the world? Im very grateful for this forum, I've found a wealth of info in the older threads as well. When i do have a bigger sum like 1m thb to invest, will it be better to split that in smaller amounts and invest gradually? Monthly? Or just put everything in funds right away?
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AyG
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Post by AyG on Jun 22, 2018 19:54:49 GMT 7
Sophie Whilst I'm not 100% happy with your asset allocation, I'll take that as a starting point and give you an example of how I'd tackle your investment situation, taking a fairly conservative approach. Note that this is not a recommendation, just a suggested approach. Thanks for the suggestions AyG, what would you change about the asset allocation to make it better? I have about 1 M THb parked in an australian savings account due to a previous job there, a country we dont plan to go back to (but who knows?) Maybe it would be better to move that to Luxembourg too, ot are there adventages to having money in different corners of the world? Im very grateful for this forum, I've found a wealth of info in the older threads as well. When i do have a bigger sum like 1m thb to invest, will it be better to split that in smaller amounts and invest gradually? Monthly? Or just put everything in funds right away? I've already suggested (given your circumstances) you keep 50% in cash, so I would eliminate the 10% cash in the investment part of your portfolio. Personally I don't like conventional bonds as an investment and in my own portfolio don't hold any. The returns are very limited, and the potential for capital loss (particularly in current market conditions where interest rate rises will mean large losses) is very real. Generally speaking there really aren't any advantages in keeping money in different countries. Keep all your investments in one place and it's much easier to monitor what's going on. In the case of your Australian savings account, you're exposed to AUD exchange rates - and exchange rates can be extremely volatile. If the AUD drops 30% against the EUR you might be upset. I know I would be. As for "invest gradually", there are a lot of people who prattle on about "dollar cost averaging" (or "baht cost averaging" or "pound cost averaging", &c.). It's a nonsense. Research unequivocally shows that, on average, you're better off investing all the money up front, rather than investing small amounts over a period of time. The one issue you'll face with Internaxx is that the minimum investment in a fund is (I think - you'll need to check) 2,000 Euros. And you have to stay invested (again, I think) for one year to avoid additional fees.
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Post by rgs2001uk on Jun 22, 2018 21:18:30 GMT 7
Sophie Whilst I'm not 100% happy with your asset allocation, I'll take that as a starting point and give you an example of how I'd tackle your investment situation, taking a fairly conservative approach. Note that this is not a recommendation, just a suggested approach. Thanks for the suggestions AyG, what would you change about the asset allocation to make it better? I have about 1 M THb parked in an australian savings account due to a previous job there, a country we dont plan to go back to (but who knows?) Maybe it would be better to move that to Luxembourg too, ot are there adventages to having money in different corners of the world? Im very grateful for this forum, I've found a wealth of info in the older threads as well. When i do have a bigger sum like 1m thb to invest, will it be better to split that in smaller amounts and invest gradually? Monthly? Or just put everything in funds right away? How much tax is Ozzyland hitting you up for, why would you keep money in a country you dont intend to go back to? In all honesty, you may be better off investing in LTFs in Thailand. Get into funds right away, I ask again, what are your fellow farang coworkers doing with their money?
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sophie
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Post by sophie on Jun 23, 2018 20:02:49 GMT 7
So what we have so far for a possible portfolio as suggested by AyG:
35% Europe equity (possibly: BlackRock Global Funds - Euro-Markets Fund D2)
25% Global equity (possibly: Pictet - Global Megatrend Select)
20% Bonds (Invesco Funds - Invesco Euro Bond Fund A Accumulation EUR or Schroder ISF EURO Bond C Acc EUR)
10% Infrastructure (Lyxor FTSE Developed Europe Infrastructure UCITS ETF [MAKE])
10% ??? (Cash not needed as we have cash savings set aside)
Is there anything wrong / missing with this picture?
Should we add some emerging market equities? Would Thai LTF fit the bill? Any other options?
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AyG
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Post by AyG on Jun 23, 2018 20:41:20 GMT 7
Should we add some emerging market equities? Would Thai LTF fit the bill? Any other options? Emerging Markets is a very diverse area, ranging from the commodity-dependent countries of S. America to the industrialising countries of SE Asia. It's by no means homogeneous. I certainly wouldn't see any particular need to invest in S. America, and what's happening in SE Asia is pretty much irrelevant to your future circumstances. Of course, there's the belief that Emerging Markets will outperform developed markets because of the growing middle class which will drive consumption. However, that may not be reflected directly in share price. In short, I see no compelling reason for you to add Emerging Markets to the mix - particularly given that you're not wanting to take on a lot of risk. If you're looking for something for the extra 10%, I would suggest looking at non-EU countries in Europe which are closer to your future home, specifically the UK and Scandinavia. The largest companies in the UK are actually global enterprises, so you're getting a broad global exposure to some very solid companies, not just exposure to the UK economy. Scandinavia, however, is difficult to invest in as a bloc.
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sophie
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Post by sophie on Jun 24, 2018 8:31:28 GMT 7
I had a look at fees / commissions that internaxx charges, looks reasonable to me.
On some forums people complain about high fees: "Internaxx charges high trading fees. It has a mobile app, but it doesn’t work at all. The only way to transfer money is bank transfer."
I guess they are mostly referring to trading stocks? All i can see for funds is a quarterly admin fee of 0.1 % (min 15 EUR) Is there any other charge one should be worried about?
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AyG
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Post by AyG on Jun 24, 2018 9:02:48 GMT 7
I had a look at fees / commissions that internaxx charges, looks reasonable to me. The trading fees are not dirt cheap (but much cheaper than the likes of Saxo) However, you're paying for a higher level of service and a lot of flexibility. I particularly dislike the 0.1% on stock and ETF trade - €14.95 + 0.10% - and would be happier with a flat fee. However, I only trade a couple of times a year, so live with it. The maintenance fee is €45 per quarter if you don't trade, and €25 if you do, so a maximum of €180/year, which is actually pretty reasonable. Not sure where you're getting "for funds is a quarterly admin fee of 0.1 % (min 15 EUR)". It's possible that you're looking at the old schedule of charges. I think this fee has gone. All i can see for funds is a quarterly admin fee of 0.1 % (min 15 EUR) The only "feature" with funds that might be of concern is (a) the high minimum investment (from memory, €2,000), and (b) additional charges if you don't hold the fund for a full 12 months minimum. One of the features I like about funds is the way I can use them to soak up cheaply any small amounts of spare cash and can raise small amounts of cash (e.g. to cover fees) if need be. This approach doesn't work on the Internaxx platform, so it's difficult to run an account with a close-to-zero cash balance. Not an enormous hardship, but does require a little bit more forethought and planning. It's true you can only fund and withdraw using a bank account in your own name. However, this to me seems like a perfectly sensible security measure and has never been an inconvenience. Sending and receiving money from my UK bank accounts attracts no charges. Incidentally, every time you use a different bank account they'll 'phone you up to check that it's legit.
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