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Post by Fletchsmile on Aug 23, 2018 12:24:05 GMT 7
There was a thread over on another forum which I used to maintain, which sort of got lost and neglected. I occasionally refer to it, but struggle to find it there 
So as I don't visit there much these days and as this forum is much easier to find stuff I've made a link to it:
It was started just over 5 years ago, so sort of interesting to look back on my thoughts of where things would go, and whether my reasons for investing remain valid...
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Post by Fletchsmile on Aug 23, 2018 12:25:47 GMT 7
Original post by Fletchsmile. Posted May 18, 2013
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FIREinTh
Crazy Mango
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Post by FIREinTh on Aug 23, 2018 14:51:33 GMT 7
I remember that thread and it's interesting to look back.
The SET is at about 1700 right now, which is only a 5% total return in 5 years. But dollar cost averaging like you talked about really helped out. The SET went down to 1200 in 2014, back up to 1600 in 2015, and down again to 1200 in 2016. Averaging that out helped a lot, especially if you put more in during the pullbacks.
It definitely shows the advantages of buying when everyone is scared and selling. At the time in 2014 and 2016 it was hard because all the news was about China slowing down, emerging market crashes, Thai exports, etc, but looking at the chart in hindsight combined with your post on staying the course with DCA really hits home about regular investing!
That's one of the reasons why I like LTFs and RMFs so much - you have to put your money in during that calendar year so they basically force you to invest regularly no what you think about the Thai market.
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GavinK
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Post by GavinK on Aug 23, 2018 15:30:14 GMT 7
That's one of the reasons why I like LTFs and RMFs so much - you have to put your money in during that calendar year so they basically force you to invest regularly no what you think about the Thai market. Not really... you don't have to contribute monthly - the choice, timing and amount (subject to an annual maximum) is down to the individual. |
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Post by Fletchsmile on Aug 23, 2018 16:27:23 GMT 7
I remember that thread and it's interesting to look back. The SET is at about 1700 right now, which is only a 5% total return in 5 years. But dollar cost averaging like you talked about really helped out. The SET went down to 1200 in 2014, back up to 1600 in 2015, and down again to 1200 in 2016. Averaging that out helped a lot, especially if you put more in during the pullbacks. It definitely shows the advantages of buying when everyone is scared and selling. At the time in 2014 and 2016 it was hard because all the news was about China slowing down, emerging market crashes, Thai exports, etc, but looking at the chart in hindsight combined with your post on staying the course with DCA really hits home about regular investing! That's one of the reasons why I like LTFs and RMFs so much - you have to put your money in during that calendar year so they basically force you to invest regularly no what you think about the Thai market. Don't forget that 5%-ish is only the capital side gain. You would also have had the dividends of ball park 3-4% a year.
If someone looks at the SET Total Return Index, (TRI), it was 8,553 on 18th May 2013 when that was posted about 5 years ago. SET TRI is now around 10,527, i.e up about 23%
So for capital gain + dividends total return would have been about 23% in that 5 years or so. Or ball park 5% a year total return. In some ways disappointing, but definitely better than cash, and would have kept ahead of general inflation. School fees fo us have gone up about 3%-4% per annum which is one of our most important individual inflation benchmarks
I find it useful to look back, and doing so a few things jump out:
1) The market was high around those levels, and not cheap as expected, and concerns were warranted
2) THB cost averaging (BCA) would probably have been useful rather than sticking a lump sum in. As you say it dipped significantly in some of the years. To me the biggest benefit of baht cost averaging is reducing risk, and avoiding going all in just before a fall. You won't necessarily get the best possible returns but you will avoid the worst possible. In this case BCA would have benefited from the weak individual years.
3) The market was indeed higher 5 years or so later. There's a post later in the thread around this where over any 5 year period the market is usually ahead approx 5 years later. (Just on capital side, ignoring dividends)
As you say, LTF and RMF tax benefits would be a nice cushion on top of these returns.
For me LTFs and RMFs were a case of getting THB 100 of investments at a net cost after tax of about 65. With 35%-ish tax benefit. (Tax rates changed a bit but 35 is an easy number_
That 100 would now be about 123, or close to double after the tax benefit is taken into account on cost. So my personal return after tax would be around 14% p.a. with the tax benefits considered, if just looking at the index movement
[Note: original post edited. As SET TRI for 18 March 2013 value of 8,273 was originally posted in error instead of 18 May (actually 17May closes business day) of 8553. But the overall picture is similar]
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FIREinTh
Crazy Mango
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Post by FIREinTh on Aug 23, 2018 16:35:40 GMT 7
That's one of the reasons why I like LTFs and RMFs so much - you have to put your money in during that calendar year so they basically force you to invest regularly no what you think about the Thai market. Not really... you don't have to contribute monthly - the choice, timing and amount (subject to an annual maximum) is down to the individual.
Right, but I meant being forced to invest at least annually takes a lot of the guesswork out of it. Of course you can still decide when to invest during that calendar year, but at least you're not going to sit out for years because you think the market is going to crash. I've read quite a few stories of people who have stayed out of US markets for the past 5 years and missed out on all the gains because they thought another crash was coming. Now, all the 'experts' have changed their tune from end of economic cycle to mid-cycle.
Don't listen to anyone and put your money in regularly, even if it is annually as a lump sum.
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Post by Fletchsmile on Aug 23, 2018 16:36:15 GMT 7
The above numbers were for the SET index. Also looking back I preferred active managed funds. As written elsewhere, Aberdeen are no longer my preferred fund manager for Thai equities, and my largest and most preferred Thai equity holding has become UOB Good Corp Governance LTF SET for 5 years to 31 July was up from 7483 to 10514 or about 40% For the same 5 years to end of July, UOB GCG LTF 57% . So my personal return would be higher. It's again born out the benefits of active management (despite higher fees), for the right fund in the right market  |
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FIREinTh
Crazy Mango
Posts: 85
Likes: 47
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Post by FIREinTh on Aug 23, 2018 16:41:39 GMT 7
I remember that thread and it's interesting to look back. The SET is at about 1700 right now, which is only a 5% total return in 5 years. But dollar cost averaging like you talked about really helped out. The SET went down to 1200 in 2014, back up to 1600 in 2015, and down again to 1200 in 2016. Averaging that out helped a lot, especially if you put more in during the pullbacks. It definitely shows the advantages of buying when everyone is scared and selling. At the time in 2014 and 2016 it was hard because all the news was about China slowing down, emerging market crashes, Thai exports, etc, but looking at the chart in hindsight combined with your post on staying the course with DCA really hits home about regular investing! That's one of the reasons why I like LTFs and RMFs so much - you have to put your money in during that calendar year so they basically force you to invest regularly no what you think about the Thai market. Don't forget that 5%-ish is only the capital side gain. You would also have had the dividends of ball park 3-4% a year.
If someone looks at the SET Total Return Index, (TRI), it was 8,273 on 18th May 2013 when that was posted about 5 years ago. SET TRI is now around 10,527, i.e up about 27%
So for capital gain + dividends total return would have been about 27% in that 5 years or so. Or ball park 5% a year total return. In some ways disappointing, but definitely better than cash, and would have kept ahead of general inflation. School fees fo us have gone up about 3%-4% per annum which is one of our most important individual inflation benchmarks
I find it useful to look back, and doing so a few things jump out:
1) The market was high around those levels, and not cheap as expected, and concerns were warranted
2) THB cost averaging (BCA) would probably have been useful rather than sticking a lump sum in. As you say it dipped significantly in some of the years. To me the biggest benefit of baht cost averaging is reducing risk, and avoiding going all in just before a fall. You won't necessarily get the best possible returns but you will avoid the worst possible. In this case BCA would have benefited from the weak individual years.
3) The market was indeed higher 5 years or so later. There's a post later in the thread around this where over any 5 year period the market is usually ahead approx 5 years later. (Just on capital side, ignoring dividends)
As you say, LTF and RMF tax benefits would be a nice cushion on top of these returns.
For me LTFs and RMFs were a case of getting THB 100 of investments at a net cost after tax of about 65. With 35%-ish tax benefit. (Tax rates changed a bit but 35 is an easy number_
That 100 would now be about 127, or close to double after the tax benefit is taken into account on cost. So my personal return after tax would be around 14% p.a. with the tax benefits considered, if just looking at the index movement
Thanks for pointing out the total return. I often forget about dividends in the Thai market because my LTFs and RMFs accumulate so it's out of mind.
14% p.a. with the tax benefits is fantastic! It's amazing how much the tax benefits add: 5% p.a. increased to 14%.
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