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Post by rgs2001uk on Nov 28, 2019 21:21:03 GMT 7
New thread created for member moobin, please feel free to comment, go easy on him, as he mentions, the numbers he may require dont make for easy reading.
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Post by rgs2001uk on Nov 28, 2019 21:29:04 GMT 7
I will kick it off, these are just some made up figures, I am 57 years old, i will retire in 3 years time at age 60.
I need an income of 500,000 baht per year, how much would i need as a lump sum to allow me to retire?
My first comment would be, are you married or single, can you park 400k or 800k in a thai bank account?
Next capital required, lets say a lump sum of 20 million in Thailand returning 3% pa, thats only 600k per year, you could well live another 30 years, factor in inflation.
I suppose my question is, is 20 million baht enough to retire in Thailand at age 60 depends on circumstances, not something I would choose to do.
Sorry to be alarmist, I am a realist.
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Post by rgs2001uk on Nov 28, 2019 22:45:25 GMT 7
Not mentioned, I dont know where you are from and what your countries tax laws are, have you considered investing in hong kong or singapore?
Not mentioned, have you ever experienced a property crash, a stock market crash or currency crash?
Could you handle 50% of your savings being wiped out tomorrow?
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Moobin
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Post by Moobin on Nov 29, 2019 16:36:03 GMT 7
Okay. Here goes. Background Information I am 57 years old in December 2019, will retire on 31 December 2022 and will be due 400 days severance pay upon retirement. If they ask me to stay on it will be on one year contracts and I will do so for a maximum of three years (25% salary cut). However, for the purposes of savings, I have to assume that I will NOT be retained after December 2022. I have lived in Thailand for 38 years and worked for the same company for the past 27 years. I gained Thai citizenship a few years ago, so am now a dual British-Thai citizen. I own my house in Thailand so do not pay rent and have no debts. When I retire I will move upcountry and build a new home before eventually selling my house in Bangkok. So my only expected large expense is the 2.5 to 3 million to build the new house. I am married, but my only son is grown up. My new wife is 19 years younger than me so I need to have enough left to support her when I die (would like to leave something for my son too). First wife died so nothing owed there. Current assets (excluding house and car) & forecast savings 1. @10.5 million Baht in mostly mutual funds, some of which are doing okay and others not. 2. @5.7 million in a TISCO provident fund, which by the time I retire will have increased by 2.6 million to 8.3 million (assuming no further interest and no increase in salary, which is likely as I am through the ceiling on my position already and on salary freeze). 3. Severance pay of 400 days upon retirement. 3 .5 million after tax. 4. Monthly savings Baht 150,000 (excluding provident fund), which I invest in various funds, with limited success. So with a further 37 months of employment additional savings of 5.55 million. Total, assuming no gain or loss over the next 3 years, and excluding savings from annual bonus, if any: 27.85 million. I was hoping to live purely off interest and my target was an income of Baht 70,000 per month. Living upcountry I do not believe I will need all that but deliberately aimed high due to inflation over the years. In fact, my wife and I live comfortably on Baht 45,000 a month in Bangkok. We set aside another 20,000 a month for travel. I assume that investing in dividend paying funds would be a good option but have little to no experience in this, having a combined investment in dividend paying TMBPIPF, DIF and BSET100 of less than 500k. But I will probably invest another 250 to 500k in PIPF once the dividend has been paid out in December. I have been quite happy with my LTF investments because although the annual growth may not be great, I have reinvested the tax rebates. B-LTF, CG-LTF and UOBLTF (3.43 million). But I understand that LTFs will not be an option for tax deductions next year and the replacement will be brought down to 250k from 500k. I will probably not invest in the replacement - depends on how long the investment is required - current 7 years is actually only 5 years in real terms but I understand the new one will be even longer. I may soon cash out those of my LTFs which I can and reinvest in something else. Other investments I am happy with are BCARE (although at one time I had to sell a large chunk at a loss) and B-INNOTECH. Of investments with UOB, UCHINA looks promising but my others are in the red - luckily most are not large investments. If I am giving out too much information, please delete this post. However, I do not believe it reveals anything that identifies me or could be used to my detriment. On the other hand, if more information is required, I may be able to fill in the gaps. I have no knowledge about mutual funds in other jurisdictions apart from those that are offered by Thai banks/managers, nor other investment options. I am not interested in investing in single stocks unless they are truly blue chip, as I do not want to have to be watching the market on a daily basis. Nor am I interesting in investing in real-estate. Any suggestions would be greatly appreciated.
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AyG
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Post by AyG on Nov 29, 2019 18:00:42 GMT 7
Just a quick post since I'm a bit busy at the moment, but a target income of 70k/month, and a projected wealth of 28 million (rounded up), is a withdrawal rate of 3%. This is eminently doable (if not, perhaps, a little on the conservative side).
You mention that you're Thai-British. You won't be able to invest directly in UK funds (at least without lying), but you would be able to open an offshore account which would give you access to more cost effective, and more diverse, funds. You're almost certainly paying very high charges (1-2%/year) on your Thai funds.
Incidentally, TMBAM's PIPF has a TER (Total Expense Ratio) of 1.37%. There are similar funds out there that are cheaper. For example, Phatra's PROP-D has a TER of 0.94%. (Both figures from WealthMagik.)
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Moobin
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Post by Moobin on Nov 29, 2019 18:37:05 GMT 7
Just a quick post since I'm a bit busy at the moment, but a target income of 70k/month, and a projected wealth of 28 million (rounded up), is a withdrawal rate of 3%. This is eminently doable (if not, perhaps, a little on the conservative side). You mention that you're Thai-British. You won't be able to invest directly in UK funds (at least without lying), but you would be able to open an offshore account which would give you access to more cost effective, and more diverse, funds. You're almost certainly paying very high charges (1-2%/year) on your Thai funds. Incidentally, TMBAM's PIPF has a TER (Total Expense Ratio) of 1.37%. There are similar funds out there that are cheaper. For example, Phatra's PROP-D has a TER of 0.94%. (Both figures from WealthMagik.) Thanks for the quick input. I did not realize the charges for Thai based funds were that much higher than offshore ones. Something else I need to look into.
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AyG
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Post by AyG on Nov 30, 2019 9:24:11 GMT 7
I was hoping to live purely off interest Given that capital gains aren't taxed in Thailand, I think you are better off selling chunks of an accumulation fund to raise cash, rather than relying on dividend income (which is taxable). I assume that investing in dividend paying funds would be a good option Yes and no. There has been a cult of buying income funds. Look at how Woodford's Equity Income fund became so large on the back of marketing. There's nothing intrinsically magical about income funds. Personally I would rather choose a fund where the manager is given a freer hand to buy and sell as he/she sees fit, rather than be constrained by an income rule. So, that's the "no". The "yes" is for funds which are backed by infrastructure or property. Such funds provide a regular income which should rise with inflation. (Companies can increase the charges for what they supply.) There's also the prospect of capital gain. Such funds are also a useful diversifier. Other investments I am happy with are BCARE (although at one time I had to sell a large chunk at a loss) and B-INNOTECH. Of investments with UOB, UCHINA looks promising but my others are in the red - luckily most are not large investments. I suspect that you are picking funds based largely upon recent performance. This has led you into high risk sectors. It's a strategy that almost always disappoints. Better, in my opinion, to stick with the simple, broad based, and straightforward. I have no knowledge about mutual funds in other jurisdictions apart from those that are offered by Thai banks/managers, nor other investment options. By going through your bank you are largely restricted to that bank's own funds. By going through a broker you'd have a much broader range of funds available and be able to switch funds more conveniently. Going offshore (e.g. Luxembourg) for your broker can give access to a wider range of funds. However, there are also the hassles of transferring money out of Thailand, and bringing the income back in. I'm not sure this is something you'd want to pursue.
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Moobin
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Post by Moobin on Nov 30, 2019 17:16:27 GMT 7
I note your comments about selling out portions of funds rather than relying on dividend income due to the tax implications.
When checking the performance of funds, I normally base my investment decisions on performance over at least the past 3 to 5 years. This is not always possible in the case of new funds. For fund performance I cross-check between wealthmagik and siamchart.
At the moment I am with BBL and Bualuang Securities, UOBAM, and TMBAM. I understand that with Bualuang I can invest in funds other than those of BBL. But I must admit that I have been focusing on BBL, UOB and more recently TMB.
I believe that healthcare in the long term is a reasonable investment, unless the US govt finally actually do something about bigpharma, and technology, assuming again that the giants are not broken up.
Are annuities worth looking into and would it be possible to simply buy in upon retirement. A friend mentioned them to me yesterday so I have not had a chance to research them yet. But he seemed to think they were the best way to go for retirement.
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Post by rgs2001uk on Nov 30, 2019 17:54:09 GMT 7
^^^^^ do annuities even exist in Thailand? I would be interested to hear your friends reasoning, is he American per chance. Personally, I wouldn’t touch them with a barge pole.
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AyG
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Post by AyG on Dec 1, 2019 12:11:37 GMT 7
^^^^^ do annuities even exist in Thailand? I would be interested to hear your friends reasoning, is he American per chance. Personally, I wouldn’t touch them with a barge pole. I've asked whether Thai annuities exist before. They don't. American and UK annuities are very different creatures. The American ones I agree aren't fit to be touched with even the longest barge pole. The UK ones, however, do have a place. For individuals who are extremely risk averse, they can provide a guaranteed income for life - an income which may be index linked - and which is better than the returns available from Gilts or on bank deposits. For someone whose expenditure is not in Sterling, a UK annuity would be a poor choice because of the foreign exchange risk.
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AyG
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Post by AyG on Dec 1, 2019 12:30:36 GMT 7
When checking the performance of funds, I normally base my investment decisions on performance over at least the past 3 to 5 years. This is not always possible in the case of new funds. Generally it's better to compare performance across longer than that. Different styles of fund management perform better/worse at different stages of the economic cycle. The economic cycle approximates to around 10-12 years. Therefore it's preferable to look at performance over 10 years. In the case of new funds, why bother with them*? They are created by marketing people and typically chase the latest fad. You may remember the "dot com bubble". Share prices rose rapidly to ridiculous values, only to crash. We're going to see similar crashes in the not too distant future. Many technology companies are ridiculously overvalued. Ditto biotechnology companies. One thing one can do is look at a fund's largest investments and look at the P/E ratio of these investments. In the case of BCARE the top five investments and their P/E ratios are: Boston Scientific Corp 39.3 UnitedHealth Group 20.3 Anthem 17.0 AstraZeneca 59.9 Thermos Fisher Scientific 36.8 Some of those companies are seriously overvalued; they're not all going to be able to grow as fast as the share prices indicate. * Some might say look at the fund manager, not the fund. However, as recent experience with Woodford, and, before that, Bolton, suggests that previously OK fund managers can fail miserably with new funds.
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Moobin
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Post by Moobin on Dec 1, 2019 20:39:02 GMT 7
^^^^^ do annuities even exist in Thailand? I would be interested to hear your friends reasoning, is he American per chance. Personally, I wouldn’t touch them with a barge pole. Actually he is British. I must admit that when he first mentioned them I thought they sounded a bit risky. I have heard of people who've saved up in pension funds which sounded very much like annuities, only to have the company go bust and they lose all their savings.
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Moobin
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Post by Moobin on Dec 1, 2019 20:40:58 GMT 7
^^^^^ do annuities even exist in Thailand? I would be interested to hear your friends reasoning, is he American per chance. Personally, I wouldn’t touch them with a barge pole. I've asked whether Thai annuities exist before. They don't. American and UK annuities are very different creatures. The American ones I agree aren't fit to be touched with even the longest barge pole. The UK ones, however, do have a place. For individuals who are extremely risk averse, they can provide a guaranteed income for life - an income which may be index linked - and which is better than the returns available from Gilts or on bank deposits. For someone whose expenditure is not in Sterling, a UK annuity would be a poor choice because of the foreign exchange risk. Noted. All my earnings and expenditure is in Thai Baht.
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Moobin
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Post by Moobin on Dec 1, 2019 20:47:59 GMT 7
When checking the performance of funds, I normally base my investment decisions on performance over at least the past 3 to 5 years. This is not always possible in the case of new funds. Generally it's better to compare performance across longer than that. Different styles of fund management perform better/worse at different stages of the economic cycle. The economic cycle approximates to around 10-12 years. Therefore it's preferable to look at performance over 10 years. In the case of new funds, why bother with them*? They are created by marketing people and typically chase the latest fad. You may remember the "dot com bubble". Share prices rose rapidly to ridiculous values, only to crash. We're going to see similar crashes in the not too distant future. Many technology companies are ridiculously overvalued. Ditto biotechnology companies. One thing one can do is look at a fund's largest investments and look at the P/E ratio of these investments. In the case of BCARE the top five investments and their P/E ratios are: Boston Scientific Corp 39.3 UnitedHealth Group 20.3 Anthem 17.0 AstraZeneca 59.9 Thermos Fisher Scientific 36.8 Some of those companies are seriously overvalued; they're not all going to be able to grow as fast as the share prices indicate. * Some might say look at the fund manager, not the fund. However, as recent experience with Woodford, and, before that, Bolton, suggests that previously OK fund managers can fail miserably with new funds. Give me time to digest what you have said and I'll get back. What you have written is quite frightening. But something I need to know.
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Post by rgs2001uk on Dec 2, 2019 20:20:39 GMT 7
Ok Moobin, sorry to ask the obvious, why are you investing in stocks and shares, and do you know what you are getting yourself into? From the sums you mention already held, thay would imply a relationship manager of some sort to me, did you do your homework and tell the RM this is what I want, was it a sit down and a "know your customer" chat, or did the RM suggest for you? The annuity aspect is a moot point, they are not available, and for you, not what you need, it would die on your death, hence nothing left for those who come after. The tax aspect, I personally wouldnt get too hung up on, I would rather pay tax on 300k baht divis, than no tax on 200k capital growth. You do realise its not a straight line upward, there are peaks and troughs along the way, think of it more like a saw rather than a ruler going in an upward projection, hence my asking if you could handle a stock market correction. Persoanlly, I wouldnt touch anything with less than a 5 year history, I have been in the offices, nice glossy booklet, pie charts etc, meaningless to me, no history of performance. Give me time to digest what you have said and I'll get back. What you have written is quite frightening. But something I need to know.appreciate your honesty, no shame in that, we all had to start somewhere, take as long as you want. Heres some homework for you, , no offence meant. www.aberdeenstandard.com/en/thailand/fund-centre/performancewww.uobam.co.th/en/mutual-fund/performance
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