What is a "safe" level in predicting exchange rates for combo retirement applictations?

[Jingthing]

We sometimes hear reports of people that are short on the bank account portion of their combination applications for annual retirement applications.

 

Combination applications means when you combine Thai banked account funds with income shown in an embassy income letter totaling at least 800K annually. For example income of 600K plus banked money of at least 200K.

 

Under technical rules of Thai immigration, money seasoning is not required for combination applications, but in practice these days it often is at least at some offices. Seasoning would mean the bank funds meeting the total in combo need to be there for 90 days before applications (or 60 days for first time extensions).

 

I'm wonder what guidelines people are using to deal with this currency fluctuation risk. Obviously the more buffer in the bank account the better, but I'm sure in the real world many people aren't funding the bank portion to deal with unusually unfavorable changes. But sometimes they do happen.

 

So I'm wondering here, what level of currency risk are people allowing for in preparation for their combination applications? 

 

I think it's probably best stated in percentage of potential decline in your source currency vs. the baht. Maybe people aren't being as analytic as doing those calculations, but it seems to me the best way to quantify the risk.

 

So any feedback on this issue? Comments like I just always keep the full 800K in the account anyway are totally off topic. Also of course if you do that, you would apply using a pure bank account method, not a combinations.

 

It's only about people that are cutting it closer than that. 

 

So how close do you think it's reasonably safe to cut it?

 

Cheers.

Edited September 1, 2018 by Jingthing

[KhunBENQ]

For worst case.

USD, one year until now, high 33.45, low 31.12 which is about 7.5% less than the high.

EUR, one year until now, high 39.85, low 37.04 which is about 7% less than the high.

 

https://www.xe.com/de/currencycharts/?from=USD&to=THB&view=1Y

https://www.xe.com/de/currencycharts/?from=EUR&to=THB&view=1Y

 

The rates are currency market rates (not really what the immigration will look up), but the swing/percentage for other rates (notes, TT) will be close.

 

Edited September 1, 2018 by KhunBENQ

[Jingthing]

4 minutes ago, KhunBENQ said:

For worst case.

USD, one year until now, high 33.45, low 31.12 which is about 7.5% less than the high.

EUR, one year until now, high

I was thinking about 10 percent negative change risk in a three month period is safe enough. But of course as we've seen with some currencies, it wouldn't always be. 

 

The way I was thinking would be most logical is to look at the rate near the beginning of the seasoning period to make the calculation, rather than annual lows or highs.

 

So that's another factor.

 

I suppose some brainiacs could actually calculate the risk level based on historical data for various currencies. 

Edited September 1, 2018 by Jingthing

[KhunBENQ]

2 minutes ago, Jingthing said:

I was thinking about 10 percent negative change risk in a three month period is safe enough.

Agree on that for the USD and EUR.

The graphics and numbers that I showed are ONE YEAR numbers.

With the XE tool it's also possible to scale to 3 months.

I couldn't find a swing of more than 5%.

[KhunBENQ]

British Pound (GBP) also about 7.5% over one year (surprise).

Do extension before Brexit

[KhunBENQ]

Practical example.

Assume you have 1500 USD monthly income.

Let's assume immigration looks at Bangkok Bank cash rate: 32.30 (about worst case).

Today would be worth 48450 Baht, *12 = 581400.

Expect Dollar downturn of 10%, makes 523260.

800000 - 523260 = 276740.

Put 280000 on the account (or 300000 to sleep even better).

Edited September 1, 2018 by KhunBENQ

[smotherb]

Am I missing something?

 

If you have the money to put in a Thai bank; what is your problem?  You simply put the difference between your income and the B800k when any currency fluctuation occurs.

 

Only if you don't have the money or your funds are borderline, is it a problem.

 

If you don't have the money, your f**ked. If your money is scarce and not enough, same-same.

 

Your options seem pretty limited:

Play the bouncing ball exit and re-entry game;

go through an agent who charges X amount of baht to get you a quasi-legal retirement extension; or, go somewhere less money is required.

 

 

[Jingthing]

28 minutes ago, smotherb said:

Am I missing something?

 

If you have the money to put in a Thai bank; what is your problem?  You simply put the difference between your income and the B800k when any currency fluctuation occurs.

 

Only if you don't have the money or your funds are borderline, is it a problem.

 

If you don't have the money, your f**ked. If your money is scarce and not enough, same-same.

 

Your options seem pretty limited:

Play the bouncing ball exit and re-entry game;

go through an agent who charges X amount of baht to get you a quasi-legal retirement extension; or, go somewhere less money is required.

 

 

Yeah you are totally missing something which I reckon is because you didn't bother to read the O.P.

 

Of course, annually you would look at your bank balance over three months out from your planned application date and TOP UP if needed to a level that when combined with your income should total at least 800K baht at time of application.

 

However, currency exchange rates do fluctuate, sometimes significantly, and as I already explained in the O.P. sadly many immigration offices are enforcing SEASONING RULES on combination applications.

 

So you plan three months out to meet the 800K but then get hit with a severe downward fluctuation that would make your stated income worth much less in BAHT, and then you may not be over 800K at application. If SEASONING RULES are enforced, topping up again during the seasoning period wouldn't help. 

 

So of course people would be silly not to add some BUFFER to their top up funds three months because if they don't even a very minor exchange change may ruin their application.

 

The question here is what level of BUFFER is reasonably safe expressed as a percentage of potential currency rate decline. 

 

Clear enough now?

 

Cheers.

Edited September 2, 2018 by Jingthing

[smotherb]

I fail to see the part which negates what I said.

 

I realize you seek a buffer, but to what end?  No matter the financial ramifications, calculations and plans you can muster; it still comes down to if you have the money, you're good and if you don't, you're not. 

 

Consequently, rather than seeking a buffer against some imaginary number, a buffer which could be wholly inadequate; I suggest you try to ensure your assets earn, or you save, as much as possible.

 

Then, at the time for seasoning, you top-up with as much as you need at the current exchange rate; the immigration officer be damned.

 

However, if you do not have enough; I believe I outlined your options in the previous post.

[allane]

This comment uses the B 800,000 money in the bank method, since obviously, it does not have the myriad of variations possible with the combination method. 

On the day that you do your annual transfer to begin the three month seasoning period, your Thai bank account balance should consist of the required B 800,000 plus three month's living expenses, which you will use to support yourself during the seasoning period. So, if your living expenses are B 35,000/mo., you should have B 905,000. Therein lies another way of "buffering."  If you can see that you are going to be in a borderline situation (let's say B 5000 short), pare your monthly expenses to B 33,000/mo. for the three month seasoning period. I think most people could find a way to do that, if it meant the difference between getting an extension or not getting it.

Another variant is to bring additional funds from your home country during the three month period. So, if you can see, two months into the seasoning period, that you are not going to have enough one month hence, bring additional funds from your home country to pay your living expenses, while leaving your B 800,000 untouched.

Edited September 2, 2018 by allane
x

[Classic Ray]

9 minutes ago, smotherb said:

I fail to see the part which negates what I said.

 

I realize you seek a buffer, but to what end?  No matter the financial ramifications, calculations and plans you can muster; it still comes down to if you have the money, you're good and if you don't, you're not. 

 

Consequently, rather than seeking a buffer against some imaginary number, a buffer which could be wholly inadequate; I suggest you try to ensure your assets earn, or you save, as much as possible.

 

Then, at the time for seasoning, you top-up with as much as you need at the current exchange rate; the immigration officer be damned.

 

However, if you do not have enough; I believe I outlined your options in the previous post.

I think the question is about what exchange rate will be used for the income part of the combination. This could be a pension from overseas. That could make the difference between say 600,000 & 500,000 being the baht equivalent of your income, so needing 300,000 as a top up in savings rather than 200,000. If the income earned in Thailand this will be no problem, as no exchange rate applies.

[smotherb]

39 minutes ago, Classic Ray said:

I think the question is about what exchange rate will be used for the income part of the combination. This could be a pension from overseas. That could make the difference between say 600,000 & 500,000 being the baht equivalent of your income, so needing 300,000 as a top up in savings rather than 200,000. If the income earned in Thailand this will be no problem, as no exchange rate applies.

Yes, no exchange rate fluctuation should apply to whatever money you generate here. However, many people have investments other than in Thailand. So whether it is pension or outside assets, or both; the exchange rate will change the amount of baht derived, but it really makes no difference. Either you have enough or you don't.  I suggest if you are that close to make or break, you need a better plan B than a forecasted buffer.  

[wgdanson]

1 hour ago, allane said:

your Thai bank account balance should consist of the required B 800,000 plus three month's living

Does it say that in the regulations? Thought it just says Bht 800,000 in bank for three months (or is it 90 days?).

Edited September 2, 2018 by wgdanson

[allane]

Yes.it is "just" B 800,000 baht. But you can not go below that figure for three months. If you have only B 800,000, how are you going to pay your living expenses for those three months ? You need B 800,000 plus three months expenses.

[Jingthing]

This about people doing COMBINATION applications. It is not about people doing income only applications or 800K bank account applications. Of course some people doing income only applications can fall into similar traps if they think they have enough income to meet the 800K but due to exchange rate declines do not.

 

A member did bring up another complicating factor. SPENDING during the seasoning period. I deliberately did not include that factor to simplify the question I had. That is a real life issue for both COMBINATION applications and pure 800K bank account ones. 

 

But its IMPLIED here that you either have a SPENDING ACCOUNT separate from your extension qualifying account OR your spending is from the extension qualifying account but you have estimated your spending needs as a SEPARATE risk factor.

This is ONLY about the risk factor of exchange rate changes on the INCOME portion of your COMBINATION application during the SEASONING period.

 

Sadly I predicted people were going to go way off topic and talk about full bank account 800K method. 

 

This is a very specific topic only about COMBINATION applications. 

 

But again I can see it does apply to pure INCOME ONLY applications in cases where the income is not much above 65K monthly at the time of the seasoning period beginning for COMBINATION applications. Such people should definitely be proactive and have a bank account with some BUFFER to prevent being hit by a rate decline on their income. So those people planning to do pure INCOME applications may have the flexibility of using the COMBINATION method if it turns out it is needed at the time of application. 

[ubonjoe]

5 minutes ago, allane said:

Yes.it is "just" B 800,000 baht. But you can not go below that figure for three months. If you have only B 800,000, how are you going to pay your living expenses for those three months ? You need B 800,000 plus three months expenses.

Many people keep the 800k baht in the bank all year. There is nothing that says you have to show money coming out for expenses. Some people have a 2nd account for their living expenses.

[Jingthing]

6 minutes ago, allane said:

Yes.it is "just" B 800,000 baht. But you can not go below that figure for three months. If you have only B 800,000, how are you going to pay your living expenses for those three months ? You need B 800,000 plus three months expenses.

800K baht full bank applications are OFF TOPIC for this thread. 

The topic is not about predicting SPENDING.

It is ONLY about exchange rate risk on the INCOME portion of COMBINATION applications. 

 

Not all topics need to be about EVERYTHING.

 

[Jingthing]

Just now, ubonjoe said:

Many people keep the 800k baht in the bank all year. There is nothing that says you have to show money coming out for expenses. Some people have a 2nd account for their living expenses.

Indeed and I deliberately didn't include SPENDING as part of this question. That is a separate issue which does apply to people using both full 800K and combination applications that is implied. This topic is only about the buffer needed for the INCOME portion of combination applications due to exchange rate risk during the seasoning period, but I will add pure income applications as well when the income cuts very close the 65K monthly requirement. 

[Jingthing]

Back to the actual and very specific question, I reckon there is a way people smarter than me could feed in data and calculate the specific currency exchange risk during any three month period of the home currency vs. Thai baht. You'd have to feed in decades of data to do that.

 

If that was done, I reckon you could (fictional sample) get useful results like this.

 

Canada dollar vs. Thai baht -- 

35 percent risk with buffer of 1 percent

15 percent risk with buffer of 5 percent

1 percent risk with buffer of 10 percent

 

But short of anyone doing the programming to do such a study, it seems to me, again refer to the original question, and forget the spending factor, all we're doing when setting a buffer level is GUESSING. 

 

Obviously the more buffer the less risk.

 

But again, how much buffer (as percentage of potential currency rate decline on income) is reasonably very low odds to ruin your application during the seasoning period?

 

I guess unless someone has a better idea and can back it up with evidence, another member's guess of 7.5 percent and my guess of 10 percent are as good as any number people can pull out of the air.

 

This does expose how ridiculous the money seasoning requirements are on combination applications though! We're not psychic! 

Edited September 2, 2018 by Jingthing

[nausea]

How long is a piece of string - Black Swan event, as Brexit pretty much was. The usual response is think of the number you first thought of, then double it.

[Ulic]

10% more than the poorest exchange of your home country in the last 24 months.  

[Jingthing]

How long is a piece of string - Black Swan event, as Brexit pretty much was. The usual response is think of the number you first thought of, then double it.

Sure. But I'm not talking about no risk. More like very low risk.

Sent from my Lenovo A7020a48 using Thailand Forum - Thaivisa mobile app

[Jingthing]

10% more than the poorest exchange of your home country in the last 24 months.  

Interesting!

Sent from my Lenovo A7020a48 using Thailand Forum - Thaivisa mobile app

[Lacessit]

I would be thinking in terms of worst case scenario 30 baht to the USD, 23 baht to the AUD. Don't ask me about the GBP, I'm not a fortune teller.

[1FinickyOne]

The big money would hedge by shorting the market... which surely is not going to be worth it... just ride the waves and hope for the best... 

[Russell17au]

This is a good question jingthing because it does not only apply to retirement extension but it also applies to the marriage extension when you are working on the income basis. There can be a shortfall on any of the income basis because all that is needed is for the Thai Baht to strengthen and the other currencies to weaken and you could possibly get around a 10% swing or even a worst case scenario is another GFC, which would wipe out any buffer that you have and with things the way they are at the moment with the possibility of trade wars anything can happen with the world currencies. But working on the way things are at the moment my guess would be around the 10% mark for the buffer.

[a977]

Jomtien Immigration told me a couple of years ago to keep 300,000 in bank for seasoning period and I would be pretty safe, that's using the Aussie pension of $21,699.60 per annum (at current exchange kasikorn  23.32 =506034thb) I currently keep 400,000thb in account due to the a##e falling out of the dollar.

[uksmdh]

Oh yes the old imponderable scenario.  If I could predict exchange rates I would be a very rich man.  Lets re-phrase the question.  If I drive on the right hand side of the road towards oncoming traffic how far can I travel before I have a head on collision?  The answer to your question is flux as much as you can afford.

[Russell17au]

The Australian dollar has dropped again and in the last 4 weeks my Australian pension payment has dropped by 1324.37Baht. That is a drop of just over 3%. I would say that a 10% buffer would be pretty close to the mark over a 12 month period

[orchidfan]

20 hours ago, Jingthing said:

This about people doing COMBINATION applications. It is not about people doing income only applications or 800K bank account applications. Of course some people doing income only applications can fall into similar traps if they think they have enough income to meet the 800K but due to exchange rate declines do not.

 

A member did bring up another complicating factor. SPENDING during the seasoning period. I deliberately did not include that factor to simplify the question I had. That is a real life issue for both COMBINATION applications and pure 800K bank account ones. 

 

But its IMPLIED here that you either have a SPENDING ACCOUNT separate from your extension qualifying account OR your spending is from the extension qualifying account but you have estimated your spending needs as a SEPARATE risk factor.

This is ONLY about the risk factor of exchange rate changes on the INCOME portion of your COMBINATION application during the SEASONING period.

 

Sadly I predicted people were going to go way off topic and talk about full bank account 800K method. 

 

This is a very specific topic only about COMBINATION applications. 

 

But again I can see it does apply to pure INCOME ONLY applications in cases where the income is not much above 65K monthly at the time of the seasoning period beginning for COMBINATION applications. Such people should definitely be proactive and have a bank account with some BUFFER to prevent being hit by a rate decline on their income. So those people planning to do pure INCOME applications may have the flexibility of using the COMBINATION method if it turns out it is needed at the time of application. 

I use the Embassy or Consulate method for income only application.

Just prior to my extension renewal I have the embassy endorse my "income" at whatever best exchange rate I choose...cover it with nice coloured stamps or "chops"...then I have this formally translated  into Thai with more nice coloured stamps.

My local IO accept this without question or checking. ....so far so good!