(Comparatively) Short Term Investing Advice

[Sheryl]

I have money in a long term fixed deposit account in the Foreign Trade Bank of Cambodia where it has been earning 6% interest. It will mature early next year at which point  the total (principal + accumulated interest) will be around 170K USD.

 

I'm uneasy about keeping that much in a Camb bank given increasingly erratic govt actions so looking for other ideas. Even if their economy continues to flourish, the govt might suddenly enact restrictions on taking money out etc.

 

I do not need the money immediately and don't expect to need it for say another 4 years  but I absolutely do need to protect the principal as longer term this is a big chunk of my old age savings.

 

I do not want anything that I have to stay on top of/pay a lot of attention to because frankly finance bores me silly, and this is the main reason I have largely stayed out of the stock market.

 

So looking for ideas that are as safe as one can reasonably be (remembering the time frame, so another reason not to go for stocks - a  big drop in value could be disasterous as my time horizon is not long enough to be likely to gain a loss back), while giving as much yield as possible within that parameter. (I do realize rate of return and safety tend to be inverse).

 

No particular preference as to country or currency as long as I won't face a problem getting the money out later. I expect to live out my old age in Thailand but to be safe there should probably be an assurrance of being able to get the money out in USD  too just in case.

 

All informed ideas welcome!

[Oxx]

Given your criteria, the only option is bank deposits.

 

The greatest risk they you face is swings in exchange rate which can often be more than 30% in a year.

 

Since you expect to retire to Thailand you should be locking in to the baht to avoid a future adverse movement in exchange rate.  This means investing in a bank deposit account in Thailand.  Long term fixed deposits would give you the best rate, but would need a certain amount of management  when they mature.  A simpler, but slightly lower yielding option is something like Krung Sri's Mee Tae Dai account which doesn't mature.  (Other banks have a similar product.)

 

The issues you will face are:

 

- Opening an account (or accounts - you may need to open a savings account before opening a deposit account)*

- Getting a Foreign Exchange Transfer certificate after you make a bank to bank transfer to your Thai bank to make sure you have evidence of the source of funds if/when you need to take the money out of the country (e.g. as USD).  (You can do this later, but it'll be simpler to get it after the transfer.)

 

A few links:

 

Current interest rates up to 24 months https://www.bot.or.th/english/statistics/financialmarkets/interestrate/_layouts/application/interest_rate/IN_Rate.aspx

 

(Note that individual banks will sometimes have "special offers" with better rates of interest, and offer deposits up to 48 months with usually marginally better rates.)

 

Mee Tai Dai https://www.krungsri.com/bank/en/PersonalBanking/DepositProducts/SavingsDeposit/MeeTaeDaiSavings.html

 

 

* Recent experience has shown me that Thai banks have tightened up on opening accounts for individuals without a work permit.  (I'm retired so don't have one, and was turned down 5 times last month.) If you already have a Thai bank account, you may find you have to stick with what that bank has to offer.

[Suradit69]

20 hours ago, Sheryl said:

at which point  the total (principal + accumulated interest) will be around 170K USD.

Is the deposit denominated in dollars or Cambodian riel?  Not relevant to your question, just curious and if the latter, has the exchange rate to the dollar worked in your favor or against you over time?

 

Agree with the other poster, if you plan to stay on in Thailand, you might talk to your bank manager about a deposit account tailored to your needs. If you have the money in a baht account, you can't be hurt by future exchange rates, but of course if the dollar gains against the baht, you won't benefit by that either. In terms of safety for the relative short term this might be best, but if you have a change of plans about where you will retire, getting the money out of Thailand could be a hassle.

 

Bangkok Bank, for example, also offers mutual funds that might be worth exploring ... as I'm sure the other major banks do too.

https://www.bangkokbank.com/en/Personal/Save-And-Invest/Mutual-Funds/Retirement-Mutual-Funds

 

I'm assuming there may be a reason why you don't want to repatriate the money to your home country for investment, otherwise some of the major fund management companies like Vanguard or Fidelity would have available safe investment opportunities either in fixed income or reliable dividend paying investments and they would offer flexibility as your needs change and they would allow you online access to your accounts.

 

https://personal.vanguard.com/us/funds/vanguard/compare?navigatingFrom=6

 

 

 

 

[ChouDoufu]

if you're going to repatriate, how about short-medium term bonds?  invesco and guggenheim have fixed term bond funds, either high yield or investment grade, that buy and hold bonds to maturity.  each has a series of funds with maturities from 2019-2026.  you build a 5-year bond ladder, each year one of the funds matures and cash is returned to you.  then you can then re-invest in the latest fund.

[Sheryl]

Ouch, those are seriously low interest rates, I can do better with a CD in the US (and no, there is no reason for not repatriating the money, I just wanted to see if there might be other places that would be a better deal as US interest rates are low - but not, evidently, as low as Thai rates).

 

The money is in US dollars. Interest rates are eveb high for riel accounts but nobody in Camb invests in riel, the whole economy is dollars.

 

I'll have a look at Vanguard and Fidelity and the fixed bond funds mentioned. I was of the impression that bond funds were a type of mutual fund thus no guarantees re either return or value of the principal, is that not the case?

 

I can get a little over 2% just parking the money in a 5 year CD with USAA, so wondering if it is worth doing anything else that might be less safe?

[ChouDoufu]

if you just want to park it somewhere for a short time while you decide, navy federal credit union has a promotional 12-month cd at 3.0%.

 

if you qualify (know anyone who ever saw an episode of gilligan's island?), you can apply from thailand, use a thai address, and get a credit card with a thai billing address.

[GarryP]

I have invested in mutual funds in Thailand. Obviously the risk is higher than with deposit accounts, but the latter (Thai banks) can barely keep up with inflation.  

[TallGuyJohninBKK]

The U.S. Fed is meeting next week to raise the fed funds interest rate, and is expected to probably do another second rate increase in December.  Right now, prior to both of those hikes, there already are 3%+ CDs of various terms available, if you have a U.S. presence (things like a viable U.S. address and DL) that often are required with new account openings. Thus U.S. bank interest rates are likely to move even higher in the year ahead.

 

Obviously, for retirement funds, the advantage of U.S. bank deposits is that they are government/FDIC insured up to $250,000 per institution. And there's a long track record of the government honoring those commitments -- unlike Thailand and Cambodia. They are essentially no risk investments that don't require any real monitoring/time commitment once opened.

 

Beyond that, there are a variety of very low risk ETFs and mutual funds and index funds available from various U.S. brokerages. Not no risk, but very low risk because the holdings typically are spread over many individual investments/bonds, etc. So if one thing goes bad/down for some reason, the broader fund typically isn't much impacted. Except, of course, in the event of a broad markets/financial collapse as in 2009.

 

Generally, professional investment advisors would tell a client that the share of their retirement funds that should be invested in no risk or very low risk holdings depends on how close they are to their retirement and potentially needing those funds. The closer to retirement and/or needing those funds, the less risky they should be. But if a person is going to continue working for many years more and doesn't expect to need the funds soon, then somewhat riskier investments with corresponding higher rates of return make sense.

 

[scubascuba3]

 

 

 

I'll have a look at Vanguard and Fidelity and the fixed bond funds mentioned. I was of the impression that bond funds were a type of mutual fund thus no guarantees re either return or value of the principal, is that not the case?

 

 

If you look at their performance the last 5 years you'll probably see they are more volatile than you think. No guarantees but have objectives to beat an index etc by a very small amount usually

 

[Sheryl]

Thanks. US CDs of 3% sound good and it also sounds like that rate may go up a bit by the time my funds are available.

 

I have a US DL and US address I can use.

 

Also looks like I would qualify for the Navy Federal Credit Union on the basis of my father's Coast guard service.

[TallGuyJohninBKK]

8 minutes ago, ChouDoufu said:

if you just want to park it somewhere for a short time while you decide, navy federal credit union has a promotional 12-month cd at 3.0%.

 

if you qualify (know anyone who ever saw an episode of gilligan's island?), you can apply from thailand, use a thai address, and get a credit card with a thai billing address.

 

If you're talking about the NFCU certificate with 12 months and 3% that I'm aware of, it really wouldn't fit for Sheryl's needs, as it has a maximum $3K deposit amount and requires payroll direct deposit.

 

[TallGuyJohninBKK]

This is a good site for accurately tracking and identifying U.S. CD rates that fit ones needs, covering all different lengths of terms and nationally available accounts or ones only available in certain states. As well as ones that permit online account opening, which probably is an important criteria for most here.

 

https://www.depositaccounts.com/cd/

 

And here is Navy Fed's webpage showing all their current CD rates, both by varying lengths and by various original deposit amounts.

 

https://www.navyfederal.org/products-services/checking-savings/certificates-rates.php

 

It looks like they right now, prior to the upcoming Fed decisions, they have 3% or greater CD interest rates terms of 5, 6, and 7 years.

 

Though, many folks might be hesitant of locking in a single large amount of funds at today's CD rates given that the Fed is likely to be raising the fed funds rate several times in the year ahead.

 

 

Edited September 25, 2018 by TallGuyJohninBKK

[TallGuyJohninBKK]

Here is Deposit Account's latest blog on the best nationally available U.S. CD rates by institution:

 

https://www.depositaccounts.com/blog/cd-rates-survey/

 

An excerpt from that...but the entire article is worth reading. They do a new recap every week, I believe.

 

But you often need to look at more than just rates, especially as an expat, because different institutions are easier or more difficult to open new accounts with. Some allow everything online. Some require some docs to be postal mailed in. Some require certain docs to be notarized. Those and other similar details are all ones that folks here probably need to pay attention to, when shopping for any new CD institution.

 

But the rates recap and summary still gives you a good idea of the best available rates in the marketplace for any particular deposit amount and length of term. And then the narrowing process begins from there.

 

Quote

 

Best Nationally-Available CD Rates

We continue to see more 3%+ CDs with shorter terms. The latest 3%+ deal is the 15-month certificate special (3.25% APY) at NASA Federal Credit Union. This is an easy membership credit union. The certificate special began in September, and it’s scheduled to last through the month, but the small print warns that it can end at anytime. Based on past 3%+ CD specials from other institutions, it may not be wise to wait too long if you’re interested in this 15-month special.
 

To earn a higher rate than NASA FCU’s 15-month certificate, you’ll need at least a 33-month CD. Illinois-based Great Lakes Credit Union is offering a 33-month special share certificate that earns 3.33% APY. Minimum deposit is $1k, and the maximum is $250k. This is another easy-membership credit union.

 

 

Edited September 25, 2018 by TallGuyJohninBKK

[TallGuyJohninBKK]

43 minutes ago, Sheryl said:

 I was of the impression that bond funds were a type of mutual fund thus no guarantees re either return or value of the principal, is that not the case?

 

Yes, that generally is the case. No guarantee of principal or guaranteed return on pretty much any stock market holding -- bond funds, index funds, mutual funds, ETFs.

 

However, there's a whole category of investing in stocks that's called dividend investing, where you're buying the stock of major companies (think Pepsi, Coke, McDonalds, P&G, others) that have 25+ year or more track records of paying dividends every quarter and raising those payments EVERY year without fail. Companies like that are called Dividend Aristocrats or Dividend Champions.

 

And so the advantage there is while the value of those stocks may go up and down in the stock market (though generally they go up over time), the companies' quarterly dividends are virtually guaranteed (25+ year track records through multiple recessions) and provide protection against loss of value from inflation, since their dividends typically will increase 3-7% or more per year.

[Sheryl]

I see. What sort of value of dividend are we talking about?

[Lacessit]

Sheryl, if you want to preserve your capital you are going to have to manage it. Putting it into safe deposit accounts only works if the interest rate is higher than the rate of inflation, otherwise the capital base is being eroded.

You need to think of diversification. Having most of your eggs in a Cambodian basket sounds to me like a very high risk strategy, as the rule of law is dependent on the whims of whoever is in charge.

Shares are for people who are hands-on with their investments. There is not much point to getting a champion dividend of 7% yield if the share has lost 20% of it's value due to something like a trade war or oil embargo. It would take you 3 years to get back to square one, assuming the directors don't cut the dividend as well.

I agree with the recommendations to get into ETF's such as Vanguard, who have a good reputation. Their fund shares can be purchased on any stock exchange, with varying yields depending on the investment mix. Here's a link to the Australian information:

https://www.vanguardinvestments.com.au/retail/ret/investments/product.html#/productType=etf

You may also want to investigate peer-to-peer lending. Yields are between 5% and 12%, depending on the risk level. I have half my capital invested in the Australia versions for an average return of 8%. I do watch these like an eagle.

I'm sure there are American versions available.

None of us know how long we are going to live. My aim is to generate enough income from my capital so I don't have to draw down on it. That's been working for me for the last 10 years. While I don't want to be the richest person in the cemetery, I don't want to be the poorest person living under a bridge either.

[TallGuyJohninBKK]

45 minutes ago, Sheryl said:

I see. What sort of value of dividend are we talking about?

Obviously, it varies by individual stock. But generally, for those types of companies, between 2-6%, but increasing every year thereafter.

 

Here's some of the longest dividend payers/raisers, 50+ consecutive years of increases or more:

 

https://www.dividendgrowthinvestor.com/p/dividend-kings.html

 

 

I personally wouldn't invest in the very low dividend % rate companies. But those near or above 3% would definitely get my attention, including Coke, Emerson Electric, Genuine Parts, Federal Realty, Procter & Gamble, Vectren, maybe Target.

 

And keep in mind, this "Dividend Kings" list is the 50+ year dividend raisers each and every year. There's another, larger list of the 25+ year dividend raising "Dividend Champions" where you'll find higher yields with companies like AT&T currently yielding about 6%,  Chevron 3.5%, ConEd 3.6%, Exxon 4%, Kimberly- Clark 3.5%, Pepsi 3.2%, Target 3.17%, and others. There also are a couple of high yielding tobacco stocks, Altria and Universal, but I deliberately omitted mention of those.

 

A person could invest in these companies individually. Or, there also are dividend growth mutual funds and ETFs where you buy the fund and the fund buys various of these dividend raising stocks, so you as a layman don't have to get into the details of analyzing and monitoring a lot of individual stock holdings.

 

The 10-year dividend growth rate mentioned in the chart above means that that percentage is the ANNUAL average over the past 10 years that that company has raised its quarterly dividend each year. So Coke's annual dividend increase over the past decade has been almost 8.5% per year. Target's 10-year dividend growth rate has been 18+% percent per year over the past decade. But you do have to be careful, because for a lot of these stocks, the higher growth rates of earlier years have lowered in the past 1-5 years. But you're still getting the current actual dividend plus whatever the annual increases amount to.

 

Similar to what Lacessit mentiond above, the idea here is to invest and then the dividends and dividend growth compound for you, creating an income flow that exceeds the rate of inflation each and every year. And frankly, as long as you have a long investment horizon, you don't have to worry about the day to day stock market price gyrations because your dividends will keep coming in and growing, month by month and quarter by quarter.

 

It's not FDIC insured, but it's about as close to guaranteed as you can get short of that. And although these don't have the principal guarantee of CDs, they also unlike have CDs are going to raise the amounts of the dividends they pay to you each and every year.

 

 

 

 

 

Edited September 25, 2018 by TallGuyJohninBKK

[scubascuba3]

Sheryl, if you want to preserve your capital you are going to have to manage it. Putting it into safe deposit accounts only works if the interest rate is higher than the rate of inflation, otherwise the capital base is being eroded.
You need to think of diversification. Having most of your eggs in a Cambodian basket sounds to me like a very high risk strategy, as the rule of law is dependent on the whims of whoever is in charge.
Shares are for people who are hands-on with their investments. There is not much point to getting a champion dividend of 7% yield if the share has lost 20% of it's value due to something like a trade war or oil embargo. It would take you 3 years to get back to square one, assuming the directors don't cut the dividend as well.
I agree with the recommendations to get into ETF's such as Vanguard, who have a good reputation. Their fund shares can be purchased on any stock exchange, with varying yields depending on the investment mix. Here's a link to the Australian information:
https://www.vanguardinvestments.com.au/retail/ret/investments/product.html#/productType=etf
You may also want to investigate peer-to-peer lending. Yields are between 5% and 12%, depending on the risk level. I have half my capital invested in the Australia versions for an average return of 8%. I do watch these like an eagle.
I'm sure there are American versions available.
None of us know how long we are going to live. My aim is to generate enough income from my capital so I don't have to draw down on it. That's been working for me for the last 10 years. While I don't want to be the richest person in the cemetery, I don't want to be the poorest person living under a bridge either.

ETFs are popular at the moment due to low costs but they can still go down in value so you have to choose carefully and its all gambling at the end of the day

[scorecard]

1 hour ago, TallGuyJohninBKK said:

 

If you're talking about the NFCU certificate with 12 months and 3% that I'm aware of, it really wouldn't fit for Sheryl's needs, as it has a maximum $3K deposit amount and requires payroll direct deposit.

 

 

Quick response; but what about the personal tax implications?

 

 

[Lacessit]

3 minutes ago, scubascuba3 said:

12 minutes ago, Lacessit said:

Sheryl, if you want to preserve your capital you are going to have to manage it. Putting it into safe deposit accounts only works if the interest rate is higher than the rate of inflation, otherwise the capital base is being eroded.
You need to think of diversification. Having most of your eggs in a Cambodian basket sounds to me like a very high risk strategy, as the rule of law is dependent on the whims of whoever is in charge.
Shares are for people who are hands-on with their investments. There is not much point to getting a champion dividend of 7% yield if the share has lost 20% of it's value due to something like a trade war or oil embargo. It would take you 3 years to get back to square one, assuming the directors don't cut the dividend as well.
I agree with the recommendations to get into ETF's such as Vanguard, who have a good reputation. Their fund shares can be purchased on any stock exchange, with varying yields depending on the investment mix. Here's a link to the Australian information:
https://www.vanguardinvestments.com.au/retail/ret/investments/product.html#/productType=etf
You may also want to investigate peer-to-peer lending. Yields are between 5% and 12%, depending on the risk level. I have half my capital invested in the Australia versions for an average return of 8%. I do watch these like an eagle.
I'm sure there are American versions available.
None of us know how long we are going to live. My aim is to generate enough income from my capital so I don't have to draw down on it. That's been working for me for the last 10 years. While I don't want to be the richest person in the cemetery, I don't want to be the poorest person living under a bridge either.

ETFs are popular at the moment due to low costs but they can still go down in value so you have to choose carefully and its all gambling at the end of the day

Point taken; however, the fluctuations on the price of ETF's is nowhere near what one will get with individual stocks, because they are constantly rebalancing the portfolios. That's why they are called index huggers.

[scubascuba3]

Point taken; however, the fluctuations on the price of ETF's is nowhere near what one will get with individual stocks, because they are constantly rebalancing the portfolios. That's why they are called index huggers.

They are designed to track the index etc. But who wants to track an index when the market is falling. But i agree with you, I'm heavily invested in mutual funds having worked in them for a long time, need to choose very carefully

[TallGuyJohninBKK]

23 minutes ago, scorecard said:

 

Quick response; but what about the personal tax implications?

 

 

CD interest for Americans is always taxable income, unless someone has such a low taxable income as to be off the tax charts. For Americans, being outside the U.S. doesn't change that fact, although an expat American probably would only be liable for federal income tax, and not state income tax, assuming one is living outside the U.S. full-time.

 

There are federal tax exempt investments such as municipal bonds and municipal bond funds and other varieties of federal tax exempt things. Those have a greater value/benefit for someone with a high taxable income who also as a result is in a high federal tax bracket. But for someone with a modest taxable income who's maybe in the 10-15% federal NET/actual tax bracket, after backing out all one's deductions, credits, exemptions, less of an advantage.

 

By the way, one of the advantages of the dividend investing approach I mentioned above is owning and holding stock of those kinds of companies means that their dividend payments to the holder are taxed at the lower federal capital gains rate, which is effectively 0% for 2018 for single filers with up to $38,600 of income, and only 15% for any higher annual income up to about $425,000.

 

CD interest, on the other hand, is taxed at higher ordinary income tax rates.

 

https://smartasset.com/taxes/dividend-tax-rate

 

 

 

Edited September 25, 2018 by TallGuyJohninBKK

[TallGuyJohninBKK]

10 minutes ago, Lacessit said:

Point taken; however, the fluctuations on the price of ETF's is nowhere near what one will get with individual stocks, because they are constantly rebalancing the portfolios. That's why they are called index huggers.

 

Yes, but I think the main point on that subject is, if the broader market takes a big dump like the U.S. back in 2009, then pretty much everything is going down in valuation, at least in the short term. So you don't want to be stock invested in that situation and then need to be withdrawing your funds to survive during that kind of a downturn, where depressed stock prices mean you're getting less money when you sell.

 

Depending on how long ahead one's investing horizon is, it's worth noting that those who invested in stock when they were low back a decade ago have made a killing in the decade since then, as stock price values have doubled or tripled for many mainstream holdings, and that's apart from dividends that many pay.

 

Ideally, if you've accumulated a good sized nest egg of dividend holdings, you're relying on the quarterly dividends for your regular income, which usually are only growing regardless of what happens with stock prices. And ideally, you're not having to sell any holdings at all for income needs, especially during any down periods in the market.

 

[Lacessit]

43 minutes ago, TallGuyJohninBKK said:

 

Yes, but I think the main point on that subject is, if the broader market takes a big dump like the U.S. back in 2009, then pretty much everything is going down in valuation, at least in the short term. So you don't want to be stock invested in that situation and then need to be withdrawing your funds to survive during that kind of a downturn, where depressed stock prices mean you're getting less money when you sell.

 

Depending on how long ahead one's investing horizon is, it's worth noting that those who invested in stock when they were low back a decade ago have made a killing in the decade since then, as stock price values have doubled or tripled for many mainstream holdings, and that's apart from dividends that many pay.

 

Ideally, if you've accumulated a good sized nest egg of dividend holdings, you're relying on the quarterly dividends for your regular income, which usually are only growing regardless of what happens with stock prices. And ideally, you're not having to sell any holdings at all for income needs, especially during any down periods in the market.

 

Every nation is different with respect to their stockmarket. In Australia, the big banks are reliable dividend payers. Some of the price/earnings ratios I see on American shares border on insanity. I suppose that's what happens when too much fiat money is looking for a home.

I've stuck with the big banks for about 15 years now. I'm reminded of how the American Willie Sutton responded when he was asked why he robbed banks. " Because that's where the money is".

My aim is to have at least two years' living expenses available at short notice, so I can ride out any market fluctuations.

Edited September 25, 2018 by Lacessit

[TallGuyJohninBKK]

21 minutes ago, Lacessit said:

Every nation is different with respect to their stockmarket. In Australia, the big banks are reliable dividend payers. Some of the price/earnings ratios I see on American shares border on insanity. I suppose that's what happens when too much fiat money is looking for a home.

I've stuck with the big banks for about 15 years now. I'm reminded of how the American Willie Sutton responded when he was asked why he robbed banks. " Because that's where the money is".

My aim is to have at least two years' living expenses available at short notice, so I can ride out any market fluctuations.

 

One concept that almost any reputable retirement stock market investment advisor would stress is DIVERSIFICATION.

 

Ideally, almost anyone would tell you that no one should have all their financial eggs in one basket -- not in one stock, not in one sector of the market, etc etc.

 

That's one of the advantages provided by broad dividend growth mutual funds or ETFs. They inherently are diversified.

 

Fortunately in the U.S., there are lots of reliable, long-term dividend growing stocks available beyond banking, which got slaughtered in the 2009 era market collapse. Note that among the 25- and 50-year dividend increasing U.S. companies I mentioned above, almost NONE of them are banking companies, because virtually none of the biggies were able to avoid dividend cuts and freezes, unlike other non-banking companies.

 

On the other hand, when you look at the companies that have managed to increase their dividends every year for 25-50 years, they've gone through multiple cycles of recessions, economic slowdowns, business cycles, etc., and still managed to keep increasing their dividends each and every year. That certainly is a good indicator of reliability and resilliance.

 

For the U.S. market, generally, stocks that have a "price earnings ratio" (PE ratio) of 15-20 are considered reasonably priced, although those PE ranges vary some among different sectors, with insurance and banking, for example, often having lower PEs in the 10-15 range. It's relatively easy to look at the 5 or 10 year PE averages for any particular company, and then see how those compare to their current PE, as an indication of being under, fairly or overvalued.

 

Edited September 25, 2018 by TallGuyJohninBKK

[rumak]

3 hours ago, TallGuyJohninBKK said:

he U.S. Fed is meeting next week to raise the fed funds interest rate, and is expected to probably do another second rate increase in December.  Right now, prior to both of those hikes, there already are 3%+ CDs of various terms available, if you have a U.S. presence (things like a viable U.S. address and DL) that often are required with new account openings.

Do you have a "U.S. presence " ?     Not easy to open accts there if you do not.   As far as advice from brokerage people..

not something I trust,   Unfortunately low yielding cd's are  probably safest bet

[Lacessit]

9 minutes ago, TallGuyJohninBKK said:

 

One concept that almost any reputable retirement stock market investment advisor would stress is DIVERSIFICATION.

 

Ideally, almost anyone would tell you that no one should have all their financial eggs in one basket -- not in one stock, not in one sector of the market, etc etc.

 

That's one of the advantages provided by broad dividend growth mutual funds or ETF. They inherently are diversified.

 

Fortunately in the U.S., there are lots of reliable, long-term dividend growing stocks available beyond banking, which got slaughtered in the 2009 era market collapse. Note that among the 25 and 50-year dividend increasing U.S. companies I mentioned above, almost NONE of them are banking companies, because virtually none of the biggies were able to avoid dividend cuts and freezes, unlike other non-banking companies.

 

For the U.S. market, generally, stocks that have a price earnings ratio of 15-20 are considered reasonably priced, although those PE ranges vary some among different sectors, with insurance and banking, for example, often having lower PEs in the 10-15 range. It's relatively easy to look as the 5 or 10 year PE averages for any particular company, and then see how those compare to their current PE, as an indication of being under, fairly or overvalued.

 

I completely agree diversification is essential.

The big banks in Australia cut dividends for one year in 2009, and were back to normal in 2011. They were a screaming buy in 2009.

No company lasts forever. I bet Eastman Kodak was a good dividend payer before digital cameras came along. A 50 year old company which is still increasing dividends could be torched next year by technological change.

 

[TallGuyJohninBKK]

Just now, rumak said:

Do you have a "U.S. presence " ?     Not easy to open accts there if you do not.   As far as advice from brokerage people..

not something I trust,   Unfortunately low yielding cd's are  probably safest bet

 

Outside of things that are FDIC insured for U.S. folks, I don't think you need to be a brokerage advisor to know and understand that putting all your financial eggs into one narrow basket is not a prudent move.

[rumak]

7 minutes ago, TallGuyJohninBKK said:

 

Outside of things that are FDIC insured for U.S. folks, I don't think you need to be a brokerage advisor to know and understand that putting all your financial eggs into one narrow basket is not a prudent move.

i agree.    but i am not a stock mkt fan.   everyone is a genius when it goes up.   I happen to favor property....feels better in my hand than paper.  I know two other farangs that agree with me...

Edited September 25, 2018 by rumak

[TallGuyJohninBKK]

Just now, Lacessit said:

No company lasts forever. I bet Eastman Kodak was a good dividend payer before digital cameras came along. A 50 year old company which is still increasing dividends could be torched next year by technological change.

 

That's true, and I believe Eastman Kodak was a dividend payer before eventually going under.

 

However, I'd say the odds that AT&T, Coke, Pepsi, Exxon, Procter & Gamble etc etc won't be around and making profits for many years to come are extremely small. In part, because those companies and others ARE inherently diversified in their own businesses.

 

Coke and Pepsi aren't just soft drink/soda companies and haven't been for many years. Pepsi is big time into snacks and foods, and Coke is big time into waters and juices and other beverages. So unless people stop eating and drinking, I'd say they're pretty safe.