Investment for income stream for a Thai

[gearbox]

Howdy,

 

I'm trying to help my gf to park funds available into some investment which would bring reliable regular income but doesn't require much knowledge and tinkering. She is very good with her business, but otherwise financially illiterate.

 

I was thinking whether some kind of index fund similar to Vanguard but with Thai shares exists here. She is very scared of these types of investments telling me she has no idea what to do if one day I leave her😃

 

The other options are buy to let real estate or getting orchard farm developed in the are around (Surat Thani/Chumpon or around) but this would require more effort and time investment.

 

Anything I'm missing that may generate steady 5% without too much fuss?

[Will B Good]

23 minutes ago, gearbox said:

Howdy,

 

I'm trying to help my gf to park funds available into some investment which would bring reliable regular income but doesn't require much knowledge and tinkering. She is very good with her business, but otherwise financially illiterate.

 

I was thinking whether some kind of index fund similar to Vanguard but with Thai shares exists here. She is very scared of these types of investments telling me she has no idea what to do if one day I leave her😃

 

The other options are buy to let real estate or getting orchard farm developed in the are around (Surat Thani/Chumpon or around) but this would require more effort and time investment.

 

Anything I'm missing that may generate steady 5% without too much fuss?

 

P2P lending in your own country will get you easily more than 5%.

 

Do not invest in markets you're not totally familiar with....and I would stear clear of anything in Thailand.

 

The gold rule...... eggs in baskets.

[Nick Carter icp]

5 minutes ago, Will B Good said:

 

P2P lending in your own country will get you easily more than 5%.

 

 

 

   You are lending to people/businesses that banks will not lend to , when participating in P2P lending . 

[Will B Good]

2 minutes ago, Nick Carter icp said:

 

   You are lending to people/businesses that banks will not lend to , when participating in P2P lending . 

 

 

.....and making a pretty penny from it for more than 10 years.

 

Currently averaging around 7.6%.

 

I have about 15% of my capital invested in three platforms.

[Nick Carter icp]

1 minute ago, Will B Good said:

 

 

.....and making a pretty penny from it for more than 10 years.

 

Currently averaging around 7.6%.

 

I have about 15% of my capital invested in three platforms.

 

   Is if often that people don't pay the money back on P2P and what are the safe guards ?

[gearbox]

22 minutes ago, Will B Good said:

 

P2P lending in your own country will get you easily more than 5%.

 

Do not invest in markets you're not totally familiar with....and I would stear clear of anything in Thailand.

 

The gold rule...... eggs in baskets.

I'm not investing in Thailand...she is investing. The investment options in my country are not available to her. She is a Thai national.

Edited September 8 by gearbox

[motdaeng]

 

48 minutes ago, gearbox said:

. She is very good with her business, but otherwise financially illiterate.

 

49 minutes ago, gearbox said:

may generate steady 5% without too much fuss?

 

financially illiterate, generate steady 5%, a safe investment and that all in thailand? that would be nice but to be honest, impossible ...

[Will B Good]

9 minutes ago, Nick Carter icp said:

 

   Is if often that people don't pay the money back on P2P and what are the safe guards ?

 

Only in the short term. Always late payments, debt restructuring, out of terms, under review.....but always....touch wood resolved eventually.

 

Never had a loan go totally **** up. 

 

The main drawback is if there is no secondary market....but no secondary market does stop me from bailing at times. 

[gearbox]

3 minutes ago, motdaeng said:

 

 

 

financially illiterate, generate steady 5%, a safe investment and that all in thailand? that would be nice but to be honest, impossible ...

This is quite possible in the west just by investing in a diversified managed fund. Plenty of people are financially illiterate there too.

[motdaeng]

5 minutes ago, gearbox said:

This is quite possible in the west just by investing in a diversified managed fund. Plenty of people are financially illiterate there too.

 

since when is thailand in the west? 

[Lorry]

3 hours ago, gearbox said:

This is quite possible in the west just by investing in a diversified managed fund. Plenty of people are financially illiterate there too.

Here is not the West.

There is a limit to the degree you can americanize a Thai. I suspect you mean the US when talking of "the West" - many people in Europe are financially illiterate and too scared to invest in anything else than government bonds.

Which is probably the best for your gf, 10 years pay 3.5%

Gold would be better, but no income stream.

Land is best,  but no automatic income stream.

 

I once bought mutual funds for a TGF, I wouldn't do it again.  Accept she doesn't want it.

[scubascuba3]

A condo in a very popular block, however  the price often is way more than the rental yield indicates

[Foxx]

12 hours ago, gearbox said:

some investment which would bring reliable regular income

 

some kind of index fund similar to Vanguard but with Thai shares

 

Anything I'm missing that may generate steady 5% without too much fuss?

 

Let's start with the good news:  there are index funds in Thailand that track the SET 50, SET 100 and MSCI Thailand indices.  That is the only good news.  Would you want to put your money into one? Here's the last few years' performance of one such fund.  (The fund is the red line.)  In 2020 it fell 11.5%, and in 2023 it fell 12%.  A white knuckle ride.  I suspect your partner would be extremely uncomfortable with performance like this.

 

More bad news is that the income versions of these funds don't pay out regular dividends.  This fund last paid out dividends in 2019 (though it's about to pay out again this year).  This is a Thai fund peculiarity:  if the capital value of a fund falls it stops paying out dividends until the capital loss has been recovered.  It applies both to mutual funds and ETFs.

I think you're being unrealistic hoping for a steady 5% without effort.  Best to stick with bank deposits.  2.5% might be achievable with fix term deposits.  As a Thai citizen your partner will have access to some better products than are available for foreigners.

[gearbox]

44 minutes ago, Foxx said:

 

Let's start with the good news:  there are index funds in Thailand that track the SET 50, SET 100 and MSCI Thailand indices.  That is the only good news.  Would you want to put your money into one? Here's the last few years' performance of one such fund.  (The fund is the red line.)  In 2020 it fell 11.5%, and in 2023 it fell 12%.  A white knuckle ride.  I suspect your partner would be extremely uncomfortable with performance like this.

 

More bad news is that the income versions of these funds don't pay out regular dividends.  This fund last paid out dividends in 2019 (though it's about to pay out again this year).  This is a Thai fund peculiarity:  if the capital value of a fund falls it stops paying out dividends until the capital loss has been recovered.  It applies both to mutual funds and ETFs.

I think you're being unrealistic hoping for a steady 5% without effort.  Best to stick with bank deposits.  2.5% might be achievable with fix term deposits.  As a Thai citizen your partner will have access to some better products than are available for foreigners.

Thank you for your input, that's indeed not good news. She wants to retire early in 6-7 years, live off investments and travel. Not possible on 2% return. Looks like the investment would be much more involving.

[gargamon]

Thais can open a Schwab international account with a minimum of 25k USD from which they can open a Vanguard s&p 500 index fund. Only taxed on the dividends until she sells.

 

My V. Index 500 fund has averaged over 10% per year (plus dividends) over the past 40 years. Plus it's in US dollars, so the currency is much more stable.

 

 

 

 

Edited September 9 by gargamon

[Lorry]

 

"Plus it's in US dollars, so the currency is much more stable."

 

 

If she had invested in USD when she was young (and the baht cheap), she would have lost 30% of the principal. Sorry, can't find 25- or 30-year charts.

The baht has been the most appreciating currency over the last decades,  there is an FT article about it.

 

10 years:

https://www.xe.com/currencyconverter/convert/?Amount=1&From=USD&To=THB

 

Stable?

 

She might get scared:

 

Edited September 9 by Lorry

[Foxx]

1 hour ago, gargamon said:

Thais can open a Schwab international account with a minimum of 25k USD from which they can open a Vanguard s&p 500 index fund.

 

No need to go to those lengths.  SCB Asset Management offers an S&P 500 fund with very low costs.  Minimum subscription is 1 baht.  Plus the fund is hedged.  In many ways it's an attractive proposition.  It invests primarily in iShares Core S&P 500 ETF.

Fund fact sheet at https://www.scbam.com/medias/fund-doc/fund-summary-aimc/SCBSP500E_FUNDSUM_En.pdf

 

However, if you think as I do, you'll consider the S&P 500 companies to be very overvalued (at least some of them), and it wouldn't take much (say China invading Taiwan, or war breaking out in the Middle East, or Trump trying violently to overturn the US election results) for the index to fall dramatically.  Not something I'd put money into at the moment.

[gargamon]

16 minutes ago, Foxx said:

 

No need to go to those lengths.  SCB Asset Management offers an S&P 500 fund with very low costs.  Minimum subscription is 1 baht.  Plus the fund is hedged.  In many ways it's an attractive proposition.  It invests primarily in iShares Core S&P 500 ETF.

Fund fact sheet at https://www.scbam.com/medias/fund-doc/fund-summary-aimc/SCBSP500E_FUNDSUM_En.pdf

 

However, if you think as I do, you'll consider the S&P 500 companies to be very overvalued (at least some of them), and it wouldn't take much (say China invading Taiwan, or war breaking out in the Middle East, or Trump trying violently to overturn the US election results) for the index to fall dramatically.  Not something I'd put money into at the moment.

Highly regulated US financial institution vs questionably regulated Thai investment company. I know which one I'd pick.

 

As for timing the market, good luck with that. Ever heard of dollar cost averaging? 

 

The best thing about the s&p index fund is it's invest and forget. No need to watch it and move money around. These people that buy and sell stocks, incurring tax costs every time are idiots.

[gearbox]

29 minutes ago, Foxx said:

 

No need to go to those lengths.  SCB Asset Management offers an S&P 500 fund with very low costs.  Minimum subscription is 1 baht.  Plus the fund is hedged.  In many ways it's an attractive proposition.  It invests primarily in iShares Core S&P 500 ETF.

Fund fact sheet at https://www.scbam.com/medias/fund-doc/fund-summary-aimc/SCBSP500E_FUNDSUM_En.pdf

 

However, if you think as I do, you'll consider the S&P 500 companies to be very overvalued (at least some of them), and it wouldn't take much (say China invading Taiwan, or war breaking out in the Middle East, or Trump trying violently to overturn the US election results) for the index to fall dramatically.  Not something I'd put money into at the moment.

I'm thinking the same, there is a worldwide asset bubble, one worldwide recession and a lot of value will be wiped out.

 

 

However that SCB option doesn't look that bad, just the prices need to go down.

Edited September 9 by gearbox

[jas007]

How about a U.S. based growth and income fund? There are tons of them.  Surely there must be a way for a Thai person to invest in these.  
 

For example, look up JP Morgan Growth and Income funds.  The long term charts look good. Set it and forget it.  Let someone else worry about the day to day stuff.

 

 

[Yumthai]

4 hours ago, Foxx said:

No need to go to those lengths.  SCB Asset Management offers an S&P 500 fund with very low costs.  Minimum subscription is 1 baht.  Plus the fund is hedged.  In many ways it's an attractive proposition.  It invests primarily in iShares Core S&P 500 ETF.

Fund fact sheet at https://www.scbam.com/medias/fund-doc/fund-summary-aimc/SCBSP500E_FUNDSUM_En.pdf

 

I assume this is a Thai fund therefore no tax on capital gains right?

 

Any other Thai funds based on US market that provide dividend/income you can recommend?

[Nick Carter icp]

19 hours ago, Will B Good said:

 

 

.....and making a pretty penny from it for more than 10 years.

 

Currently averaging around 7.6%.

 

I have about 15% of my capital invested in three platforms.

 

  I did look into it and the P2P lending .

They had extremely high risk options at 15 % interest and safer options at 5 % and numerous interest rates/risk rates in between .

  I bottled it and stuck in  an ISA 🙂

[persimmon]

I think a Thai can open an account with Interactive Brokers . Then , it`s just a matter of choosing investments that throw off a 5 % dividend - there`s lots of options such as REITS or high yield bonds or ETFs comprised of a selection of higher dividend yielding global shares .

Currency conversion losses might be an issue , ie. Baht ---> $ , then back to Baht again . Also accounting problems for tax purposes .

[gearbox]

I met representatives of two of the major banks to discuss what options they have. Most of the offers were about life insurance policies, intentionally convoluted and deceiving products with terrible return on equity. Loans on land purchases can be as high as 10%, interest, even if you provide 70% of the equity.

We'll keep on looking.