k japanese government bond 6mj fund

[CallumWK]

Just went to Kbank to open a term deposit when I got offered this.

 

6 months, "estimated" return 2% per annum tax free.

 

I have no experience with these things, and I can understand that estimated means not guaranteed.

 

For those that have the knowledge, and experience, what are the chances that I actually get the return that is estimated?

 

https://www.kasikornasset.com/en/mutual-fund/fund-template/Pages/KJG6MJ.aspx

[topt]

Just look at the charges for the fund and then consider what the likely returns will be......

 

If they are telling you "estimated" 2% and you can get pretty close to that with a fixed deposit from a Thai bank why take the extra risk?

 

I don't know about Japanese or Thai bond funds specifically but that return seems very low in the current environment.

[CallumWK]

1 hour ago, topt said:

Just look at the charges for the fund and then consider what the likely returns will be......

 

If they are telling you "estimated" 2% and you can get pretty close to that with a fixed deposit from a Thai bank why take the extra risk?

 

I don't know about Japanese or Thai bond funds specifically but that return seems very low in the current environment.

 

The closest alternative is an 8 month fixed term at 1.8%, and which is taxed. I have always been told that withholding tax on term accounts can't be claimed back. Maybe someone can confirm if this is correct or not?

 

In Japan, interests are still around 0%, so 2% is not such a bad deal imo.....if that actually is what I will get at the end.

 

You have any suggestions for a more favorable option?

 

[topt]

8 minutes ago, CallumWK said:

The closest alternative is an 8 month fixed term at 1.8%, and which is taxed. I have always been told that withholding tax on term accounts can't be claimed back. Maybe someone can confirm if this is correct or not?

if you are referring to a normal fixed account then you can reclaim like any other withheld interest - ie you need to register for a TIN and apply for a refund. In the current environment that may raise other questions regarding remitted income depending on your residency status.......

 

13 minutes ago, CallumWK said:

You have any suggestions for a more favorable option?

Depends on your risk status and what's available to you depending on many factors - IE $USD and £GBP rates offshore are generally higher (not following Euro so won't comment).  

[CallumWK]

1 minute ago, topt said:

if you are referring to a normal fixed account then you can reclaim like any other withheld interest - ie you need to register for a TIN and apply for a refund. In the current environment that may raise other questions regarding remitted income depending on your residency status.......

 

Depends on your risk status and what's available to you depending on many factors - IE $USD and £GBP rates offshore are generally higher (not following Euro so won't comment).  

 

I have a TIN and have claimed back withholding tax on savings accounts for years, so thanks for confirming that it can be done on term deposits as well.

Not sure what remitted income has to do with this, as my money is in Thailand for years already, and I live here on a retirement extension.

 

The Japanese bond has risk status 3, which I think is very low. Not interested in offshore investments, because then remitted income will come in play.

[Gottfrid]

Est return, always mean 0 chance of getting what they say.

[Lorry]

6 hours ago, CallumWK said:

Just went to Kbank to open a term deposit when I got offered this.

 

6 months, "estimated" return 2% per annum tax free.

 

I have no experience with these things, and I can understand that estimated means not guaranteed.

 

For those that have the knowledge, and experience, what are the chances that I actually get the return that is estimated?

 

https://www.kasikornasset.com/en/mutual-fund/fund-template/Pages/KJG6MJ.aspx

You will get very close to the estimate.

It may not be 2.0000% like on a term deposit, there will probably be a different number in the second decimal.

 

This is a fixed-term (automatic redemption after about 6 months, they are always a bit flexible about the maturity date) fixed-income (fund holds only a certain set of fixed-income papers, in this case Japanese government bonds, see the fact sheet, they won't buy or sell) foreign (fund holds only Japanese papers) fund.

These funds are very safe. They usually hold papers from Qatari banks, big Indonesian banks, big Chinese companies,  stuff like that.  It's all short-term paper, will mature soon, so very little risk - they are always currency-hedged. Return is usually a bit higher. 

Risk is usually given as 4/10 (because foreign).

 

In this case, they only hold Japanese government bonds,  so even safer, 3/10,

(the risk is that the Japanese government will go broke within 6 months), but less return. 

 

Return of these funds is always a tiny bit more than a fixed-term deposit, and tax-free. But they always run only a short time (6 or 12 months is typical), and then you have to get active again. 

For a well-off Thai (minimum investment is typically 500,000) who pays income tax and who would not be able to claim back the withholding tax, this is a way to get a tax-free return even on rather high sums invested.