Retire At 45

[PCA]

Agreed PCA, but the comment about Think_too_mut goes way beyond this thread... mostly from his unwavering bitterness regarding real estate in Thailand. The comment was not intended to offend those with fewer financial resources. Those people may indeed have other resources from which to draw happiness from, perhaps finding themselves better off than a rich man with nobody to share it with.

I do realize that the OP wants to retire in Thailand, but I was just offering the scenario in which for some reason he would need/want to leave Thailand. Surely (unless he went to Cambodia, Philippines, etc.) he would be in a bit of a squeeze to make it by on that 700K.

In addition, the OP is 85% vested in equities and is almost referring the their return as a fixed-return investment -- very dangerous. Perhaps he was speaking of dividends, and perhaps I misunderstood. My main point was just to beware -- early retirement is of course everybody's dream, but it has to be thought out very thoroughly or else it can turn out to be a debacle.

I've seen some older retirees who, from their faces, seemed as if their "dream retirement" wasn't so dreamy as they had hoped. Sometimes I wonder if it was my father that was in that situation, and how I would feel. Thailand is a machine that can take a well-wishing good-hearted person and spit them out into a bitter shell of a man. Those who don't believe this just aren't seeing the reality of it all. That said, it can also be a beautiful country with many things to offer. People just need to be realistic. I'm just advising the OP to re-consider and (like GuestHouse suggested) take some time to think about it. A few more years of hard work now can make a huge difference in the long run.

I think that initially (and this is purely guessing), the OP may be happy with the 30K, but as inflation and currency fluctuation and fluctuating equity markets take their toll (if they do), it could be tough going. If anything, I would advise to save some more and reduce exposure to the equity markets (unless the OP knows his derivatives). If i recall correctly, Naam is 53% cash currently, and I believe him to be a smart man.... this alone should tell you something about his immediate view of the current markets.

I don't want to the the guy to rain on anybody's parade. Yes, I was a bit lucky to be trading in perhaps the best trading of the decade, but I'd hate to see the OP retire too early and find himself in trouble later on when he could have toughed it out for a few more years.... In the short term, Thailand will still be here, the beaches will still be here, the girls (if he's interested) will still be here... I think the general consensus from the experienced members would be that 700k is a bit too low. You would have to have everything go your way for quite some time to make it work out, and the most dangerous part of it all is if he takes a big hit early on in his retirement (a 20% correction when he's 46 put's him at ~581k (assuming the correction was in the 85% equity portion only)). Then he could be looking at 580k to fund possibly 40-odd years.

That said, I'm all for people getting out and seeing the world and living their life instead of sitting in a cubicle wasting away their good years. But I've seen some sad faces around Thailand recently, and if he's asking for genuine advice, I'd say work a bit more and maybe he can live a long happy life here with less to worry about.

Teej

definitely true what you say, you sound like a nice guy. Nevertheless we are all creating reality by ourselves, our reality. It doesnt take only money to make such a move rather discipline and the strength to let go in case things turn bad. People break and not only here because they are not willed to admit it was all their own fault. Thats why I recommend safety belt plan B. I left home when I was 26 and have never looked back. And you never know whats going to happen when you open the next door. Risks as well as chances are waiting there.

[niebla]

In retirement, I suggest a balanced approach to investing with 50% in short term goverment (US) backed bonds. The remaining portion should be in equities. Currently I am in 90% US equities and 10% international equities. This should allow a 4% /year withdrawl without impacting the capital, and allowing for inflation.

If you were NOT going to live like a tourist, one can live quite well in Chiang Mai for $12,000/year US. If one wanted to live like a tourist, or live in a more expensive area of Thailand, then one could easily spend more than $30K US/year.

I agree. If you cannot live on 30K US something is wrong. I agree about planning for inflation, and balancing your investments in stocks and bonds. If you would like further information, please IM me.

hi niebla,

why not enlighten us all? You sound like a helpful person

[PCA]

In retirement, I suggest a balanced approach to investing with 50% in short term goverment (US) backed bonds. The remaining portion should be in equities. Currently I am in 90% US equities and 10% international equities. This should allow a 4% /year withdrawl without impacting the capital, and allowing for inflation.

If you were NOT going to live like a tourist, one can live quite well in Chiang Mai for $12,000/year US. If one wanted to live like a tourist, or live in a more expensive area of Thailand, then one could easily spend more than $30K US/year.

I agree. If you cannot live on 30K US something is wrong. I agree about planning for inflation, and balancing your investments in stocks and bonds. If you would like further information, please IM me.

hi niebla,

why not enlighten us all? You sound like a helpful person

niebla,

this is not a balanced approach. Just for your own case when you are 90% in equities at the moment. Tomorrow at the same time you will have lost 5 - 10% of your portfolio value. And this even on a holiday.

[niebla]

In retirement, I suggest a balanced approach to investing with 50% in short term goverment (US) backed bonds. The remaining portion should be in equities. Currently I am in 90% US equities and 10% international equities. This should allow a 4% /year withdrawl without impacting the capital, and allowing for inflation.

If you were NOT going to live like a tourist, one can live quite well in Chiang Mai for $12,000/year US. If one wanted to live like a tourist, or live in a more expensive area of Thailand, then one could easily spend more than $30K US/year.

I agree. If you cannot live on 30K US something is wrong. I agree about planning for inflation, and balancing your investments in stocks and bonds. If you would like further information, please IM me.

hi niebla,

why not enlighten us all? You sound like a helpful person

niebla,

this is not a balanced approach. Just for your own case when you are 90% in equities at the moment. Tomorrow at the same time you will have lost 5 - 10% of your portfolio value. And this even on a holiday.

Total portfolio:

50% GNMA Bonds, short term, government guarenteed, 5% return

5% International stocks

45% US Stocks

Currently looking at moving some bond money into equities with the downturn. (buying opportunity.)

[PCA]

In retirement, I suggest a balanced approach to investing with 50% in short term goverment (US) backed bonds. The remaining portion should be in equities. Currently I am in 90% US equities and 10% international equities. This should allow a 4% /year withdrawl without impacting the capital, and allowing for inflation.

If you were NOT going to live like a tourist, one can live quite well in Chiang Mai for $12,000/year US. If one wanted to live like a tourist, or live in a more expensive area of Thailand, then one could easily spend more than $30K US/year.

I agree. If you cannot live on 30K US something is wrong. I agree about planning for inflation, and balancing your investments in stocks and bonds. If you would like further information, please IM me.

hi niebla,

why not enlighten us all? You sound like a helpful person

niebla,

this is not a balanced approach. Just for your own case when you are 90% in equities at the moment. Tomorrow at the same time you will have lost 5 - 10% of your portfolio value. And this even on a holiday.

Total portfolio:

50% GNMA Bonds, short term, government guarenteed, 5% return

5% International stocks

45% US Stocks

Currently looking at moving some bond money into equities with the downturn. (buying opportunity.)

ok, I need to correct my statement since I read your structure wrong. Sometimes it is hard to switch from philosophy and idealism to money. Only 5% portfolio loss tomorrow.

[Naam]

I think that initially (and this is purely guessing), the OP may be happy with the 30K, but as inflation and currency fluctuation and fluctuating equity markets take their toll (if they do), it could be tough going. If anything, I would advise to save some more and reduce exposure to the equity markets (unless the OP knows his derivatives). If i recall correctly, Naam is 53% cash currently, and I believe him to be a smart man.... this alone should tell you something about his immediate view of the current markets.

Teej

to be honest Teej, even without the subprime crisis surfacing last summer my cash quota would be very high (~40%). my decision (about 2 years ago) to substantially increase cash are based on personal reasons / circumstances as well as on my changed strategy to move from sovereign to corporate debtors (i am a "bondman") and in a corporate segment of high yield / high risk bonds. partly to balance the higher risk i deemed it necessary to increase cash. the personal reasons are much easier to explain. i have all the money i need (i think) and i am fed up looking daily long hours at the four screens which surround me and reading megabytes of financial research and comments, something what i have done for nearly 1½ decades. as simple as that.

as far as the current markets are concerned i admit that i slightly underestimated the situation, although -within the circle of my investor friends- i am considered since several years the most prudent one. my view is that what we have seen last year was indeed only the tip of the iceberg. if one goes through the news of just the last three weeks one financial horror after the other one surfaces and it will take months to clarify the situation and during that period it will be a wild ride.

what puzzles me in this and other threads are naive (no offence meant!) views and expectations that one can retire holding equities because "in the long run...". even more puzzling are statements what yield to expect, how much of it can be spent and what portion should be reinvested to compensate for inflation. statements which prove nothing else than lack of maths

[siamamerican]

what puzzles me in this and other threads are naive (no offence meant!) views and expectations that one can retire holding equities because "in the long run...".

Naam, I don't consider myself naive, but plan on having most my retirement portfolio in equities. I'll keep $150k in cash like investments that would cover my needs in Thailand for 5-7 years. This would put me in a good position to weather any of the equity market drops that happened over the last 50 years. It seems you are judging other people's needs based on your needs. Myself and the OP don't have the same income requirements as you.

Hey, maybe I'm naive. Help me comprehend my error in judgment. Not being sarcastic - find your posts entertaining and insightful.

[LivinLOS]

Well the OP had 85% in Equity.. US markets were closed yesterday. but looking at Japan yesterday and today its not unlikely to think that 10% of that may be gone by close of business.

So now his nestegg is 700k minus 8.5% ??

How many times can that nestegg survive that kind of treatment and still last a 'lifetime' ??

@taj.. I agree 100% with almost all you have written.. Thailand may be great now but 10 years down the road who knows how it will be, rising radicalism, a very prominent person who probably wont be here in a decade, etc etc etc.

[think_too_mut]

... but the comment about Think_too_mut goes way beyond this thread... mostly from his unwavering bitterness regarding real estate in Thailand. The comment was not intended to offend those with fewer financial resources. Those people may indeed have other resources from which to draw happiness from, perhaps finding themselves better off than a rich man with nobody to share it with.

What comment was that? About having 700K US$ in a bank, 7% monthly interest and getting 130K baht each month to live on while not touching the principal? What is far above this thread? That or your vulgar boasting about millions and millions?

About real estate - I have no bitterness at all about BKK property - just get nervous when someone is touting huge gains and even more down the track.

IMO, BKK property is near non-resellable and can not be counted as any value ready to be cashed.

Edited January 22, 2008 by think_too_mut

[siamamerican]

Well the OP had 85% in Equity.. US markets were closed yesterday. but looking at Japan yesterday and today its not unlikely to think that 10% of that may be gone by close of business.

So now his nestegg is 700k minus 8.5% ??

How many times can that nestegg survive that kind of treatment and still last a 'lifetime' ??

@taj.. I agree 100% with almost all you have written.. Thailand may be great now but 10 years down the road who knows how it will be, rising radicalism, a very prominent person who probably wont be here in a decade, etc etc etc.

You are predictable. Constantly using extreme market conditions to make your point. So the US markets are going to lose 8.5% on Tuesday. I think that has only happenned a couple times in the last 100 years. hel_l, it might, but I very much doubt it.

To answer your question. Quite some time if you have some cash put aside, so as not to have to dip into your equity investments. Now if you think the markets aren't going to recover sometime in the next ten years, build a house of gold, as monument of your investment wisdom.

Edited January 22, 2008 by siamamerican

[LivinLOS]

You are predictable. Constantly using extreme market conditions to make your point. So the US markets are going to lose 8.5% on Tuesday. I think that has only happenned a couple times in the last 100 years. hel_l, it might, but I very much doubt it.

Well I was actually pointing out a 10% equity loss in 2 days.. And its going to get nastier (IMO) most markets now in technical bear conditions.. And yet posters are advocating 85%, 90%, etc equity holdings.. Also I am not using 'extreme market conditions' by plucking dates out of the air, I am saying whats happening NOW !! Its not a surprise, it was shockingly obvious, hence so many statements to a mostly hostile poster base.

So its only happened a few times in 100 years.. OK sure.. And how long did it take those times in the 100 years to get out of the hole ?? Remember that was his nest egg that he needed capital gains from simply to live. Again how long do you expect a buy and hold strategy to require for Mr 1980's Kiro-san.. Nikkei 39k may take a lot longer than many of us have left. And thats to break even let alone have money to live off.

[Naam]

what puzzles me in this and other threads are naive (no offence meant!) views and expectations that one can retire holding equities because "in the long run...".

Naam, I don't consider myself naive, but plan on having most my retirement portfolio in equities. I'll keep $150k in cash like investments that would cover my needs in Thailand for 5-7 years. This would put me in a good position to weather any of the equity market drops that happened over the last 50 years. It seems you are judging other people's needs based on your needs. Myself and the OP don't have the same income requirements as you.

Hey, maybe I'm naive. Help me comprehend my error in judgment. Not being sarcastic - find your posts entertaining and insightful.

i realized to late that my post could be construed as meant for you S-Am, but i assure you that is not the case. you mentioned that the $30k is dividend income and that means a calculable income assuming the companies are sound.

if you scour to the various "money/retirement" threads in TV-Forum you will find dozens of postings where potential retirees plan to hold equities and selling a part to finance their living expenses because "in the long run equities go up in value". some of these as well as others throw around figures and percentages concerning yield and inflation which raise the hair on my neck and again others neglect inflation completely. this is what i call naive. what i gather from your postings is that you belong to neither group but are a rather bright young man.

i also don't judge you according to my needs and have stated in this forum multiple times that even a Farang can lead a happy life on a tight budget in Thailand. we have a saying in german "one has to stretch according to the size of the blanket". needless to say that those (or most of them) with big blankets not only stretch as they please but might even roll around under it.

my answer to the OP of this thread states clearly my view:

"none of us is qualified to answer that question! it all depends on what lifestyle you expect to lead. the same goes for your question whether to retire or keep on working. if you retire and find out that you are (contrary to your expectations) living like a pauper when you are 50, well that's bad luck. you will say "i made a wrong decision". if you keep on working till 50, your capital has grown to 1 million dollars and you are diagnosed with terminal cancer you will say "<deleted>! how could i make such a stupid decision!"

[siamamerican]

You are predictable. Constantly using extreme market conditions to make your point. So the US markets are going to lose 8.5% on Tuesday. I think that has only happenned a couple times in the last 100 years. hel_l, it might, but I very much doubt it.

Well I was actually pointing out a 10% equity loss in 2 days.. And its going to get nastier (IMO) most markets now in technical bear conditions.. And yet posters are advocating 85%, 90%, etc equity holdings.. Also I am not using 'extreme market conditions' by plucking dates out of the air, I am saying whats happening NOW !! Its not a surprise, it was shockingly obvious, hence so many statements to a mostly hostile poster base.

So its only happened a few times in 100 years.. OK sure.. And how long did it take those times in the 100 years to get out of the hole ?? Remember that was his nest egg that he needed capital gains from simply to live. Again how long do you expect a buy and hold strategy to require for Mr 1980's Kiro-san.. Nikkei 39k may take a lot longer than many of us have left. And thats to break even let alone have money to live off.

There are many world indexes, but I'll use the S&P. The last drastic short term drop in the S&P was in October 1987. It dropped 20% in one day and by end of month it was down over 30%. 1 year and 10 months later it was reaching new highs. To answer your question, not too long in most cases. As you have done before, pick a date in the last 200 years to make your point though.

Using extremes like I just did, is really not the way to measure returns. Unless you're timing the market. Those that have had the guts to stick with it through bad and good have done extremely well in the longterm. Currently, I'm not walking the talk - mostly in cash since Jan. 2.

I thought OP stated on an earlier post that dividends would provide what he needed. No guarantee dividends will continue, but better than relying on liquidating your gains.

[fletchsmile]

I am 45 and considering my options regarding retirement. I hope to to retire in Pattaya or Chiang mai. I have total assets of $700,000 of that about 85% equities 12% bonds 3% cash. These pay an annual income of about $30,000.

Any self funded retirees happy to tell me if this a comfortable position from which to retire?

Bearing in mind I will have to pay for visa runs probably to Malaysia every 3 months.

Currently I have the option of working which obviously means I will have more assets if I retire at a later date.

Great topic, plus some good posts above from a lot of perspectives, as well as aspects to consider.

Looking specifically at your model, and leaving aside the other issues, as the topic is otherwise too diverse: I feel you are underestimating the equity risk in your portfolio, when looking at your income/wealth. I believe it is better to look at overall return not just dividend income, for the following main reasons:

A) to better revalue/mark-to-market your capital. This is important in times like now. Unforeseen events may require you to realise your capital at undesireable times, eg a need for funds at this moment would hit you badly as you stand. I have large equity exposures now, but as I'm working could replace losses.

If you seek only dividend/high yielding shares you limit your investments. Additionally you make it harder to diversify your portfolio and reduce risk.

I'm a big fan of equities, even appreciating current market risks, because over time they outperform cash and bonds. I think you need to be careful in allocating your %s here.

For the last few years when I have been considering/planning early retirement I have been thinking along the following model, rather than fixed percentages. NB focus is on capital allocation. Insurance etc needs to come out of income. There's actually a few more elements to it, but these are the key ones.

1) 5 years cash or cash equivalent (perhaps some held to maturity govt bonds), but nothing with market risk to capital. Why 5 years? In the 25-ish years I've personally been investing in equities, there has never been a time I have lost money over a 5 year time frame. This will earn some interest/return, but the key is preservation of capital.

2) House paid, with a roof over my head.

3) The bulk of the remainder could be in equities: - although it would also include other instruments to diversify. This is the part if you told me 85% equities 12% bonds, 3% cash I would say OK under my model, if I have 1) and 2) in place

4) Assume a return of 7% on the portfolio. (I've proved longer term, i.e 5 years+ cycles I can regularly exceed this figure)

5) Take 4% from the portfolio in good years. Live off this 4% (or preferably less). Don't focus too much on dividend income or capital growth, but focus on ensuring your portfolio remains balanced as to your views on what are good investments. The danger on just taking dividend income is that over time you'll have a higher % of growth shares.

6) Leave say 2% for inflation, and 1% as your buffer.

7) The 2% inflation is left in the portfolio, so it grows with inflation. Next year your income you take is effectively 4% + 4%x2% under this method, i.e income grows in absolute terms in line with inflation although 4% is retained.

8) The 1% buffer you view separately in how you invest. Could be bonds, cash, equity, depending on your views. It is kept for the individual years you lose money on your portfolio. This way you can accommodate 4 years of positive returns and 1 year of negative returns, without dipping into your main pool of capital. Instead in the negative return year, you take from the buffer, and don't reduce your main portfolio capital

9) Any excess over 7% I would leave in the portfolio. But again you can vary from time to time

10) Regularly look back and check your numbers, to ensure you have 5 years cash, and your portfolio kept pace with inflation.

BTW You can vary assumptions 4) - 9) to fit your views on inflation, returns etc. In reality you will need to revise and tweak them as years go by, and they shouldn't be viewed as set in stone. Times change. The 5 years cash or cash equivalent lets you weather bad times, and ensure you don't get hit by short term shocks. Allowing you to make longer term adjustments spread over 5 years if necessary

Hence if I had your portfolio, and was using for myself. I'd want approx:

1) 5 years cash or cash equivalents: = $120k (NB 5 x $ 24k is what you have enough for, not 5 x 30k under this model)

2) Remainder of $580k would generate approx $23k a year to live off at 4%, $12k for inflation @2% kept in portfolio, 1% or $6k buffer

There are a lot of other factors to consider, and you can vary amounts according to your risks and views. But for me the 5 years cash zero market risk (NB not same as zero risk) is key. It covers the foreseeable market downturns. You can always do the adjusting your expenditure up and down.

Other factors:

A) You're still talking in dollars. Expand the model above to address currency risk. Again the 5 year cash or cash equivalents should largely address this. You'll be living in Thailand you need THB assets. Sure the 1%-2% return on cash, or 3-5% on Thai govt bonds is poor. but there is no currency risk

I haven't included returns on cash or cash equivalents above. This is actually an additional sum you can factor in or consider a bonus. Remember interest rates go up and down. So in some years could be next to nothing anyway

C) Remember your cash in a bank account or bonds is not 100% safe. No market risk, but there are other risks, eg fraud, credit risk.. Spread it around. Similarly don't have all your equities in the same account. Frauds and bankruptcies happen. You can have a great portfolio, but if someone steals/loses it you're in big trouble.

D) "Stress test" the above. What happens if USD halves, inflation doubles etc. Your 5 years gives you time to adjust, but longer term shifts could happen. The above covers normal cycles, there's always that once in 30yrs event. Think and anticipate them.

Lastly the above is not for everyone. It also doesn't cover lifestyle issues. It only covers one financial model idea, on managing finances. It also lets people play around with what they are happy/comfortable with.

Summary:

= 5 years cash or cash equivalents + a roof over your head + portfolio yielding enough to live on (at say 4%) + inflation (2%) + buffer (1%) for years you get it wrong. All adjusted for currency risk + insurance, etc . Plus regularly do "what ifs", including the life changes, eg a wife, eg one kid could cost an extra $10k a year in school fees

I enjoy investing and finance, some people don't. I have a reasonable idea of what I'm good at, what risks I take and how often I get it wrong. To some the above would be more hassle than it's worth, and give more headaches than it solves. After all it's only dealing with the money issues, which are much easier in my view

[chiang mai]

Lots of good comments but everyone seems to be avoiding:

1) Currency Risk, assuming you require Baht to live here.

2) Inflation: I see people talking in terms of 3.5% inflation rate and that seems absurd.

And of course, the inevitable equities vs "safer" income cash flow for the retirement years. Equities seem to be taking a beating currently so further words are probably not necessary.

[Naam]

Remember your cash in a bank account or bonds is not 100% safe. No market risk, but there are other risks, eg fraud, credit risk.. Spread it around. Similarly don't have all your equities in the same account. Frauds and bankruptcies happen. You can have a great portfolio, but if someone steals/loses it you're in big trouble.

if you do that Fletch you are losing all clout with your bank. i am doing since years exactly the opposite and bank since many years together with more than two dozen friends as a "group of clients" (we also moved last year as a group from one bank to another one) which enables us to obtain the best possible conditions.

of course we are neither with Northern Rock nor with the branch of First Ozark County Savings&Loan in Bentonville, Arkansas

[Naam]

Lots of good comments but everyone seems to be avoiding:

1) Currency Risk, assuming you require Baht to live here.

2) Inflation: I see people talking in terms of 3.5% inflation rate and that seems absurd.

And of course, the inevitable equities vs "safer" income cash flow for the retirement years. Equities seem to be taking a beating currently so further words are probably not necessary.

why absurd? please elaborate as inflation should be everybody's concern.

[fletchsmile]

Remember your cash in a bank account or bonds is not 100% safe. No market risk, but there are other risks, eg fraud, credit risk.. Spread it around. Similarly don't have all your equities in the same account. Frauds and bankruptcies happen. You can have a great portfolio, but if someone steals/loses it you're in big trouble.

if you do that Fletch you are losing all clout with your bank. i am doing since years exactly the opposite and bank since many years together with more than two dozen friends as a "group of clients" (we also moved last year as a group from one bank to another one) which enables us to obtain the best possible conditions.

of course we are neither with Northern Rock nor with the branch of First Ozark County Savings&Loan in Bentonville, Arkansas

Fair point. Don't think you need to lose all your clout, but think it might be worth sacrificing "some". Also a little competition keeps them on their toes, instead of them keeping you on your toes, to ensure you've selected the "best bank".

Personally I use 3 main institutions for "custody" of my assets, one in UK, one in Singapore and one in Thailand. i.e Somewhere in between. As you say a trade off between best ultimate price and safety. I probably don't get the best price I could, but on the other hand max I can lose is 1/3.

Next time you change give them half. They won't know any better. Am sure you're past all the maximum thresholds already, even if you half it

BTW2 Wasn't it UBS recently that needed help from Temasek?

Edited January 22, 2008 by fletchsmile

[pkrv]

Also a subject close to me (48 and 1/2). Although others have commented on a roof over your head, I note the OP did not say that he has excluded property from his 'capital'.

If no property he will have to buy or rent - one of the two. IMO renting over the long period (40 + year) would be catastropic, and I'm afraid any pension provision will not actually be that much, given he will (again IMO wisely) not actually be paying into it, he wil be retired.

Something that has not been talked about is the western concept of down sizing as a strategy i.e. selling up your home and buying a cheaper (not necessarilly smaller) property, then repeat as necessary.

Anyone tried this in Thailand?

[chiang mai]

Lots of good comments but everyone seems to be avoiding:

1) Currency Risk, assuming you require Baht to live here.

2) Inflation: I see people talking in terms of 3.5% inflation rate and that seems absurd.

And of course, the inevitable equities vs "safer" income cash flow for the retirement years. Equities seem to be taking a beating currently so further words are probably not necessary.

why absurd? please elaborate as inflation should be everybody's concern.

I know that you know better Naam but since my dinner is not yet ready I will indulge you, but only momentarily.

I recall you said that your recent book keeping review of your annual accounts showed that you had spent exactly the same amount this year as you did last year and that inflation was not an issue for you. My strongest suspicion is that much of that comes down to lifestyle and a willingness to adapt to price fluctuations. Inflation, as we all know, depends on individual lifestyles and varies accordingly. I would suggest that whilst headline inflation in Thailand is reported as 3.5/4.5% the impact of inflation on western expats is typically much higher hence I propose that 10% is appropriate.

I have just returned from three days in HK and BKK and the price increases are noticeable - from what I could guess they seemed to be in the region of 15/20%. Hotel costs, airline costs, the cost of silly and essential things, all significantly upwards by far more than 3.5% year on year.

But why am I am talking about these things, you know this! Opps, bless Mrs CM, dinners ready.

[Naam]

Personally I use 3 main institutions for "custody" of my assets, one in UK, one in Singapore and one in Thailand. i.e Somewhere in between. As you say a trade off between best ultimate price and safety. I probably don't get the best price I could, but on the other hand max I can lose is 1/3.

BTW2 Wasn't it UBS recently that needed help from Temasek?

my bonds are not kept with UBS but with Euroclear and Clearstream Fletch (i guess you knew that ) . only a very sophisticated fraudulent procedure by bank employees could (for a short time) do some harm. but then UBS would be still responsible and would have to compensate me. as far as cash is concerned you are quite right that if a bank goes belly-up the cash might be gone.

i wouldn't call the Temasek involvement "help". at first i was angry because i did not get a chance to inject my cash at the conditions Temasek got but now i am over it.

now of course whenever we talk to our bankers we are pulling their legs "have you finally cooked up something to fleece us for the billions you lost due to subprime?"

[Naam]

I recall you said that your recent book keeping review of your annual accounts showed that you had spent exactly the same amount this year as you did last year and that inflation was not an issue for you. My strongest suspicion is that much of that comes down to lifestyle and a willingness to adapt to price fluctuations. Inflation, as we all know, depends on individual lifestyles and varies accordingly. I would suggest that whilst headline inflation in Thailand is reported as 3.5/4.5% the impact of inflation on western expats is typically much higher hence I propose that 10% is appropriate.

i think we have to differentiate CM and should agree that inflation impacts people in different ways and different percentages. simple examples: one has a new house, the other one has a leaking roof. one has a new car, the other one a wreck that has to go to the workshop once a month. the list is very long.

as far as my personal situation is concerned i am still puzzled and believe me i looked into all nooks and crannies to find an accounting mistake. let's talk about it again in one year's time.

[chiang mai]

I recall you said that your recent book keeping review of your annual accounts showed that you had spent exactly the same amount this year as you did last year and that inflation was not an issue for you. My strongest suspicion is that much of that comes down to lifestyle and a willingness to adapt to price fluctuations. Inflation, as we all know, depends on individual lifestyles and varies accordingly. I would suggest that whilst headline inflation in Thailand is reported as 3.5/4.5% the impact of inflation on western expats is typically much higher hence I propose that 10% is appropriate.

i think we have to differentiate CM and should agree that inflation impacts people in different ways and different percentages. simple examples: one has a new house, the other one has a leaking roof. one has a new car, the other one a wreck that has to go to the workshop once a month. the list is very long.

as far as my personal situation is concerned i am still puzzled and believe me i looked into all nooks and crannies to find an accounting mistake. let's talk about it again in one year's time.

Agreed. But hows about we talk about it again in one months time. You keep track of the inflationary increases of the things that you buy and I'll do the same and we'll compare notes, for everyone's benefits. I've just replaced my wreck and fixed my roof so I'll focus on other things.

[chiang mai]

My how time flies, is it really one month already! Actually, I slept on the thought and figured I would report some price increase observations from my recent trip to Bangkok:

1) My one night in the Dynasty Inn on Soi Nana cost me 1,490 instead of the previous years 1,290, up about 15%. I used to stay at the Dynasty Grande but since they bumped their prices by 20% in November the place is no longer on my "where to sleep in Bangkok" list.

2) My iced tea at my favorite watering hole had increased from 60 to 70 baht and it seems every other bar has followed suit - 14%.

3) I bought some medication from a long standing pharmacist friend and he tells me the prices had increased in January by 15%.

4) Ate some comfort food in the new airport, a slice of pizza up from 100 to 120 baht and pretty bad stuff at that - 20%.

5) Also ate half a Subway sandwich, price 129 up from 109 - 20%

6) Tollway costs when cabbing it from Don Muaeng to downtown, 60 baht, up from 40 baht, middle of last year.

7) A quick trip to Central to buy a couple of Polo shirts, previously 900/1,100 baht. A new range now in stock and the old range discontinued, - 2,200 baht!

8) A sweet young thing accosted me outside my hotel one evening and offered to give me a half hours massage for 1,500 baht. I of course declined her gracious offer stating she was quoting prices that I suspected (don't know for sure) were far out of line with industry norms.

9) Thai Airways: I got stuck buying a ticket on TA to Phuket and the cheapest seat available was a whopping 2,900 baht. Now I realize it is high season and Thai will almost certainly offer cheaper seats by end of March (maybe) but if my memory serves me well I recall there being much cheaper seats available last year at this time - 1,900 springs to mind.

[Naam]

-had three fried eggs and a slice of bread for breakfast. asked the maid whether i have to pay more. she said "No Sir", raised an eyebrow and must have been thinking "Madame is back since yesterday and again in control of Port and booze. Perhaps he has hidden a bottle or two and started boozing already in the morning?"

[JonnyF]

I haven't read all the replies but thought I'd offer an opinion based on the opening post. From my experience here you have enough money, depending on the lifestyle you want. On the money you are talking about, you can quite easily rent a decent house, drive an average car and enjoy a nice and relaxed lifestyle, eating out every night at nice local restaurants with a few "big" nights out a month.

Of course, if you want to impress people with the red plated Benz, the mansion in the hills and several "tilacs" per week then you may have to sacrifice a few more years of your life and hope nothing happens to you before you finally decide to retire. It's just about weighing up the pro's and con's and how much you "need" the extra luxuries. I may be biased on this one as a family member of mine was 3 years away from his planned retirement date before suffering a major stroke in his mid fifties and has been in a wheelchair ever since.

Be careful though, I have never considered retirement (I'm mid 30's) but I have taken breaks from work for up to a year at a time and I was very bored and went back to work earlier than I had planned. Try to find a hobby that will also keep you fit. I'd say boredom and the change in lifestyle and culture will be bigger problems than lack of money, assuming you're not planning to live like a premiership footballer.

Also on the plus side, if you retire now and change your mind in the next couple of years then you have a much better chance of getting a decent job at 47-48 than at 57-58, so you could treat this "retirement" as a couple of years out of work that could become a retirement if you enjoy not working and can live the lifestyle you enjoy.

My only concern would be exchange rates, but you could always spread your capital around multiple currencies to give yourself a degree of security against your particular currency crashing.

Good luck with your decision.

[fletchsmile]

my bonds are not kept with UBS but with Euroclear and Clearstream Fletch (i guess you knew that ) . only a very sophisticated fraudulent procedure by bank employees could (for a short time) do some harm. but then UBS would be still responsible and would have to compensate me. as far as cash is concerned you are quite right that if a bank goes belly-up the cash might be gone.

i wouldn't call the Temasek involvement "help". at first i was angry because i did not get a chance to inject my cash at the conditions Temasek got but now i am over it.

now of course whenever we talk to our bankers we are pulling their legs "have you finally cooked up something to fleece us for the billions you lost due to subprime?"

Funny you should mention that Naam. At one point in my pre-Asia days, I actually used to look at risk and control reviews for banks. (Not UBS I'd add). This included once or twice looking at the risks and controls around banks and Euroclear, former Cedel etc.

Secondly, you're right with UBS that if the bank goes belly-up your cash is gone. Now if UBS went belly up, (perhaps even following a liquidity run on the bank as a result of a Euroclear bond fraud ), how would they be able to compensate you?

What would you put as the probability of default of UBS in a 5 year or 15 year time frame? It's not fully zero. Perhaps 0.0X% or 0.00X%? Reallistically it's a very very small risk of default, but it's still there. Maybe even the same odds as winning the UK lottery? The point is there's a lottery winner most weeks in the UK

For yourself you'll probably help develop the home equity release market in Thailand, but for someone else, spreading their money around a little mightn't be such a bad idea in exchange for a few basis points on the best deals

Edited January 23, 2008 by fletchsmile

[Naam]

Funny you should mention that Naam.

What would you put as the probability of default of UBS in a 5 year or 15 year time frame? It's not fully zero. Perhaps 0.0X% or 0.00X%? Reallistically it's a very very small risk of default, but it's still there. Maybe even the same odds as winning the UK lottery? The point is there's a lottery winner most weeks in the UK

funny you should mention that Fletch . in fact i raised this concern only a couple of weeks ago with my banker (whom i know personally since nearly two decades) and was told if i apply enough pressure on him UBS could arrange for me to spread my cash with two or three other SG banks. they did that for a client in december albeit for a big shot who would consider my cash as pocket money. i am still thinking about it but

1. i'm not sure about the legal implications if UBS "arranges" the "spread" and got p*ssed off reading a dozen pages in legal lingo and another half a dozen pages of waivers which i would have to sign.

2. until recently i held cash in €UR, AUD, NZD, ISK and TRY on a weekly basis with stop losses and did a little in/out trading too. i won't be able to do that with the proposed different arrangement and i don't want to be handcuffed if opportunity knocks in these interesting times. nowadays i hold €UR only (besides some peanuts amounts in other currencies) but that applies today and i don't know whether it will apply tomorrow.

i can't ask my friends for advice because they are all fully invested and consider my stance as... i don't want to mention the expressions they use as far as my cash quota is concerned

what's your advice? that is a genuine question!

[LivinLOS]

I haven't read all the replies but thought I'd offer an opinion based on the opening post. From my experience here you have enough money, depending on the lifestyle you want. On the money you are talking about, you can quite easily rent a decent house, drive an average car and enjoy a nice and relaxed lifestyle, eating out every night at nice local restaurants with a few "big" nights out a month.

Of course, if you want to impress people with the red plated Benz, the mansion in the hills and several "tilacs" per week then you may have to sacrifice a few more years of your life and hope nothing happens to you before you finally decide to retire. It's just about weighing up the pro's and con's and how much you "need" the extra luxuries. I may be biased on this one as a family member of mine was 3 years away from his planned retirement date before suffering a major stroke in his mid fifties and has been in a wheelchair ever since.

While I am not trying to imply that its impossible.. I would say that 30k USD would not be generous to do that where I am on phuket or I would guess in BKK either.. That is with the additional cost of rental as the OP hasnt budgeted a house purchase.

I live pretty modestly.. I drive an old (really old) car.. I dont do the yacht club (much) or golf and country club scene.. I havent had a big ticket blow out item in ages.. I no longer do the bar scene for anything more than drinks (and god how much I squandered in my first few years ringing bells and in gogos) my one luxury is renting a home with a pool.. I cant seem to spend less than 120k per month and approx on average I send 8k EUR a quarter to Thailand. However I also have a credit card which I travel on (thats another luxury) and buy online books, bits, and bobs, medical and others so even that is not my total cost of living..

Now I imagine that if your living rurally in nakhon nowhere then that would be a major budget, but Thailand is very variable. It is possible (I know guys doing it on less) but thats not looking at any USD fx risk..

[fletchsmile]

As Guest House suggests taking a year out might be a good idea. I took a year or so out here in Thailand at one point. Went to university, learnt to read and write Thai, travelled the country, watched the World Cup, did a TEFL, and generally enjoyed life, etc with a view to what I wanted to do next. Helps focus life.

I also left Thailand a couple of years later, for about two of years, because after 7 years I felt I wanted to leave for a while. Don't underestimate you may feel the need for change. I'm very glad I did leave, work/visit other countries, and come back with a few different perspectives.

I also used to track my spending as a single guy. I don't bother so much now as a married guy and my wife tells me off if I spend too much. . In those years I experimented "just to see" and could live off THB 30k a month, staying in a one bed 5k a month place. The other extreme was probably spending 200k a month including sharing a large house for 90k rent between 2. That was on expat terms and still saving after the 200k. i.e around 7 times as much. I would say the enjoyment was not "7 times", but on the other hand, one was obviously preferred

To be honest, my happy medium was around the THB 100k mark as a single guy, doing all the things I wanted. That's now 150k being employed with a lovely wife and family. I'm not knocking the THB 30k a month life. I enjoyed it. It's just not for me long term in a city (maybe up country tho').

keep your options open. Travel around quite a bit in Thailand. Live in a few different places. It's very different to short trips and holidays. There's much nicer places than BKK and Pattaya. eg Chiang Mai, Hua Hin. Horses for course tho'

Edited January 23, 2008 by fletchsmile