Where To Put Your Money For Inflation.

[BEENTHEREDONETHAT]

Who in Thailand does inflation hurt most?

The first thought is those who are in debt. But when you stop and look at it you realize that they can benefit from inflation. The reason for this is that debtors borrow valuable money and the number of dollars they must repay is fixed. So over time the value of the dollars they must repay is less and less (so they are easier to obtain than if the value of the dollar wasn't inflated away.)

The big losers those on fixed incomes like the elderly and anyone whose income isn't indexed to inflation.

Inflation affects them especially hard because the prices of things they buy go up while their income stays the same. In addition, the poor are generally renters so they don't even benefit from a "cheaper" mortgage while they are paying higher prices for their groceries.

So what do you feel is the best placement of your money in preparation for inflation. And how bad to you think Thailands inflation will be?

[William Osborne]

at the moment i only bring in what I spend as the ex rate for the baht/dollar is too high, the rest I keep in dollars and invest in long term stocks, mostly oil, mining and metals

Think they are a lot of good buys out there as a lot of stuff is well below their 52 week average especially in China such as China Petroleum and China Aluminium, these are definatley going to up in the long term.

Petrobras and Vale in Brazil are close to their 52 week highs but i think are also good long term buys as they have massive reserves.

McDonalds is also probably a good bet as soon most people in the US soon won't be able to afford eat anywhere else

Edited June 18, 2008 by William Osborne

[GuestHouse]

At the back end of last year when I was discussing inflation and stating that I believed it to be the single biggest issue with respect to the long term financial security of retirees in Thailand my posts where often ridiculed ... the term 'GH is bleating on about inflation' comes to mind.

Funny how a few months change the general view..... But then inflation is like that, it needs time.

[lannarebirth]

I think low down, low fixed rate real estate is a good hold in inflationary times. That and short bond funds.

[samran]

resources. Coal and Iron ore......

[MattFS218]

real estate, the stock market, and commodities are all good hedges against inflation. If you are a US investor, I recommend WIP, which is an ETF of inflation protected government bonds world wide (ex- US).

[lannarebirth]

real estate, the stock market, and commodities are all good hedges against inflation. If you are a US investor, I recommend WIP, which is an ETF of inflation protected government bonds world wide (ex- US).

The stock market? Really?

http://www.dogsofthedow.com/dow1925cpilog.htm

[Heng]

Land, houses, buildings. Espeically when so many folks have to give theirs up because they thought they could afford more of a mortgage than they really could.

[gregb]

So what do you feel is the best placement of your money in preparation for inflation. And how bad to you think Thailands inflation will be?

Thailand's exposure to inflation is just as bad as anywhere else. Skyrocketing energy prices affects every country equally, although energy producers at least get something in return. Unfortunately, Thailand is not a net energy producer.

Where to invest your money? Commodities. Not even a second thought there. All commodities. Oil underlies everything today. Gold is particularly great in Thailand. Buy 99.99% and if you have to leave fast for any reason, carry it with you.

You can not beat inflation in the current environment. But you can prevent losing your purchasing power.

[samran]

So what do you feel is the best placement of your money in preparation for inflation. And how bad to you think Thailands inflation will be?

Thailand's exposure to inflation is just as bad as anywhere else. Skyrocketing energy prices affects every country equally, although energy producers at least get something in return. Unfortunately, Thailand is not a net energy producer.

Where to invest your money? Commodities. Not even a second thought there. All commodities. Oil underlies everything today. Gold is particularly great in Thailand. Buy 99.99% and if you have to leave fast for any reason, carry it with you.

You can not beat inflation in the current environment. But you can prevent losing your purchasing power.

Even the energy producers are getting hit. They still have to buy the (expensive) fuel and sell it in a sometimes regulated market. It ain't a good time to be a power generator at the moment.

So, coal, etc are better bets as their mining costs aren't usually that exposed to the fuel price. Shipping is another one which I forgot to mention.

[BEENTHEREDONETHAT]

Thanks for all the comments. I've only tried the stock market a couple of times and ended up on the losing end. Once on my own and not paying enough attention to the market. Once I had a Swiss Bank manage some funds for me, claiming they had been averaging 15% or more a year forever. Went on a trip for a year when I got back they had managed to lose 20% on a up market. Churned the hel-l out of my account and if I got a $3 dividend they would charge $5 for handling it. I'm not willing to put in the time to do it myself so I leave that market to those willing to work at it.

Guess I should have mentioned I'm a lazy investor and typically prefer Bank term deposits or bonds. Right now I'm OK as my return is considerable more than in flation. Don't know if it will stay that way or not.

Yes a good buy on property has appeal since inflation on new increases the cost and that drags the old along.

I do hold some gold Krugerands, Pandas and Canadian Maple Leafs. Bought them in the early 80's and they just recently (the last year or so) got back up to what I paid for them. I've made my share of bad decisions but fortunately the good have pretty much canceled the bad out. That dosen't mean to imply gold is a bad decision it was my timing that was bad.

Guess the big question is how high will inflation in LOS get? And almost as important how long will it last? I know you don't have crystal balls but what is the gut feeling?

[pkrv]

Hi BEENTHEREDONETHAT - an interesting post. I am sort of considering the situation but at 48 am currently only really positioning myself for this type of issue, and have noted posts on UK National Insurance and UK pensions (and thanks to GH for his input).

If you have never played the markets please, please don't. I am afraid there are a bunch of predators out there that are fully aware that retirees (I don’t know if you are one) who suddenly have access to a pension lump sum and are simply there to be exploited. Anyone who is onto a good thing stays quiet until it is time to sell.

My own thoughts (which can change BTW) are currently to use the concept of downsizing in property (freehold condominiums in Bangkok and London). Over a protracted period (15-20 years?) units should keep pace with inflation. By selling up and moving down market I should release cash that has kept pace with inflation.

I know the secondary market is still in its infancy here in Bangkok but there are a lot of estate agents out there who must be doing some business, plus I also have faith that the (condominium) market will develop in the future. As with all things in life, a gamble.

I do obviously have the option of renting out my UK home as an income stream, which again will be ‘inflation proofed’ to some extent. I have virtually no debt, and no longer contribute significantly to UK pension schemes (The HP scheme was OK I put in the minimum 1% because they put in 5% if I did) and I can shift to a SIPP at the end (it is not protected rights). But even my SIPP is now in cash only.

Downsizing should also protect me against exchange rate movement (also a big enemy). I can downsize the UK or Bangkok property dependent on the situation.

[lannarebirth]

So what do you feel is the best placement of your money in preparation for inflation. And how bad to you think Thailands inflation will be?

Thailand's exposure to inflation is just as bad as anywhere else. Skyrocketing energy prices affects every country equally, although energy producers at least get something in return. Unfortunately, Thailand is not a net energy producer.

Where to invest your money? Commodities. Not even a second thought there. All commodities. Oil underlies everything today. Gold is particularly great in Thailand. Buy 99.99% and if you have to leave fast for any reason, carry it with you.

You can not beat inflation in the current environment. But you can prevent losing your purchasing power.

Will be you accepting delivery of these "commodities" are you just waiting for someone to pay you more for your derivative than you payed for it?

[cmsally]

Has anyone looked at alternative energy companies and buying shares in them. This is something I am looking into when I have a bit of free time to research.

Am also looking into switching some cash from UK pounds to AUS$. Anyone have a crystal ball viz the future possibilities of exchange rate fluctuations.

Personally with its stocks of raw materials I think Aussie looks a good bet to park some cash. Not to mention interest rates are attractive.

[churchill]

There is a lot of talk about buying gold as a hedge against inflation , so I am sure many will follow and gold prices will rise .

[BEENTHEREDONETHAT]

Hi BEENTHEREDONETHAT - an interesting post. I am sort of considering the situation but at 48 am currently only really positioning myself for this type of issue, and have noted posts on UK National Insurance and UK pensions (and thanks to GH for his input).

If you have never played the markets please, please don't. I am afraid there are a bunch of predators out there that are fully aware that retirees (I don't know if you are one) who suddenly have access to a pension lump sum and are simply there to be exploited. Anyone who is onto a good thing stays quiet until it is time to sell.

My own thoughts (which can change BTW) are currently to use the concept of downsizing in property (freehold condominiums in Bangkok and London). Over a protracted period (15-20 years?) units should keep pace with inflation. By selling up and moving down market I should release cash that has kept pace with inflation.

I know the secondary market is still in its infancy here in Bangkok but there are a lot of estate agents out there who must be doing some business, plus I also have faith that the (condominium) market will develop in the future. As with all things in life, a gamble.

I do obviously have the option of renting out my UK home as an income stream, which again will be 'inflation proofed' to some extent. I have virtually no debt, and no longer contribute significantly to UK pension schemes (The HP scheme was OK I put in the minimum 1% because they put in 5% if I did) and I can shift to a SIPP at the end (it is not protected rights). But even my SIPP is now in cash only.

Downsizing should also protect me against exchange rate movement (also a big enemy). I can downsize the UK or Bangkok property dependent on the situation.

pkrv

I retired when I was 5o and have never regretted it for a minute. That by the way was over 24 years ago so I'm getting the hang of it.

Part of my philosophy when quitting was to live whatever life style was required for my principle to grow a minimum of 10% a year and typically we did better than that. Since we spent a great deal of time traveling I did not want a investment that would require regular monitoring. So most of our money has been into Bank term deposits and bonds. My favorite was a 10 year bond with Citibank at 15%.

Also have done fairly well on the property we have owned. I must admit it was rarely bought as a investment but because it was a place we wanted to live. A fair amount of that was in Australia.

I think diversification is typically beneficial and we have our money spread around a bit. New Zealand, Australia, Thailand and the US.

We are averaging a bit over 8% right now but I must admit I'm a bit concerned that inflation in LOS might exceed that. Playing with the idea of buying some property in the US since it appears to be a buyers market right now. Part of my problem with the US is the property tax can be brutal. The same for insurance. That is one of the really nice features of a condo in LOS, no property tax, very low (in comparison) association fees and reasonable insurance.

There are three things that I believe had a influence on our money growing. Don't buy anything you can't pay for (other than a house) in other words don't pay interest. Pay minimal taxes. And save at least 10% of your earnings. We found that each year the 10% grew and got easier, now we save in excess of half of our income.

But I'm to old a dog to learn new tricks so I'm staying away from the stock markets. That and staying away from investments that are time consuming or require regular tracking.

Good luck in your retirement pkrv. I'm sure you will enjoy it and most likely prosper while doing it. Don't wait to long, it is fun.