If You Had 25m Baht How Would You Invest It?

[sokal]

Based on your requirements,

- Capital growth

- Moderate income

- You want minimal time managing investments

- Living in Thailand, with family

- No other income

Then I'd recommend to be as much as 80% in Thai Equities.

:D

that's another buying signal for me.............

[womble]

80% in a single emerging market is just slightly too much risk than I can handle...........

[womble]

Ok so here's another option, my wife is against it, but it may well be the best solution as it will get me the income I need. There is the option to retain 25% or perhaps a slightly smaller or bigger amount of the business, the choice is mine really. It'll be a bit weird being a minority shareholder in a business that I built and set up from scratch, "My Baby".

But it is a business that has great prospects for the future and as it is tourism related and is profitable even through these turbulent times, i'm pretty sure it'll become even more profitable as this sector recovers.

So instead of trying to research Thai stocks which I know nothing about to gain dividends, why not retain a small part of my own business which I know inside out and take my income from the monthly dividends gained from the profits of something I will have some control over.

Does anyone have experiance in selling out the majority of their own company and retaining a minority stake. Would be interested in peoples views on this option.

[russianrobert]

Ok so here's another option, my wife is against it, but it may well be the best solution as it will get me the income I need. There is the option to retain 25% or perhaps a slightly smaller or bigger amount of the business, the choice is mine really. It'll be a bit weird being a minority shareholder in a business that I built and set up from scratch, "My Baby".

But it is a business that has great prospects for the future and as it is tourism related and is profitable even through these turbulent times, i'm pretty sure it'll become even more profitable as this sector recovers.

So instead of trying to research Thai stocks which I know nothing about to gain dividends, why not retain a small part of my own business which I know inside out and take my income from the monthly dividends gained from the profits of something I will have some control over.

Does anyone have experiance in selling out the majority of their own company and retaining a minority stake. Would be interested in peoples views on this option.

If you built a successfull company from scratch it would be safe to assume you are an expert in that field.

From what you have said you are obviously selling the business with the added benefit of good growth prospects going forward. If so, as well as retaining a minority share holding (with small % of the profits)you might be able to also negotiate yourself a lesser role (fewer hours) as consultant on a salary/results basis.

[Abrak]

Ok so here's another option, my wife is against it, but it may well be the best solution as it will get me the income I need. There is the option to retain 25% or perhaps a slightly smaller or bigger amount of the business, the choice is mine really. It'll be a bit weird being a minority shareholder in a business that I built and set up from scratch, "My Baby".

But it is a business that has great prospects for the future and as it is tourism related and is profitable even through these turbulent times, i'm pretty sure it'll become even more profitable as this sector recovers.

So instead of trying to research Thai stocks which I know nothing about to gain dividends, why not retain a small part of my own business which I know inside out and take my income from the monthly dividends gained from the profits of something I will have some control over.

Does anyone have experiance in selling out the majority of their own company and retaining a minority stake. Would be interested in peoples views on this option.

I certainly do and my advice is don't do it. You built your business you know how it should be run and there is a fair chance the new owner will screw it up with out you having a word to say. So unless you are really confident the new owner will add a lot of value take your money and run. Ultimately 25% of something can be worth next to nothing. And you will find my guess is that there is nothing worse than ownership without control unless you have complete faith in the new owners

you say you don't know how to value a company. is that really true-?

[Bemused]

Whatever you do dont bring more than a couple of million baht into Thailand. Thailand is an investment black hole and you will never get the money out again.

I think also you need to accept that 25 million aint really enough to generate 100k a month (and have the income keep pace with rising prices). Put the money into lots of different things - paricularly spread it across different types of assets.

You are better off finding something you enjoy doing and spend part or all of your year earning. Doing nothing in Thailand gets really boring after a while and you just spend all your time getting wasted.

I have cash from investments, but I also spend time in the UK working. The contrast makes me enjoy my time in thailand more, and it keeps me financially on an even keel.

PS. I was thinking about buying in Bangkok and decided against it because of the global warming issue. Even on the conservative estimates rising sea levels will massively increase the flood risks for the whole delta, and within 20 years the impact may be castastrophic. Bangkok appears to be much more vulnerable than other major coastal cities like London, Hong Kong etc. Climate change is something everybody needs to factor in when making investment decisions.

Edited October 27, 2009 by Bemused

[sokal]

Ok so here's another option, my wife is against it, but it may well be the best solution as it will get me the income I need. There is the option to retain 25% or perhaps a slightly smaller or bigger amount of the business, the choice is mine really. It'll be a bit weird being a minority shareholder in a business that I built and set up from scratch, "My Baby".

But it is a business that has great prospects for the future and as it is tourism related and is profitable even through these turbulent times, i'm pretty sure it'll become even more profitable as this sector recovers.

So instead of trying to research Thai stocks which I know nothing about to gain dividends, why not retain a small part of my own business which I know inside out and take my income from the monthly dividends gained from the profits of something I will have some control over.

Does anyone have experiance in selling out the majority of their own company and retaining a minority stake. Would be interested in peoples views on this option.

Why be so affraid of dividends ? It doesnt matter what the actual price of the stock does because you will never sell. Companies cut jobs before they cut dividends. Dividends are taxed favorably and they also adjust for inflation.

Starting your own business sucks, I would never ever do it. Pain in the as$ even if it works out.

[Naam]

Why be so affraid of dividends ? It doesnt matter what the actual price of the stock does because you will never sell. Companies cut jobs before they cut dividends.

[Naam]

Dividends are taxed favorably and they also adjust for inflation.

:D

[Time Traveller]

80% in a single emerging market is just slightly too much risk than I can handle...........

Sure, now that you mention country risk. However, if your entire income before was from the business then it's obvious country risk was something that you didn't care about. There are other reasons for such a high allocation also.

Firstly, for cases where people want a stable income then most of a portfolio invested in that persons home market is preferably. In this case home is Thailand. This will avoid most swings in income due to exchange rates.

Secondly, if country diversification was important then it would simply not be possible to get the income that he wants. Can you name one internationally diversified equity or bond fund at the moment that yields (i.e. pays out dividends) more than 3.5% after management takes out their fees? Junk bonds perhaps?

Thirdly, while many of the leading stocks in Thailand carry high country risk (e.g. Telecom or bank stocks), there are several top companies that I would say have very little Thailand country risk. Let me explain. While some companies are listed in Thailand, most of their business is out side of the country and/or have very little Thai regulation that they need to navigate. What I would call international companies rather than simply Thai companies. Without looking further I can think of two. One is TTA which is in fact a holding company for various shipping and offshore services. Most of it's subsidiary companies are registered in other countries and the nature of the business is tied to global trade. Simply put, if the country became difficult for business, this company could easily shift to another jurisdiction and become a registered entity there. BANPU is another company I can think of also, which has significant stakes in coal mining and electricity generation in countries outside of Thailand. The point is just because companies are listed in one jurisdiction does not imply that they carry that country risk also. (e.g. Thai Beverages is listed in Singapore but it's country risk is elsewhere)

Edited October 28, 2009 by Time Traveller

[Abrak]

Based on your requirements,

- Capital growth

- Moderate income

- You want minimal time managing investments

- Living in Thailand, with family

- No other income

Then I'd recommend to be as much as 80% in Thai Equities. You can easily find stock with yields of 5% or more in the Set (even before including tax credits). There's no worry then about currency risk, you don't need to be working 10hrs a day as you would in a business or worried about trying to rent out property. Secondly, most Thai companies pay dividends with tax credits. This is important in your case as a Thai resident with no other income (salary) and especially with a family, you're going to get a good tax return at the end of the year also.

So with 20m bt invested you will easily get an income of about 100k per month while meeting other requirements.

There is some good guys out there to look for SET equities too. Marc Faber and Peter Schiff follow the SET closely.

But seriously don't let that put you off.

[womble]

80% in a single emerging market is just slightly too much risk than I can handle...........

Sure, now that you mention country risk. However, if your entire income before was from the business then it's obvious country risk was something that you didn't care about. There are other reasons for such a high allocation also.

Firstly, for cases where people want a stable income then most of a portfolio invested in that persons home market is preferably. In this case home is Thailand. This will avoid most swings in income due to exchange rates.

Secondly, if country diversification was important then it would simply not be possible to get the income that he wants. Can you name one internationally diversified equity or bond fund at the moment that yields (i.e. pays out dividends) more than 3.5% after management takes out their fees? Junk bonds perhaps?

Thirdly, while many of the leading stocks in Thailand carry high country risk (e.g. Telecom or bank stocks), there are several top companies that I would say have very little Thailand country risk. Let me explain. While some companies are listed in Thailand, most of their business is out side of the country and/or have very little Thai regulation that they need to navigate. What I would call international companies rather than simply Thai companies. Without looking further I can think of two. One is TTA which is in fact a holding company for various shipping and offshore services. Most of it's subsidiary companies are registered in other countries and the nature of the business is tied to global trade. Simply put, if the country became difficult for business, this company could easily shift to another jurisdiction and become a registered entity there. BANPU is another company I can think of also, which has significant stakes in coal mining and electricity generation in countries outside of Thailand. The point is just because companies are listed in one jurisdiction does not imply that they carry that country risk also. (e.g. Thai Beverages is listed in Singapore but it's country risk is elsewhere)

I started off with 5m baht. It's dam_n hard to build a decent business in my sector for that amount, many struggle on double or tripple that budget. So it was basically an all or nothing type business. I really believed in the product, designed the place myself and 6 years later it's still going strong. I think now is the right time to cash in tho. I'm young enough that I can retire for a few years and watch the kids grow up, then when something takes my fancy i'm sure i'll end up doing something else.

People that work for themselves, particulary those happy to work all hours of the day and night, and take the job home. The seldom stay retired for ever.

I think I may fit into this catagory. My dad does, he's been a millionaire and lost it all three times over, he's now 65, and his health isn't what it was, so maybe he made and lost his last million......

[sokal]

Dividends are taxed favorably and they also adjust for inflation.

:D

This is from the Shell site. Look at the chart, its proof.

Dividend Information - Royal Dutch Shell plc

In setting the level of the dividend, the Royal Dutch Shell Board will seek to increase dividends at least in line with inflation for global, developed economies over time.

Year Interim Final Total

2004 0.90 1.33 2.23

2003 0.85 1.21 2.06

2002 0.70 1.10 1.80

2001 0.61 0.88 1.50

2000 0.60 0.80 1.40

1999 0.70 0.77 1.47

1998 0.71 0.89 1.60

1997 0.65 0.90 1.55

1996 0.63 0.82 1.45

1995 0.59 0.81 1.40

1994 0.55 0.78 1.33

1993 0.51 0.67 1.18

[Naam]

"Dividends are taxed favorably"

who thinks of taxes when living in Thailand having the investment offshore?

2000 0.60 0.80 1.40

1999 0.70 0.77 1.47

1998 0.71 0.89 1.60

1997 0.65 0.90 1.55

1996 0.63 0.82 1.45

1995 0.59 0.81 1.40

six years of inflation, "adjustment of dividend" = zero, nada, zilch, niente, rien, muffat, mafeesh, nichts!

[sokal]

"Dividends are taxed favorably"

who thinks of taxes when living in Thailand having the investment offshore?

2000 0.60 0.80 1.40

1999 0.70 0.77 1.47

1998 0.71 0.89 1.60

1997 0.65 0.90 1.55

1996 0.63 0.82 1.45

1995 0.59 0.81 1.40

six years of inflation, "adjustment of dividend" = zero, nada, zilch, niente, rien, muffat, mafeesh, nichts!

What was the price of oil then ?

10 dollars ?

[flying]

I think now is the right time to cash in tho. I'm young enough that I can retire for a few years and watch the kids grow up, then when something takes my fancy i'm sure i'll end up doing something else.

Now that sounds like living to me

[Naam]

"Dividends are taxed favorably"

who thinks of taxes when living in Thailand having the investment offshore?

2000 0.60 0.80 1.40

1999 0.70 0.77 1.47

1998 0.71 0.89 1.60

1997 0.65 0.90 1.55

1996 0.63 0.82 1.45

1995 0.59 0.81 1.40

six years of inflation, "adjustment of dividend" = zero, nada, zilch, niente, rien, muffat, mafeesh, nichts!

What was the price of oil then ? 10 dollars ?

who cares what the price of oil or any commodity was? we are talking about inflation and company dividends. nobody knows how commodity prices or consumer demand affects the profit and therefore the dividends of any corporation. claims like "dividends adjust for inflation" are simply nonsense. period!

question: why do you keep on shooting your own foot with most of your claims over and over? Austrian School of Economics?

[sokal]

"Dividends are taxed favorably"

who thinks of taxes when living in Thailand having the investment offshore?

2000 0.60 0.80 1.40

1999 0.70 0.77 1.47

1998 0.71 0.89 1.60

1997 0.65 0.90 1.55

1996 0.63 0.82 1.45

1995 0.59 0.81 1.40

six years of inflation, "adjustment of dividend" = zero, nada, zilch, niente, rien, muffat, mafeesh, nichts!

What was the price of oil then ? 10 dollars ?

who cares what the price of oil or any commodity was? we are talking about inflation and company dividends. nobody knows how commodity prices or consumer demand affects the profit and therefore the dividends of any corporation. claims like "dividends adjust for inflation" are simply nonsense. period!

question: why do you keep on shooting your own foot with most of your claims over and over? Austrian School of Economics?

I just proved to you that Shell does index for inflation. Period. You dont need to index for inflation if it does not exist.

[Naam]

I just proved to you that Shell does index for inflation. Period. You dont need to index for inflation if it does not exist.

the only thing you proved is that you have problems to understand a simple english sentence.

quote: "In setting the level of the dividend, the Royal Dutch Shell Board will seek to increase dividends at least in line with inflation for global, developed economies over time.

none of this has any bearing to the OP's question what to do with 25 million Baht and your advice to buy shares because "Dividends are taxed favorably and they also adjust for inflation".

[recall] the OP lives according to his posting in Thailand and has no plans to move to a country with a "developed economy" and spend his 25 million Baht buying Royal Dutch Shell shares because [repeat] its board will seek... bla-bla-bla over time bla-bla-bla.

case closed, next!

[Abrak]

The claim that Shell increases its dividends in line with inflation (when it can afford to) is no great shakes. Since 1990 the dividend on the S&P 500 increased from around US$12 to US$28 in 1998 (it has since slipped back to about US$22). The GDP deflator over the period was about 55% so dividend growth has easily outstripped inflation in the past.

In fact if you go back 130 years you will find that on average dividend growth has outstripped inflation by a little over 1% per annum. BTW this is hardly that surprising as profits tend to rise in line with nominal GDP which in general shows some real growth.

[Time Traveller]

Naam, will all due respect. There is only one school of Economics. That is the Austrian. Everything else is Econostrology.

Edited October 29, 2009 by Time Traveller

[Abrak]

Naam, will all due respect. There is only one school of Economics. That is the Austrian. Everything else is Econostrology.

Really? Possibly right. Most other economic theories made it passed 'school' to at least university.

[Time Traveller]

"Dividends are taxed favorably"

who thinks of taxes when living in Thailand having the investment offshore?

Sure, but if the investment is in Thailand is would depend on each individual situation. If you're looking at 100k per month with no other Thai income, then it makes sense for such investments to be in Thailand and not registered "offshore".

A non-thai domiciled tax payer will be worse off until the individuals personal income tax rate goes above the with holding tax rate. Which is very roughly around 1 mill baht,

Also I may be mistaken on this but I believe any BOI income is tax free only for thai tax residents. Foreign entities (included the offshore family trust) are still liable for with holding tax.

[Time Traveller]

Naam, will all due respect. There is only one school of Economics. That is the Austrian. Everything else is Econostrology.

Really? Possibly right. Most other economic theories made it passed 'school' to at least university.

Yes you'll find plenty of Phd's in central banks and those troubled US banking giants. Seems such a waste of money if after all that study they've still managed to completely bring their institution or economy to the brink of disaster. And Alan Greenspan, the hero for econostrologers and money debasers everywhere.

[Abrak]

Yes you'll find plenty of Phd's in central banks and those troubled US banking giants. Seems such a waste of money if after all that study they've still managed to completely bring their institution or economy to the brink of disaster. And Alan Greenspan, the hero for econostrologers and money debasers everywhere.

Yes well economists disagree. I mean Krugman was warning in 2002 that Greenspan was creating a property bubble to fuel consumption growth that would inevitably end in tears. And Sokal, our other 'Austrian', believes he's a 'retard'. You see to me the thing that Austrians dont get is that economic equations are not linnear. The value of 'x' is dependent on the value of 'y'. As such there is really no reason to believe that a market will even trend towards equilibrium and in certain cases can generate self reinforcing disequilibrium. Which is why two very bright economists can look at the same equation and come up with wildly different solutions. All this makes laissez faire a bit of nonsense.

Anyway you cant base the validity of one theory solely on the weakness of another. As far as I can tell Austrians fall into two camps 1) we are doomed to hyperinflation (not that helpful) or 2) we need a large bout of 'creative destruction' for which I can only see the destruction and have no idea where the creation will come from.

[Naam]

Naam, will all due respect. There is only one school of Economics. That is the Austrian. Everything else is Econostrology.

basically i have nothing against any School of Economics although i look at the Austrian one with some suspicion concerning the subjects taught.

reason: TV-member Sokal who claims he "is from the Austrian School", says fiat money is all shit², only gold is the real thing. but then he turns around and airs intentions to buy SET stocks (once they are cheaper) and advises others to invest in stocks because

. what he must have also learned is calling anybody, who does not perform according to his liking, e.g. Bernanke, Geithner et al, idiots and reserves for TV-members the finer titles such as "son of a bitch" and "sucker".

does the Austrian School of Economics really teach that?

[aussiebebe]

Just wondering, to the OP Womble - how did you do so well in business over 8 years in Thailand? You started with 5MTB and now have 25MTB - all while living in Thailand. What's your business?

[ricklee]

So obviously I know Thai Visa isn't the best place for economic advice, but it looks like i've sold my business, so have around 25m baht to invest somehow.

Being relatively young, 32, i'd rather have modest income and a higher capitol growth. I wish to stay in Thailand and already have several of my own ideas, but in these tricky economic times was just wondering what other members would do to achieve the goals i'm after with such a sum.

I do not wish to work, just invest it somehow that will bring in enough each month to live, maybe 100k or so, i'm mainly concerned with longterm growth of the original investment.

Take it to Vietnam and invest there. Better opportunity for the long hall and easier to do business

Good growth in Vietnam but it's a dicey country. If anyone's cooking the books you can be sure they are. I have a Vietnam ETF but I didn't bet the farm on it. I used to live there. I've seen how they run things. Still, it's worth a play.

[womble]

It was a bar. But very very different to other models found here, infact at the time when it was built there was nothing else even remotely like it. Now there are several.

[hhgz]

"I do not wish to work, just invest it somehow that will bring in enough each month to live, maybe 100k or so, i'm mainly concerned with longterm growth of the original investment."

Have you ever considered speaking to a professional investment advisor, rather than a bunch of strangers on the internet?