Investing Monthly Savings

[GarryP]

I wonder if any of you experts could give me some pointers/suggestions.

Starting next year I intend to save Baht 60,000 a month. My monthly savings will never dip below this figure but may be higher from time to time. Putting my money in a bank account does not seem to be a good idea as the interest earning potential is very low (much lower than the rate of inflation). Of the local banks, the best interest rates seem to be 0.85% which is terrible.

I am willing to have the money tied up for 8 to 10 years but no longer, but I will only be making monthly savings payments for 8 years. I do not wish to withdraw any interest during such period but allow the interest to compound (not sure if that is the correct term). LTFs seem interesting but to be honest I have never invested before in my life. I always banked my money. As for trading shares/stocks, again, I know very little and have no idea about trends. I also have serious concerns about some of those companies that claim to invest your money and take a share of the interest earned. Worried that they would just take off or close down overnight. However, I would contemplate going with one of the larger firms such as Nomura, ING.

What would you suggest I do with my money (apart from give it to you ) to get a decent return? What sort of interest earnings are we talking about?

Any pointers would be greatly appreciated, even if the suggestions is to speak to a professional.

[flying]

Speak with my two professionals....

Just kidding as I would never presume to advise anyone

[PattayaParent]

The problem with most 'professionals' is that they will steer you towards the invetments where they make the most front end commission which can be from 4% to 7% of your investment.

[SiamRose]

This thread may be useful to you. It discusses investing for beginners and has some useful book recommendations.

http://www.thaivisa.com/forum/topic/371249-thai-stocks-for-mid-to-long-term-investors/page__st__325

I would suggest that learning how to invest yourself is better than going to "advisors" who just want a slice of your hard earned money, and it isn't too difficult. Good luck.

[GarryP]

Thanks for you suggestions/inout, including investing in body art .

[millionair]

i myself i am looking for investments but so far no strong plan,but however i have started buying gold every month.

as per my thinking it will not take a sudden jump,but it wont crash either.

Edited October 29, 2010 by millionair

[GarryP]

I had about 10 Bahts weight in gold a few years ago but ended up selling it. That was when the price of gold was 7k/Baht. It is now well over twice that price and I am kicking myself for not holding on to it. Do you think gold is going to rise much more than the current rate?

[aurelius]

Long Term Equity Funds have a tax benefit which you may be eligible for if you are earning income and paying tax in Thailand. The max investment is 15% of income and not to exceed 500,000bt per calendar year. The investment is then held for 5 years (can be redeemed earlier but all sorts of penalties apply, including repaying the tax benefit). You can minimise the 5 years by buying on the last day of December and selling as soon as possible in the 5th year, which effectively means you can reduce the holding period to 3 years (plus a few days) if you so want. LTF's come in a variety of risk shades from low risk bonds through to 75% or more Thai equity allocations. The RMF is similar but requires being held to 55 years old, - it offers an additional 500k tax break and likewise caters for a range of investment risk profiles. You can buy both these products on a monthly basis via internet, so once you have done the initial set up you basically don't have to touch it. If your company is paying your income tax, you need to file a tax receipt by feb/march period to claim the benefit - the asset mgmt company will send you receipts of the amount that you have bought. There are some options to switch between funds - say you bought KAsset xx fund and then decided to switch to BBLam YY fund, you can do that without incurring tax penalties (there may be switching fees). All investments are subject to etc ad nauseum.

The key question you didn't answer is whether you can afford to lose the money and how important it would be to "sell" if the market started losing value - this would help you determine the appropriate risk profile for you.

All the main banks have licensed Investor Contact staff at their main branches. If you can find someone who speaks English they will most likely be happy to go through the options for you, but you may need to insist on not just getting the hot product of the month. Also check out the mutual fund info on the bank websites. There is a SET in the City event coming up in Nov (~20th or so) at Paragon, this will have all the major banks and asset management companies represented & may be a good time to go shopping.

[antony77]

Put it in an A$ deposit a/c about 6%%.

[Time Traveller]

IF your time horizon is 8 to 10yrs, I would say equities or at least 75% equities. Secondly if you are working in Thailand then the best option available to you is LTF (Long term equity fund). Judging from the amount that you can save each month it sounds like your income is above 1.5m bt per year and so into the 30% tax bracket at least. By investing up to the maximum into an LTF fund you essentially can deduct this amount off your assessable income at tax time. Hence for taxpayers in the 30% bracket you will get a refund of 30% of your LTF investment when you do you tax. (i.e the 30% tax rate that you paid through you income on income >1million baht will be returned).

So effectively if your marginal tax bracket is 30% your first yr return on LTF is 30% (from tax deduction) and the actual capital (100%) is still invested like in a normal fund except you can't actually access the money again for 5 callendar years without losing the tax benefits.

And if you're in the 37% tax bracket the return is even better. But for other people in the low tax bracket or not in work, LTF's are not really recommended since you have no tax benefit, hence they become just like any other fund.

BTW, LTF fees are mostly quite low e.g less than 1% management fee for an index based LTF, to about 2% for an actively managed fund. Generally these have no front end commissions and you can just walk into a fund office or bank and ask for documents there.

[danbradster]

Put it in an A$ deposit a/c about 6%%.

Those rates are not fixed, am I right? They can drop to .25% should things change.

Interest rates in Australia are increasing, not falling to 0.25% any time soon. Or you could get a term deposit, locked in ~6%PA for 1-10 years. Australia is in a mining boom with falling unemployment at ~5%.

I live in Australia at the moment, but I invest in self-picked shares. I focus mainly on small/medium-caps which I believe will have far superior growth to large-caps or term deposits. I am young though, so I can take more risk.

Many property trusts and infrastucture shares pay out 5-15% dividend yield. You'll have to decide on your own how safe they are.

[GarryP]

Thank you all for your input. In answer to one of your questions, I cannot afford to lose the money, but realize that some risk is involved. As to risk, I would not go with high risk but would at least like to earn interest which is equal to or higher than inflation. Sitting in a bank, is, thus, not really an option. You are losing money in the long term.

I am working in Thailand so the tax benefits of an LTF are definitely worth considering.