Investment For Life In Thailand

[Virretk]

Hi, Im new here, and new to what Im about to ask.

I planning to settle in thailand, maybe in 5 years. Whats the smartest way to invest my money, to not loose purshasing power ?

Thanks

Victor

[wasabi]

Short Everything, ride it to 0. The end of days is near.

[nong38]

Stock markets around the worls dived yesterday, the world is a volatile place, what was good advice earlier this week is not good today. Interest rates remain poor, property prices are deflated. Anything showing a good return is risky. Thyings are not good, you have 5 years to wait then wait and play it safe for the time being, a small return guranteed is better than losing the lot, f you are a chess player, move a pawn.

[Morden]

Get a girlfriend or wife, get to know her family really well, buy some land, build a house, buy a pick up. Within five years you'll not have to worry about investments.

If the weather in 2012 looks a bit dodgy, spend the lot as quickly as you can.

Joking of course. There is no safe way to invest your money these days. Keep it safe and make it last when you need to use it.

[bushwacker]

Seems like a question that is so general and lacking of any detail, so there is no way you can possibly get a good answer!

[Nawtier]

In a wrod...or 2 actually..........two up.

[maprao]

Get a girlfriend or wife, get to know her family really well, buy some land, build a house, buy a pick up. Within five years you'll not have to worry about investments.

If the weather in 2012 looks a bit dodgy, spend the lot as quickly as you can.

Joking of course. There is no safe way to invest your money these days. Keep it safe and make it last when you need to use it.

Got all of these and still loads of lolly!

Maybe I need a couple of BG Mia Noi that should do the trick!

On a serious note the poster should invest all his money in a bar in patters safe as anywhere else nowadays!

[nong38]

On a serious note!! A bar in Patters is the last place to invest, so manyup for sale and not the customers, you will be at the mercy of the locals who know the business a lot better than you. Be very very cautious with your money, you could be easliy parted and by the sound of it it might be to late in life to do it all again. Its your choice whilst you still have it.

[AyG]

In one word: diversify.

You can't predict which markets will do well, so spread your investments between equities, bonds, absolute return/hedge fund vehicles, money markets, property/real estate, commodities. However, do bias your investments towards SE Asia since it's more important to track that economy than any other, given that that's where your future liabilities will be. To achieve diversification (unless you're very, very wealthy) use collective investments such as investment trusts, unit trusts, OEICS, mutual funds and/or ETFs.

In a few more words: diversify and keep charges low.

Fund managers are often happy to charge an initial 5% (sometimes more), plus an annual management charge of 1.5% or more, plus a 20% performance fee for less than challenging performance targets. To avoid these expensive charges use a discount broker and/or stick to ETFs; few fund managers beat benchmark/index performance after charges in any given year, and even fewer do so consistently over several years.

Also: monitor your investments periodically (say, every 12 months). Kick out the dogs. Rebalance to make sure that your investments continue to match your target asset allocation. Reinvest all income.

Invest offshore so that you don't pay any unnecessary tax. (Though if you're American, I think you're stuck with American tax, so this probably doesn't apply.)

A few don'ts: don't try and guess which markets will do well. The experts can't do it, and neither can you. Don't listen to advice on the latest trendy funds/investment classes; journalists (for the most part) just parrot what the fund management companies tell them, so you can end up buying what the fund manager wants to sell. (A classic example of this is the Blackrock UK Absolute Alpha fund - very heavily hyped, supposed to give good returns whatever the direction of the market, whilst in reality you'd have been better putting your money under the mattress for the last couple of years.)

Finally, if an investment sounds too good to be true, it's probably a fraud.

[maprao]

On a serious note!! A bar in Patters is the last place to invest, so manyup for sale and not the customers, you will be at the mercy of the locals who know the business a lot better than you. Be very very cautious with your money, you could be easliy parted and by the sound of it it might be to late in life to do it all again. Its your choice whilst you still have it.

Got all of these and still loads of lolly!

Maybe I need a couple of BG Mia Noi that should do the trick!

On a serious note the poster should invest all his money in a bar in patters safe as anywhere else nowadays!

Sarcasm. I keep forgetting this humour only works in the UK or with ex-Forces. It was a joke and should be read as such!As was my entire reply!

The last place to invest lol

Edited November 18, 2010 by maprao

[Naam]

i like everything you said AyG, except...

"monitor your investments periodically (say, every 12 months)".

my [not so] humble view is that even monitoring once a month is much too long a period. ideal is to follow investments daily.

:jap:

[AyG]

i like everything you said AyG, except...

"monitor your investments periodically (say, every 12 months)".

my [not so] humble view is that even monitoring once a month is much too long a period. ideal is to follow investments daily.

:jap:

Daily review is not a good thing in my opinion for a couple of reasons. If you review daily you're going to have a lot of days when the an investment has lost value, so you're going to feel bad much more often than if you review once a year, or once a month. This leads to a second problem which is to decide to switch investments too frequently. This adds to your investment costs, so reduces overall return.

If you're investing (as opposed to stock trading), then you should be following broad investment themes such as "emerging markets" or "financials" or "natural resources". These play out over years, not days, so there is no benefit in daily review.

I would add one caveat to that. It's useful to check frequently for fund manager moves, so that if a leading manager leaves and is replaced by someone with a lesser track record, then you should switch pronto.

[Naam]

i like everything you said AyG, except...

"monitor your investments periodically (say, every 12 months)".

my [not so] humble view is that even monitoring once a month is much too long a period. ideal is to follow investments daily.

:jap:

Daily review is not a good thing in my opinion for a couple of reasons. If you review daily you're going to have a lot of days when the an investment has lost value, so you're going to feel bad much more often than if you review once a year, or once a month. This leads to a second problem which is to decide to switch investments too frequently. This adds to your investment costs, so reduces overall return.

If you're investing (as opposed to stock trading), then you should be following broad investment themes such as "emerging markets" or "financials" or "natural resources". These play out over years, not days, so there is no benefit in daily review.

I would add one caveat to that. It's useful to check frequently for fund manager moves, so that if a leading manager leaves and is replaced by someone with a lesser track record, then you should switch pronto.

to each his own. since 21 years i follow my investments not daily but several times daily (except when i'm travelling). but then i am an active investor who considers investing not only as means to achieve above market yields but also an interesting hobby.

not even in my wildest dreams i considered to leave any of my hard earned money in the hands of a fund manager or (YUCK²) a broker to be handled by them.

[ExpatJ]

i like everything you said AyG, except...

"monitor your investments periodically (say, every 12 months)".

my [not so] humble view is that even monitoring once a month is much too long a period. ideal is to follow investments daily.

:jap:

I agree, every 12 months way too long. Though it does depend on the investors time frame- if you invest now intending to retire in 10-20 years time- then checking 1 time per year would be fine i suppose. For a shorter time period it would be important to review regularly particularly when you begin see news stories about economic problems!

[SantiSuk]

I'm more on the Naam side. I reprice the total of my investments daily (from portfolio engines available free on the web) and briefly scan individual share price movements. I look more closely at individual price movements monthly. But then, like Naam (I assume form what he posts) I have a lot. I check into Bloomberg or CNBC over cups of coffee when I'm around the house. For the average investor - not the average person - with say $50,000 to $100,000 in investments and most of their wealth in property that's too much hassle. I reckon I spend an average of a couple of hours a day on investments (though I trade maybe only once a month) and since I look after my aunt's and father's money also I am a mini fund manager in my own right.

Agree with Naam, if you can afford the time to DIY, never touch paid advisers with a barge pole. I would far sooner put my money in a basket of investment funds that track a broad variety of indices.

I have not got into investing Thailand yet, other than Aberdeen New Thai Investment Trust - a UK closed ended fund that is a useful hedge against the UK/baht exchange rate if you are funding a Thai existence out of falangland earnings/savings. I intend to put say 20% of my wealth into Thailand in one form or another over the next few years though. Yes there are risks, but they are balanced by the risks of investing your money in post-industrial decline economies like the US and UK with sinking exchange rates.

Edited November 19, 2010 by SantiSuk

[fletchsmile]

Question: "I am planning to settle in thailand, maybe in 5 years. Whats the smartest way to invest my money, to not loose purshasing power ?"

Answer: A vasectomy. Costs around THB 10k. Kids in Thailand can seriously damage your purchasing power. Also lasts for a lifetime and likely to pay for itself a hundred times over.

Fringe benefits: If and when you fall for a lovely local lady, it removes any doubt you may have as to whether the kids are yours or not.

It is also fully portable and you can take it wherever you go, providing multi-currency benefits

Should you end up getting divorced your wife (hopefully)can't take half of it either

No investment is perfect though and it doesn't hedge against angry wives and farmyard ducks...

Edited November 19, 2010 by fletchsmile

[mitsubishi]

Short Everything, ride it to 0. The end of days is near.

Bold words but possibly wise ones given the worlds direction....

[rgs2001uk]

I'm more on the Naam side. I reprice the total of my investments daily (from portfolio engines available free on the web) and briefly scan individual share price movements. I look more closely at individual price movements monthly. But then, like Naam (I assume form what he posts) I have a lot. I check into Bloomberg or CNBC over cups of coffee when I'm around the house. For the average investor - not the average person - with say $50,000 to $100,000 in investments and most of their wealth in property that's too much hassle. I reckon I spend an average of a couple of hours a day on investments (though I trade maybe only once a month) and since I look after my aunt's and father's money also I am a mini fund manager in my own right.

Agree with Naam, if you can afford the time to DIY, never touch paid advisers with a barge pole. I would far sooner put my money in a basket of investment funds that track a broad variety of indices.

I have not got into investing Thailand yet, other than Aberdeen New Thai Investment Trust - a UK closed ended fund that is a useful hedge against the UK/baht exchange rate if you are funding a Thai existence out of falangland earnings/savings. I intend to put say 20% of my wealth into Thailand in one form or another over the next few years though. Yes there are risks, but they are balanced by the risks of investing your money in post-industrial decline economies like the US and UK with sinking exchange rates.

Some interesting points.

First, you had better know what you are doing.

Secondly, do you have the time to spend each day watching markets.

When to sell and what to do with any cash generated.

I keep myself aware of news that affect my holdings, wonder how many off loaded Gartmore recently.

Individual shares I pay attention to, sold Rio Tinto sold for almost double then bought them back again, also bought more BP shares.

The problem I have is ensuring that who ever comes after me is able to understand what I have done and what the strategy is.

Amongst my portfolio I have 8 Investment Trusts and 20 indivdual company shares, thats about all I can manage, and I am considering slimming down to something more manageable.

[ExpatJ]

Investing in stocks takes some upfront work- i spent probably 2 full days in January this year researching and selecting 20 solid, growth, blue chip type Thai stocks. Since then i just use technical analysis/charts to determine exactly when to buy in or sell stocks from this list. (Technical analysis charts are free on bloomberg.com and it takes only a minute or so to review a stock's chart to see if there is a buy/sell signal- if you know what you are looking for). I have had a 45% return since January (though given the massive bull market in Thailand that's not as amazing as it sounds really).

Investing in gold is very low maintenance- buy some bars/coins- stick them in a safe, come back in 1- 10 years.

Mutual funds also easy to manage.

[AyG]

Investing in gold is very low maintenance- buy some bars/coins- stick them in a safe, come back in 1- 10 years.

There's no such thing as "investing in gold" - it's all speculation.

In 1980 the prices was about $650/oz.

The price then fell, bottoming out at under $300/oz.

It eventually regained $650/oz in 2007.

You'd have had to wait for more than a quarter of a century to make any gain on your so-called "investment". And for that whole period inflation would have been eating away at its value.

In short, as an investment, gold is worthless.

[ExpatJ]

Investing in gold is very low maintenance- buy some bars/coins- stick them in a safe, come back in 1- 10 years.

There's no such thing as "investing in gold" - it's all speculation.

In 1980 the prices was about $650/oz.

The price then fell, bottoming out at under $300/oz.

It eventually regained $650/oz in 2007.

You'd have had to wait for more than a quarter of a century to make any gain on your so-called "investment". And for that whole period inflation would have been eating away at its value.

In short, as an investment, gold is worthless.

Gold has outperformed the S & P stock index by 500% in the last 10 years and gold has increased @25% in last few months. Add to that the increased market volatility (which increases gold prices) plus the quantitative easing in the US and gold= a great investment right now. But perhaps you know of other investments that have returned 25% in a year??

The alternatives are money sitting in a bank savings account which means in 5 years , because of inflation and low interest rates, you will actually have less money in real terms than you do now. Or stock markets- these have actually been excellent in last few months with alot of money made, but now because of ireland and euro crisis need to be careful with equities.

Out of curiosity, what is your investment portfolio?

[Naam]

The alternatives are money sitting in a bank savings account which means in 5 years , because of inflation and low interest rates...

i read and have been told that 'investors' do indeed exist who practise in the present environment that kind of low interest rate/lock-in long term investment but i never met a single one. would like to know what they look like.

p.s. i have also been told that investors exist who invest in high yield currencies but short term maturities which provide adequate yields or in currencies which pay hardly any interest but generate yield via appreciation.

[AyG]

Gold has outperformed the S & P stock index by 500% in the last 10 years and gold has increased @25% in last few months. Add to that the increased market volatility (which increases gold prices) plus the quantitative easing in the US and gold= a great investment right now. But perhaps you know of other investments that have returned 25% in a year??

The alternatives are money sitting in a bank savings account which means in 5 years , because of inflation and low interest rates, you will actually have less money in real terms than you do now. Or stock markets- these have actually been excellent in last few months with alot of money made, but now because of ireland and euro crisis need to be careful with equities.

Out of curiosity, what is your investment portfolio?

An increase of 25% in a few months isn't the sign of a good investment - it's the sign of a bubble - particularly if the investment's value is solely based upon what someone is willing to pay for it. It's rather like the Dutch tulip bulb bubble, which eventually burst. (Actually, tulip bulbs may be a better investment than gold, because you can grow them and increase their numbers.)

For any investment that doesn't produce an income its value is solely based upon sentiment, and sentiment can change quickly and unpredictably. To me, it's then not an investment.

As for investments that have increased a lot recently, the following investment trusts have done pretty well since the start of the year:

Treveira - up 103%

Aberdeen Asia Sm. Cos. - up 61%

Henderson Private Equity - up 71%

City Natural Resources - up 56%

(There are other investment trusts that have done better, and many that have done worse. I only selected these because I hold them.)

If you're not a fan of active management, then ETFs show good performance too:

ETFS Palladium - up 72%

ETFS Silver - up 62%

ETFS Cotton - up 62%

And if you're happy to pay the charges for unit trusts/OEICS:

Allianz RCM Thailand - up 71%

MFM Slater Growth - up 71%

Alianz RCM Emerging Asia - up 50%

Smith & Williamson Global Gold - up 47%

Of course, past performance is no guide to future prospects.

Over this period Asian markets (particularly Thailand, Indonesia) have done very well, as have gold-related stocks and some commodities.

As for my personal investments, well, I spent most of my working career in investment banking so have a very jaded view of the industry and the abilities of most fund managers. But I also know that I'm not smarter than they are, so I know I can't time the markets or predict the future winners with any sort of reliability. I therefore focus my attentions on high level asset allocation. I also want diversification and low charges.

For equities, I mostly use ETFs and investment trusts, only using OEICS where I have a high level of confidence in the manager(s). I have a target asset allocation by geographical region, with about 60% of my equity investments in SE and E Asia and the balance elsewhere. - though I almost completely avoid investments in the USA since I think the American empire is in terminal decline, much like the Roman one all those centuries ago.

For property I use a mixture of investment trusts and unit trusts/OEICS which invest in physical property. (Funds that invest in property shares are too closely correlated with equity markets so don't provide diversification.) This is one area I feel that fund managers can add significant value.

For bonds I only use ETFs. The charges of other vehicles have too much of an impact on performance.

For commodities I only use ETFs again. This time it's because I don't believe fund managers can add significant value.

I don't invest in private equity. Historical data shows that the risk/return profile favours publicly quoted equities.

I don't invest in hedge funds or absolute return products. It's a market full of thieves, cheats and charlatans. I'm not going to hand over my money to someone I don't think fit to go out and buy me a sandwich at lunchtime.

I don't hold any individual shares (apart from investment trusts).

I never invest in leveraged ETFs. They're another con (based upon how they compound performance). There is also too much downside.

I think that just about covers it.

[Naam]

gold has increased @25% in last few months

for the record: measured in US Dollar gold price increase last six months was 13.3%, during the same period US Dollar lost 8.5% vs. Thai Baht. gold price increase measured in Thai Baht plus 4.8%, in Aussie Dollars minus 3.1%, in Swiss Francs minus 4.3%, in Singapore Dolllars plus 4.2%, in Kiwi Dollars minus 3%, British Pounds plus 2.2%.

[ExpatJ]

Gold has outperformed the S & P stock index by 500% in the last 10 years and gold has increased @25% in last few months. Add to that the increased market volatility (which increases gold prices) plus the quantitative easing in the US and gold= a great investment right now. But perhaps you know of other investments that have returned 25% in a year??

The alternatives are money sitting in a bank savings account which means in 5 years , because of inflation and low interest rates, you will actually have less money in real terms than you do now. Or stock markets- these have actually been excellent in last few months with alot of money made, but now because of ireland and euro crisis need to be careful with equities.

Out of curiosity, what is your investment portfolio?

An increase of 25% in a few months isn't the sign of a good investment - it's the sign of a bubble - particularly if the investment's value is solely based upon what someone is willing to pay for it. It's rather like the Dutch tulip bulb bubble, which eventually burst. (Actually, tulip bulbs may be a better investment than gold, because you can grow them and increase their numbers.)

For any investment that doesn't produce an income its value is solely based upon sentiment, and sentiment can change quickly and unpredictably. To me, it's then not an investment.

As for investments that have increased a lot recently, the following investment trusts have done pretty well since the start of the year:

Treveira - up 103%

Aberdeen Asia Sm. Cos. - up 61%

Henderson Private Equity - up 71%

City Natural Resources - up 56%

(There are other investment trusts that have done better, and many that have done worse. I only selected these because I hold them.)

If you're not a fan of active management, then ETFs show good performance too:

ETFS Palladium - up 72%

ETFS Silver - up 62%

ETFS Cotton - up 62%

And if you're happy to pay the charges for unit trusts/OEICS:

Allianz RCM Thailand - up 71%

MFM Slater Growth - up 71%

Alianz RCM Emerging Asia - up 50%

Smith & Williamson Global Gold - up 47%

Of course, past performance is no guide to future prospects.

Over this period Asian markets (particularly Thailand, Indonesia) have done very well, as have gold-related stocks and some commodities.

As for my personal investments, well, I spent most of my working career in investment banking so have a very jaded view of the industry and the abilities of most fund managers. But I also know that I'm not smarter than they are, so I know I can't time the markets or predict the future winners with any sort of reliability. I therefore focus my attentions on high level asset allocation. I also want diversification and low charges.

For equities, I mostly use ETFs and investment trusts, only using OEICS where I have a high level of confidence in the manager(s). I have a target asset allocation by geographical region, with about 60% of my equity investments in SE and E Asia and the balance elsewhere. - though I almost completely avoid investments in the USA since I think the American empire is in terminal decline, much like the Roman one all those centuries ago.

For property I use a mixture of investment trusts and unit trusts/OEICS which invest in physical property. (Funds that invest in property shares are too closely correlated with equity markets so don't provide diversification.) This is one area I feel that fund managers can add significant value.

For bonds I only use ETFs. The charges of other vehicles have too much of an impact on performance.

For commodities I only use ETFs again. This time it's because I don't believe fund managers can add significant value.

I don't invest in private equity. Historical data shows that the risk/return profile favours publicly quoted equities.

I don't invest in hedge funds or absolute return products. It's a market full of thieves, cheats and charlatans. I'm not going to hand over my money to someone I don't think fit to go out and buy me a sandwich at lunchtime.

I don't hold any individual shares (apart from investment trusts).

I never invest in leveraged ETFs. They're another con (based upon how they compound performance). There is also too much downside.

I think that just about covers it.

This is interesting- thanks for taking the time.

"For any investment that doesn't produce an income its value is solely based upon sentiment, and sentiment can change quickly and unpredictably. To me, it's then not an investment." Are you saying stocks prices are not driven by market sentiment???? ..

A 25% return in a few months is an excellent return- no matter how you spin it. Yes, its a bubble, but bubbles provide some of the greatest returns historically for savvy investors- i, Geroge Soros and a number of other big fund managers - think that the bubble has some expanding to do before it bursts. Same with emerging markets- they have bubbled up alot in the last 6 months to a year and its been a money pot of those of us investing in equities there- the bubble will pop, just need to keep an eye out for that.

"I also want diversification and low charges"

Based on what you listed above- 100% of your porftolio is in stocks/ETFs, which is not diversified at all- i would recommend that people be investing in physical property (e.g. rental condos), precious metals (but not with ETFs- actuall coins/bullion), stocks/ETFs and cash.

[Naam]

A 25% return in a few months is an excellent return- no matter how you spin it

and no matter how you spin it... the 25% return is a fictive one and applies only to those who have expenses in US Dollars or in currencies pegged 100% to the USD. all other goldbugs have only wet dreams as far as "25% return in a few months" are concerned.

[AyG]

This is interesting- thanks for taking the time.

"For any investment that doesn't produce an income its value is solely based upon sentiment, and sentiment can change quickly and unpredictably. To me, it's then not an investment." Are you saying stocks prices are not driven by market sentiment???? ..

A 25% return in a few months is an excellent return- no matter how you spin it. Yes, its a bubble, but bubbles provide some of the greatest returns historically for savvy investors- i, Geroge Soros and a number of other big fund managers - think that the bubble has some expanding to do before it bursts. Same with emerging markets- they have bubbled up alot in the last 6 months to a year and its been a money pot of those of us investing in equities there- the bubble will pop, just need to keep an eye out for that.

"I also want diversification and low charges"

Based on what you listed above- 100% of your porftolio is in stocks/ETFs, which is not diversified at all- i would recommend that people be investing in physical property (e.g. rental condos), precious metals (but not with ETFs- actuall coins/bullion), stocks/ETFs and cash.

Of course stock prices are driven by market sentiment. However, stocks also have a value based upon the current and forecast cash flows they will generate, which can be discounted to net present value. The price of gold and similar investments is driven solely by sentiment. (OK, technically there are a few industrial uses for gold, but these uses are insignificant when it comes to pricing the metal.)

A 25% return in a few months sounds good. However, if it's followed by a massive crash, with hindsight the 25% will seem less impressive.

And as for only investing in stocks, I think you might have missed some of the detail. I specifically mention that the property funds I invest in hold physical property, not property shares. The ETFs have underlying physical investments, so track the underlying's performance very accurately. Incidentally, investing in rental condos or similar is not diversification if one already owns a property and that property represents a significant part of one's overall wealth since one is already exposed to physical residential property. Furthermore, for most investors investing directly in physical property is not diversification, but a crazy risk. If, for example, the major employer in a town quits the property values will plumet and so will rental income. How many people can afford to manage a diversified property portfolio within a single country (i.e. not all within the same part of the country), let alone a globally diversified one? That's why funds are a much better way of providing exposure to physical property.

[ExpatJ]

This is interesting- thanks for taking the time.

"For any investment that doesn't produce an income its value is solely based upon sentiment, and sentiment can change quickly and unpredictably. To me, it's then not an investment." Are you saying stocks prices are not driven by market sentiment???? ..

A 25% return in a few months is an excellent return- no matter how you spin it. Yes, its a bubble, but bubbles provide some of the greatest returns historically for savvy investors- i, Geroge Soros and a number of other big fund managers - think that the bubble has some expanding to do before it bursts. Same with emerging markets- they have bubbled up alot in the last 6 months to a year and its been a money pot of those of us investing in equities there- the bubble will pop, just need to keep an eye out for that.

"I also want diversification and low charges"

Based on what you listed above- 100% of your porftolio is in stocks/ETFs, which is not diversified at all- i would recommend that people be investing in physical property (e.g. rental condos), precious metals (but not with ETFs- actuall coins/bullion), stocks/ETFs and cash.

Of course stock prices are driven by market sentiment. However, stocks also have a value based upon the current and forecast cash flows they will generate, which can be discounted to net present value. The price of gold and similar investments is driven solely by sentiment. (OK, technically there are a few industrial uses for gold, but these uses are insignificant when it comes to pricing the metal.)

A 25% return in a few months sounds good. However, if it's followed by a massive crash, with hindsight the 25% will seem less impressive.

And as for only investing in stocks, I think you might have missed some of the detail. I specifically mention that the property funds I invest in hold physical property, not property shares. The ETFs have underlying physical investments, so track the underlying's performance very accurately. Incidentally, investing in rental condos or similar is not diversification if one already owns a property and that property represents a significant part of one's overall wealth since one is already exposed to physical residential property. Furthermore, for most investors investing directly in physical property is not diversification, but a crazy risk. If, for example, the major employer in a town quits the property values will plumet and so will rental income. How many people can afford to manage a diversified property portfolio within a single country (i.e. not all within the same part of the country), let alone a globally diversified one? That's why funds are a much better way of providing exposure to physical property.

For investing in rental properties, i would only advise it if the investor can buy the property outright with no need for a mortgage, that makes things much less risky- in this case a condo or two will be a valuable part of any portfolio.

Back to gold - really nothing has an intrinsic value - everything is relative to the situation. Even water and food vary in value depending on your situation (hungry or not) and the environment (next to a stream or in the middle of a desert)- one thing we do know is that people want gold and place a high value on it and have done for 1000s of years- therein lies its value. BUT thats not why it makes a good investment now per se- right now the weakening dollar, global economic uncertainty, the search for a safe location to invest funds withdrawn from the US stock market in the last 2 years, China's growing demand pressure, Central Banks becoming net buyers of gold for only the 2nd time in last 15 yrs or so. etc etc- all these make gold a good investment at this time (the bubble will get bigger before it bursts- but lets check back in 6 months or so:-)

[ExpatJ]

This is interesting- thanks for taking the time.

"For any investment that doesn't produce an income its value is solely based upon sentiment, and sentiment can change quickly and unpredictably. To me, it's then not an investment." Are you saying stocks prices are not driven by market sentiment???? ..

A 25% return in a few months is an excellent return- no matter how you spin it. Yes, its a bubble, but bubbles provide some of the greatest returns historically for savvy investors- i, Geroge Soros and a number of other big fund managers - think that the bubble has some expanding to do before it bursts. Same with emerging markets- they have bubbled up alot in the last 6 months to a year and its been a money pot of those of us investing in equities there- the bubble will pop, just need to keep an eye out for that.

"I also want diversification and low charges"

Based on what you listed above- 100% of your porftolio is in stocks/ETFs, which is not diversified at all- i would recommend that people be investing in physical property (e.g. rental condos), precious metals (but not with ETFs- actuall coins/bullion), stocks/ETFs and cash.

Of course stock prices are driven by market sentiment. However, stocks also have a value based upon the current and forecast cash flows they will generate, which can be discounted to net present value. The price of gold and similar investments is driven solely by sentiment. (OK, technically there are a few industrial uses for gold, but these uses are insignificant when it comes to pricing the metal.)

A 25% return in a few months sounds good. However, if it's followed by a massive crash, with hindsight the 25% will seem less impressive.

And as for only investing in stocks, I think you might have missed some of the detail. I specifically mention that the property funds I invest in hold physical property, not property shares. The ETFs have underlying physical investments, so track the underlying's performance very accurately. Incidentally, investing in rental condos or similar is not diversification if one already owns a property and that property represents a significant part of one's overall wealth since one is already exposed to physical residential property. Furthermore, for most investors investing directly in physical property is not diversification, but a crazy risk. If, for example, the major employer in a town quits the property values will plumet and so will rental income. How many people can afford to manage a diversified property portfolio within a single country (i.e. not all within the same part of the country), let alone a globally diversified one? That's why funds are a much better way of providing exposure to physical property.

For investing in rental properties, i would only advise it if the investor can buy the property outright with no need for a mortgage, that makes things much less risky- in this case a condo or two will be a valuable part of any portfolio.

Back to gold - really nothing has an intrinsic value - everything is relative to the situation. Even water and food vary in value depending on your situation (hungry or not) and the environment (next to a stream or in the middle of a desert)- one thing we do know is that people want gold and place a high value on it and have done for 1000s of years- therein lies its value. BUT thats not why it makes a good investment now per se- right now the weakening dollar, global economic uncertainty, the search for a safe location to invest funds withdrawn from the US stock market in the last 2 years, China's growing demand pressure, Central Banks becoming net buyers of gold for only the 2nd time in last 15 yrs or so. etc etc- all these make gold a good investment at this time (the bubble will get bigger before it bursts- but lets check back in 6 months or so:-)

update- North Korea just attacked S Korea- breaking now- expect gold to tick up a few more percent! (i mean that in non-gleeful way).

Edited November 23, 2010 by ExpatJ