Have Some Money To Invest

[cat5]

Until very recently I was living and working in Thailand as a teacher (no derisory comments, please). I've been back in the UK for just a few months but have already decided that I'd much rather be somewhere else, possibly Taiwan or China, or working in Thailand again. I have a house in the UK which I have previously let but for various reasons have decided that I would rather sell now, with the option to buy again later if prices take a dive. Actually, that is one of my preferred options. Doom mongers currently predict a fall of about 20% but even the agents admit 5 - 10% is quite likely.

It seems that I now have a buyer and hope to exchange contracts very soon. I don't have a mortgage so I'll have some cash to invest. I also have some other savings currently earning about 3% which is less than inflation. I should have about GBP 250K in total, cash, and am wondering what to do with it. I'm in my early 40s, not a qualified teacher (limiting my income to about THB 70K per month) and am not interested in buying a condo or investing in some bar. The options I have considered so far include keeping the money as cash or bonds (no more than about 4.5% return). I think I should diversify a little but don't know where to start. I have spoken to a manager at Charles Stanley (opinions, anyone?) who suggests I leave 90% of my assets with him to manage, but I'm not so sure about that either! When I finally retire, I don't expect it to be in the UK.

Anyone in a similar position or have advice to give?

Thanks for reading.

[danbradster]

If you want to outperform inflation, wisely picked shares can do just that. Although my goal is strong growth with moderate risk.

[cat5]

Bearing in mind that I have no first hand knowledge of share dealing, I wouldn't feel confident in doing so. However, I am willing to buy into some sort of managed service.

[rgs2001uk]

Bearing in mind that I have no first hand knowledge of share dealing, I wouldn't feel confident in doing so. However, I am willing to buy into some sort of managed service.

In your situation I would imagine you are looking for long term capital growth as oppossed to regular income.

I wouldnt entrust Charles Stanlet to manage my funds unless it was as an advisory capacity instead of a discretionary one.

The first option means he only acts as an advisor and cant do anything without your say so, the second means you are giving him carte blanche to do as he pleaes with your money, and that translates to what suits his needs in the way of commissions.

If you have no first hand knowledge of share dealing, I would limit my learning curve to investment trusts.

Split your money 4 ways, 25% in something such as Law & Debenture, 25% in Monks, 25% in Witan and the remaing 25% in some asian (excluding Japan) fund such as Henderson Far East.

Have the dividends reinvested, then sit back for 2 years to give the funds time to start working for you, and at the same time expand your knowledge.

Personally I would never sell any of my properties in the UK, and if I were you I would think long and hard about doing so.

I remember a similair situation almost 20 years ago in the UK, and look what happened since.

I dont know where your house is or what type of property you own, it may well be worth your while selling what you have and buying in a more desirable location elsewhere in the UK.

I take what estate agents and so called experts tell me with a pinch of salt, there are still parts of the UK that are and always will be desirable to buyers, its a matter of finding such an area in your location.

Edited December 22, 2010 by rgs2001uk

[cat5]

RGS2001uk,

Thanks for your reply. I note your advice re. not selling my UK house, but I have the opportunity to realize a decent capital gain on what I originally paid and would at this moment like to reduce my exposure to the UK property market. Most people agree that prices will not increase in the short term and will most probably fall. Moreover, the current value of my house is in my opinion too big a chunk of my assets. Finally, if I decided to return to the UK then I would want to move to a different area with better job prospects.

Re. advisory / discretionary investment, I understand the point that you are making. Discretionary investment was suggested as being most suitable for me, but like you I have some concerns. I was told they work on a fixed percentage management fee not commission, or do you think commission is hiding there somewhere?

I presume that you are not suggesting I invest 100% of my money in investment trusts (albeit four ways).

[cat5]

In your situation I would imagine you are looking for long term capital growth as oppossed to regular income.

You're right, I'm looking for capital growth rather than income.

[rgs2001uk]

RGS2001uk,

Thanks for your reply. I note your advice re. not selling my UK house, but I have the opportunity to realize a decent capital gain on what I originally paid and would at this moment like to reduce my exposure to the UK property market. Most people agree that prices will not increase in the short term and will most probably fall. Moreover, the current value of my house is in my opinion too big a chunk of my assets. Finally, if I decided to return to the UK then I would want to move to a different area with better job prospects.

Re. advisory / discretionary investment, I understand the point that you are making. Discretionary investment was suggested as being most suitable for me, but like you I have some concerns. I was told they work on a fixed percentage management fee not commission, or do you think commission is hiding there somewhere?

I presume that you are not suggesting I invest 100% of my money in investment trusts (albeit four ways).

Yeah I will bet discretionary was mentioned as most suitable, LOL.

Yes I mean split your money 4 ways into 4 different investment trusts.

Nothing to be lost by asking this so called advisor to knock you up a portfolio, and then coming back here and asking for advise.

[thrilled]

There are some annuities that will pay you 6 to 7% A year.Talk to A financial advisor ,they will tell ya about them.

Most of my money is in stocks with good companies that pay out between 4-8% in dividends every year.Theres many options.

[cat5]

If I understand correctly, an annuity is purchased to give an income. I want to invest capital for capital growth, not income.

[wordchild]

There has been a very long bull market in UK property that is only now showing signs of ending and by most fundamental measures UK property looks expensive. I am not sure you will see dramatic falls but a decade of going nowhere whilst incomes and other assets catch up is a reasonable expectation. Many leading UK bluechip shares meanwhile have gone nowhere much for 12 years or so and dividend yields are attractive.

FWIW i think you are absolutely right to be doing what you are doing. But your priority has to be to take good care of the funds that you take out of your property and before you do anything you need to get your knowlege base up, Invest some time and effort in learning about shares and bonds. Elsewhere on this site there is a discussion about the "motley fool" website which is well worth spending some time on, alot of v,good info on there. If you can put some time and effort in, then direct investment yourself is better (and more fun ) than useing a discretionary advisor . Having said that , I think Charles Stanley are a pretty good firm and you could do alot worse than working with them, it maybe worth exploring what other services they can offer you eg an advisory relationship (which would give you more control )rather than full discretionary.

You need also to think about currency exposure and have an eye to matching your longterm plans (in terms of where you want to live) with the currency of your savings. Given that you say your aim is to retire in the UK after a period overseas nothing wrong , in your case , in keeping your assets in sterling. If however, your plans changed and you decided long term , say Thailand was for you then you may need to re-think your savings base as well .

Edited December 22, 2010 by wordchild

[jay1980]

You need also to think about currency exposure and have an eye to matching your longterm plans (in terms of where you want to live) with the currency of your savings. Given that you say your aim is to retire in the UK after a period overseas nothing wrong , in your case , in keeping your assets in sterling. If however, your plans changed and you decided long term , say Thailand was for you then you may need to re-think your savings base as well .

Sorry to high-jack the thread, I am in a similar position to the OP in that I have some UK property, however both my properties are in good positions and rented out giving me a reasonable income, as well as a safety net in my home country so I will not be selling them any time soon.

I am still working in the EU for now and have a 2 year plan to move to Thailand. I already own a condo and spent 18 months in Thailand in 2003/4 so fairly sure it will be a long term move.

If I had say around 200K GBP or around 9.5M Baht and I wanted to invest it locally in Thailand/SE Asia to protect income from currency changes and possible future economic issues in my home country by having an income in THB or a currency like SGD how would you suggest I go about re-thinking my savings base, and what kind of income and gains could I expect? Are there such thing's as THB based annuities and how would I go about purchasing one?

Thanks in advance for any suggestions

[wordchild]

You need also to think about currency exposure and have an eye to matching your longterm plans (in terms of where you want to live) with the currency of your savings. Given that you say your aim is to retire in the UK after a period overseas nothing wrong , in your case , in keeping your assets in sterling. If however, your plans changed and you decided long term , say Thailand was for you then you may need to re-think your savings base as well .

Sorry to high-jack the thread, I am in a similar position to the OP in that I have some UK property, however both my properties are in good positions and rented out giving me a reasonable income, as well as a safety net in my home country so I will not be selling them any time soon.

I am still working in the EU for now and have a 2 year plan to move to Thailand. I already own a condo and spent 18 months in Thailand in 2003/4 so fairly sure it will be a long term move.

If I had say around 200K GBP or around 9.5M Baht and I wanted to invest it locally in Thailand/SE Asia to protect income from currency changes and possible future economic issues in my home country by having an income in THB or a currency like SGD how would you suggest I go about re-thinking my savings base, and what kind of income and gains could I expect? Are there such thing's as THB based annuities and how would I go about purchasing one?

Thanks in advance for any suggestions

As per my response above , first priority, i would say , is to do the work and get your knowlege base up, if you want to invest in a new area. FWIW i would look at investing such a sum in an equity/bond portfolio in the region with a focus on dividend return. Despite the better markets its still possible to obtain a reasonable current yield (say 4%) from certain SE Asian stocks , and,with the scope for that to grow over the medium term.

Edited December 23, 2010 by wordchild

[Naam]

Are there such thing's as THB based annuities and how would I go about purchasing one?

although i can't present solutions for your problem i can offer an advice, which is "during the prevailing extremely low interest level environment the worst possible decision an investor can make is buying an annuity!"

[Naam]

There are some annuities that will pay you 6 to 7% A year.Talk to A financial advisor ,they will tell ya about them.

Most of my money is in stocks with good companies that pay out between 4-8% in dividends every year.Theres many options.

please tell us about it and don't forget to mention the rating of the debtor and the currencies in which these annuities are denominated.

[jfchandler]

I'd certainly agree with that advice about avoiding annuities for the time being.... at least in the U.S., annuity rates these days are around 3%.... and in most cases you'd be locking in that rate for the long term.... probably not the smartest move in today's environment.

I have seen some annuities that advertise rates of like 6%, but then in the small print below, note that that rate is typically a first year bonus provided by the annuity company and then the rate will fall to the contract rate in subsequent/future years.

[ericthai]

I'd certainly agree with that advice about avoiding annuities for the time being.... at least in the U.S., annuity rates these days are around 3%.... and in most cases you'd be locking in that rate for the long term.... probably not the smartest move in today's environment.

I have seen some annuities that advertise rates of like 6%, but then in the small print below, note that that rate is typically a first year bonus provided by the annuity company and then the rate will fall to the contract rate in subsequent/future years.

Yes, you need to know what you are doing when buying an annuity and make sure you read all the fine print. There are some annuities that will give prime + or prime - etc etc. Depends on the term, allot of things to consider and it can confuse someone. However I still believe in an annuity if you dont no anything about stocks and want no risk. As with an annuity you can never lose your money as with stocks. i would not put everything into an annuity.

[bob4you]

I was in Real Estate and Mortgage industry for 30 years in US. Now retired in Thailand and put liquid cash into pooled Mortgage notes that don't require foreclosure if defaulted and currently pay at least 9% per annum. PM me for further details

[asiawatcher]

I would put par of it into precious metals like gold and platinum (around 20%) as it is liquid and valuable. Real estate seems to average 10% p.a. in capital growth but select the properties and don't invest in Thailand! UK is good of course as is Australia. US is still ready to default across the board so I would not do anything there and do not relay on tenants. Shares are always easy enough to cash and I would only back airlines, banks and majors. I would not put anything in to T Bills or treasury notes with Govt's right now.

Good luck.

[cat5]

Thanks for some ideas, guys. I think one of the main points is that I need to learn some more about investing, as the little I have now is mostly just from regular work.

[jay1980]

FWIW i would look at investing such a sum in an equity/bond portfolio in the region with a focus on dividend return.

Is there any reputable Thailand or Singapore based firm's that could set that up for me? I would really like not to set anything new up in the UK as I don't want to be paying 40% tax.

cheers

[clinique]

If i were you i would talk directly (no brokers/advisors needed) to some of the reputable private banks in Singapore (ICICI, Soc Gen) They are secure, low tax, better than average returns.

[jsflynn603]

These are very strange and difficult times. There are 160 trillion (US$equivalent) in derivatives floating about wordwide--the amount is unfathomable. If US banks were forced to "mark to market" (state assets value at today's sale value) there would not be a solvent bank in the US. I believe it to be about the same in Europe. Everything is smoke and mirrors today. Six US banks were shuttered last week alone but does the media report it? Nope. Each bank had on average less than half in equity as it formerly stated, the numbers are there to see. There would be far more bank closings but the Fed moves slow in fear of starting a panic.

I agree that Singapore, Thailand (and to a lesser degree Australia) are wise choices though I fear that "contagion" will wreck havoc worldwide.

Look at the value of the Swiss Franc and the Yen, both are overvalued, as fear causes gold to rise and investors to seek safety--so much so in the Yen that to an American a Honda Accord "should" cost 12% more this year than last year, yet it is not the case. As this continues I fear for Japan. Even countries that are solid such as Singapore and Thailand will suffer when capital flows into them out of other currencies. Capital always moves to quality--the problem is that the Singapore dollar and Thai Baht will rise in value and in doing so this can hurt exports. Oz is unique with it's commodity strength, but it is so inter-meshed with China. China is the Bull in the bathtub, and if it slips, Oz will be particularly hurt.

Bonds, I believe are the kiss of death. The US 30 year bond rate has risen 25% in the last 40 days--extrapolate this out realizing that bonds that pay higher rates decimate prior lower rate paying bonds. There are riots today in Italy and Greece over austerity measures--yet no austerity measure will save any of the Western countries as we move into a debt spiral. Imagine your own debt's percentage rate increasing 25% in each month?

It may be that the best investment other than tangibles (gold/silver/copper) is quality real estate with fixed mortgage debt. If we move to a 20% inflation rate as we did in 1980-1983, your mortgage effectively shrinks 20% in that year. If this scenario comes to pass, gold will rise 20% in that year. It is not that gold is really rising, it is that the value of the underlying currency is falling--and brother, will it fall.

America with its "gimme" attitude will not accept austerity, therefore in America it will be QE (Quantitative Easing) QE3..4...5... The American state of California alone makes Greece and Portugal's problems look like child's play. Europe will do QE 3..4...5.... too, it is that or face implosion and a deflationary depression. But the mirror image is inflationary.... Governments worldwide are walking a razor's edge of inflation.

As far as investment advisers I say what I asked my sister to do: Ask the Advisor: "How did you fare between September 2008 and September 2010." In almost all cases you will receive no answer at all.

I like Thai stocks, but it is difficult to understand and fairly expensive to get into it (~25-40,000US$). But there are many Thai companies that are rock solid, and these have a history of paying out solid dividends--but finding an adviser I would not know where to start.

As I've done since September of 2008 I recommend at least 20% in gold and silver physical and/or stock, and it gets a bit difficult to recommend Silver Wheaton, one of my favorites, which is now $38/share (Canadian Stock) knowing that when I first recommended it to my friends in 2008 it was $2.55/share, yet I still do. (Though I am no financial adviser, so please don't listen to me). But to understand the role of gold/silver search google for "safe deposit boxes in germany" and you will learn something about the role of gold versus currency versus fear.

Quality energy stock will do well in inflationary periods as it did even during the Weimar Republic hyper inflationary period, though not as well as gold/silver.

Hard choices--but exciting ones I think, wise choices now might still be the trades of the century.

Edited December 23, 2010 by jsflynn603

[Naam]

Look at the value of the Swiss Franc and the Yen, both are overvalued--so much so that to an American a Honda Accord "should" cost 12% more this year than last year, yet it is not the case.

of course this is not the case because Honda manufactures the Accord since 28 years in the U.S. of A.

[cat5]

As far as investment advisers I say what I asked my sister to do: Ask the Advisor: "How did you fare between September 2008 and September 2010." In almost all cases you will receive no answer at all.

Thanks for an informative post, and I'll certainly try that question!

[cat5]

I've booked a couple more appointments with IFAs and will get them to draft some ideas of what they'd suggest for me. With a bit more research, I can always walk away and do it myself. Incidentally, they have quoted me their fees as follows: 3% of initial sum invested, and 1% thereafter. 1.5% of managed funds, of which they take 0.5%. All seems a bit exorbitant to me. Reckon I might have to invest it in a bar someplace.

[wordchild]

I've booked a couple more appointments with IFAs and will get them to draft some ideas of what they'd suggest for me. With a bit more research, I can always walk away and do it myself. Incidentally, they have quoted me their fees as follows: 3% of initial sum invested, and 1% thereafter. 1.5% of managed funds, of which they take 0.5%. All seems a bit exorbitant to me. Reckon I might have to invest it in a bar someplace.

those fees are ridiculous and will eat in significantly to your nest-egg. worth reading a few books i think ! start with "one up on wall street " by peter lynch

Edited December 23, 2010 by wordchild

[wordchild]

FWIW i would look at investing such a sum in an equity/bond portfolio in the region with a focus on dividend return.

Is there any reputable Thailand or Singapore based firm's that could set that up for me? I would really like not to set anything new up in the UK as I don't want to be paying 40% tax.

cheers

I know Phillip securities , they are based in Sing but also have a Thai offshoot, on the whole pretty good i would say.

Edited December 23, 2010 by wordchild

[wordchild]

I've booked a couple more appointments with IFAs and will get them to draft some ideas of what they'd suggest for me. With a bit more research, I can always walk away and do it myself. Incidentally, they have quoted me their fees as follows: 3% of initial sum invested, and 1% thereafter. 1.5% of managed funds, of which they take 0.5%. All seems a bit exorbitant to me. Reckon I might have to invest it in a bar someplace.

those fees are ridiculous and will eat in significantly to your nest-egg. worth reading a few books i think ! start with "one up on wall street " by peter lynch

i think you will find a good stockbroker cheaper and way more useful than the vast majority of ifas who tend to have zero investment expertise. You mentioned Charles Stanley (a stockbroker) in your original post and i believe their fees are considerably lower than that.

[rgs2001uk]

I've booked a couple more appointments with IFAs and will get them to draft some ideas of what they'd suggest for me. With a bit more research, I can always walk away and do it myself. Incidentally, they have quoted me their fees as follows: 3% of initial sum invested, and 1% thereafter. 1.5% of managed funds, of which they take 0.5%. All seems a bit exorbitant to me. Reckon I might have to invest it in a bar someplace.

those fees are ridiculous and will eat in significantly to your nest-egg. worth reading a few books i think ! start with "one up on wall street " by peter lynch

i think you will find a good stockbroker cheaper and way more useful than the vast majority of ifas who tend to have zero investment expertise. You mentioned Charles Stanley (a stockbroker) in your original post and i believe their fees are considerably lower than that.

Probably in the region of about £300 per year based on the capital the OP mentioned.

[cat5]

^ Charles Stanley quoted a management fee of 0.5% for a discretionary service.

Oh, by the way, thanks to the guys who have sent me PMs inviting me into their exciting business opportunities. I never knew Thai Visa had so many resident millionaires located in Jomtiem.