Looking For A Long Term Safe Investment

[abrise]

A thai friend of mine has just inherited from his farang partner a few million bahts

The money is still in Europe but I believe that it would be better to move it to Thailand.

He will do what I recommend to him as per the wish of the deceased.

But I don't know, neither does he know what to do with the money here.

Can you recommend a long term fund from which can be withdrawn automatically a fix sum say 15-20000baht per month, even if it is more than the income, until the capital is depleted.

It would be even better if the capital cannot be easily available.

[Tarric]

Your going to have to be a bit more specific with the numbers, then we can better reccomend a course of action. That being said however, a term deposit would probably be what your after, you cant touch the money for that particular term be it 3 months or 2 years etc, but you get an interest payment every month or quarter. How much interest you get is dependent on how much money we are actually invested but its likely to be 3-4% p.a.

Edited August 31, 2011 by Tarric

[soi41]

Open a trading account for SET with any of the big banks. Buy CPNRF retailfund, yearly interest just below 8%. Paid quarterly into your friends bankaccount, no tax. So if he buy CPNRF-units for 2 million bath, he will recieve 40.000 bath every 3 months. With the capital still intact. IMO a very good deal.

[abrise]

Thank you for your answers . The investment is around four million bahts.

CPNRF might be a good idea but the volatility is too high -6.5 to 13 in the last 6 years.

[soi41]

Abrise. CPNRF are one of least volatile stocks on SET. Your 6.50 are from Oct 2008. I am sure if you check any of the stocks on SET 50 or 100, you will find that from Oct 2008 to today you will find that most of them have moved a lot more than 100%. What is more interesting for your friend is to follow the volatility in dividends, which is almost nonexisting. Each unit has been yielding about one baht yearly, which in your friends case will give him about 27.000 montly. So if the unitprice drops to 6.50 again or spikes to 20 really does not matter. The question is ofcourse if the 13.40 they were traded at today are too expensive ? I thougt 11.00 was far to expensive !!

Horses for courses. Good luck.

[Naam]

good dividend history!

http://www.cpnrf.com/site-investor/investor.php

[topt]

Taking the net asset value from Naam's link the current price is at a 29% premium - although the valuation date was July 31st so it may be a little less. This seems very high compared to say UK Investment trusts where you look to try and buy at a discount to NAV. However I have no idea how it may compare to other Thai SET investments - anybody know?

[AyG]

Suggesting putting all the money in a single investment is, in my opinion, thoroughly irresponsible. It should be spread across a number of investments to reduce the risk, and that range will be in accordance with the individual's appetite for risk.

I once invested in a property fund (Carpathian) specialising in commercial property in Eastern Europe. Almost overnight it lost 90% of its value. It's now going to take a few years before investors such as me get back just a fraction of what they put in. It has been a painful experience, but fortunately only represented a small fraction of my portfolio. There's no guarantee that a Thai property fund wouldn't perform equally disastrously.

[Naam]

Taking the net asset value from Naam's link the current price is at a 29% premium - although the valuation date was July 31st so it may be a little less. This seems very high compared to say UK Investment trusts where you look to try and buy at a discount to NAV. However I have no idea how it may compare to other Thai SET investments - anybody know?

premium above NAV is indeed quite steep. however the dividend history is impressive and so is the net yield for a THB investment. somebody please correct me if my assumption that a flat tax of 10% is levied is wrong.

[churchill]

'Buy CPNRF retailfund, yearly interest just below 8%'

Sounds good to me

[midas]

'Buy CPNRF retailfund, yearly interest just below 8%'

Sounds good to me

but how could you rely on the sustainability of that kind of return so heavily dependent on consumer spending

when you look at conditions in other countries.

for example this guy is one of the savviest retailers in Australia and if he is saying these kinds of things then

there has to be something seriously wrong

Retailers scrooged as Gerry Harvey warns of 'shocker Christmas'

http://www.news.com.au/business/retailers-scrooged-as-gerry-harvey-warns-of-shocker-christmas/story-e6frfm1i-1226125734344

Edited September 1, 2011 by midas

[churchill]

These places always seem to be packed -- with the minimum wage going up why can't they carry on ?and Presumably /probably the Baht going up in value against Euro / USD will also add to their value ? and 8 % return - Perhaps if we do get a major correction in world markets in the coming months the share price will go down -- so sit on the sidelines for a few months ..........

[fletchsmile]

good dividend history!

http://www.cpnrf.com/site-investor/investor.php

'Buy CPNRF retailfund, yearly interest just below 8%'

Sounds good to me

Think you need to be careful on this as taking the "distribution" as "yearly interest". I expect some of this is effectively return on capital.

Of the 3 main projects, 2 are investments in SUB-Leasehold rights for approx 14 years. The other is Leasehold rights for 85 years.

So could well be that for around 2/3's of the investment (the sub-leases) it is both capital + interest being returned over what may be 20 years total (14 years remaining + 6 year history listed). Should also check who it is sub-leased from, although should be OK given CPN and central Group.

The actual "income" yield stripping out return of caital is probably more in the ball park of 4 to 5% +/-

Is a 14 year period long enough for OP? Depends on age etc...

Edited September 1, 2011 by fletchsmile

[abrise]

Thank you for all the answers

I will certainly not put all the eggs in the same basket . CNPRF might be one of the eggs. However I was more looking in a kind of mutual fund which would probably have an average return but would carry less risks.

[johnbits]

Thank you for all the answers

I will certainly not put all the eggs in the same basket . CNPRF might be one of the eggs. However I was more looking in a kind of mutual fund which would probably have an average return but would carry less risks.

Mutual funds aren't really that much less risky, they don't go down as much but they don't go up as much, and they charge a fee that limits their gains.

Maybe put in a good to cancel order for 2 mllion (50%) of the 4 million for CPNRF at 11.00, maybe it never goes there, but not buying means you aren't risking anything, and the stock is at an all time high.

You don't say what your friend does for a living or how he is fixed as in a house, car, etc. What is his interest and capablities? Farmer, Bangkok city life? How old is he, does he work, etc. Is he responsble, will he take the money out and spend it, of leave it in for the long term? Its a different decision if he has no place to live Vs has a paid off house and car.

The other alternative is just put the cash into some sort of trust where you can only draw money out in a limited amount.

Unfortuanly, world wide interest rates at quite low, stocks are still somewhat close to their highs, gold is near a high, that CPNRF is at an all time high, seldom a good time to buy. Meaning now there aren't a lot of good places to put cash that are somewhat safe.

There is a lot of fear in the markets, the USA market is cheap but that is cheap if the world doesn't slip into a recession. No reason the markets can't go down more.

If one doesn't really understand markets well, then it's typically a bad idea to invest in a single stock or even a group of stocks, mostly individuals don't understand how markets work.

I would do nothing until eithe the markets got a lot worse or until some more obvious need comes up.

[abrise]

The other alternative is just put the cash into some sort of trust where you can only draw money out in a limited amount.

Where can I find a trust like that?

[Tarric]

'Buy CPNRF retailfund, yearly interest just below 8%'

Sounds good to me

but how could you rely on the sustainability of that kind of return so heavily dependent on consumer spending

when you look at conditions in other countries.

for example this guy is one of the savviest retailers in Australia and if he is saying these kinds of things then

there has to be something seriously wrong

Retailers scrooged as Gerry Harvey warns of 'shocker Christmas'

http://www.news.com....i-1226125734344

While I respect Gerry Harvey's business acumen that doesnt really apply here. Australia's current problems are not caused by external shocks such as low U.S growth or the EU sovreign debt crisis, they are of a home grown nature. The Australian people have realised that they are in far too much debt to risk spending at previous levels, thats why retail in Australia is suffering.

Thailand on the other hand doesnt have that particular issue it went through its own debt crisis in the mid to late 90's, consumer spending will continue at reasonable rates even if there is another U.S recession and continue turmoil in Euroope. However if the Chinese economy slows substantially because of the Chinese governments ongoing battle with high Chinese inflation then investing in something that relies on consumer spending may not be so wise. That being said, if the Chinese economy faceplants its not going to matter what your invested in unless its capital guaranteed you may run into some serious issues.

[AyG]

unless its capital guaranteed you may run into some serious issues.

Even if it is you may run into some serious issues. Remember Lehman's? They backed a lot of structured products before they went bankrupt and left a lot of investors out of pocket.

[johnbits]

Where can I find a trust like that?

You seem to imply that the beneficiary cannot control their spending.

Use google to find out about trust. There are trusts called spendthrift trust that are designed to limit payouts because a person is unable to control spending..

http://en.wikipedia.org/wiki/Trust_law

As far as I know, a trust need to be set up by a lawyer and they are individually designed. This isn't my area of expertise, so I don't know the details.

Annuities are finaical instruments some of which are designed to pay out a fixed income for life. Problems with annuties are they can be poorly mananged, overpriced and the person recieving the income can usually sell the annuity to get all the cash at once. Annuities are very popular with financial companies because they often can charge a high commision for selling the annuity. This does not apply to all annuities. just that these are common problems to look out for. Most are a good comprimise between getting a life payment and protecting the asset. They are usually some sort of insurance product, at least in the USA.

Try and google Life annuity and look at an immediate annuity.

Most forums on the internet don't like their users to place links in their posts, so I tend not to put in links rather that learn the individual rules of every forum. Just google what what you want to know about.

[Naam]

abrise, Yesterday, 21:35 , said: Where can I find a trust like that?

a trust costs money to set it up and money to maintain. a setup doesn't pay for a few million Baht.

[johnbits]

abrise, Yesterday, 21:35 , said: Where can I find a trust like that?

a trust costs money to set it up and money to maintain. a setup doesn't pay for a few million Baht.

I agree, trusts are usually for a few milllion dollars, not baht. For 2 million baht, the expenses outweigh the benefits, just wanted to mention the specturm of what people sometimes do when they leave money to another person. Likely many farang will be in this situation.

[Suradit]

A fairly good, comprehensive resource: http://www.silkwormb...guide-thailand/

Your Investment Guide to Thailand

Revised and Updated

Bruce Bickerstaff

Foreword by Korn Chatikavanij, Finance Minister of Thailand

ISBN 978-974-9511-86-2

2010. 269 pp (xvi + 253)

43 b/w illus.

15 x 23 cm

THB 695

Your Investment Guide to Thailand is essential reading for foreign investors, expats, retirees, and anyone considering relocating to Thailand. It will also help Thai officials better understand the mindset of the foreign investor. This newly revised and updated version provides important new data and analysis on the Thai economy.

[tezzaaa]

With 4 milions he could buy a condo or town house and rent it, that way capital is preserved (going up in fact) and risk is minimum..

[AyG]

With 4 milions he could buy a condo or town house and rent it, that way capital is preserved (going up in fact) and risk is minimum..

This is not minimum risk. There's no income if you can't find someone to rent. There are plenty of apartment blocks that are virtually empty, with noticeboards covered in signs offering the place to rent.

Over time condo blocks become run down and the value of individual apartments falls.

[GreenSnapper]

With 4 milions he could buy a condo or town house and rent it, that way capital is preserved (going up in fact) and risk is minimum..

This is not minimum risk. There's no income if you can't find someone to rent. There are plenty of apartment blocks that are virtually empty, with noticeboards covered in signs offering the place to rent.

Over time condo blocks become run down and the value of individual apartments falls.

Yes.

This 'over time' in Thailand is about 10 years. These cheap (not price, but quality) condos here run down vry fast. Buy in the West if you want value. Here you shall rent.

[Suradit]

Buy in the West if you want value. Here you shall rent.

Yes, nothing says solid value and good returns like an investment in real estate (or anything else) in the super safe "west." Try sunny Florida. What could go wrong?

Anyone here read a newspaper or looked at the news on TV in the past few years?