What'S The Best Bank Interest Rate In Thailand?

[jbrain]

Roughly i make it.

First year 10%

Second year 5%

Third year 3.33%

Years 4-10 = 4.45%

I'm going back bkb to look at details properly and most likely set it up tomorrow. I''ll report back and confirm how it is

See my post above, if you pay the 300k at the start of the year and the 30k is received at the end, they have succeeding in dressing this up and misleading you.

More accurately if this is the case you have paid 300k day 1, then 270k net day 365/6, then another 270k net day 730/731.You need to look at the cashflows and timings. All they might be doing is giving you some of your own capital back/ reducing your premiums. It's only after year 3 onwards you're getting net receipts instead of making net payments. Think about that for a moment...

Fletch

I think you're turning this in a glass half empty / half full discussion.

There is no bank in the world that pays you interest at the start of your investment is it. So the 30.000 Baht you receive at the end of year 1 means 10 % interest on your 300.000 have you have invested for the period of past year, regardless if they take it from the sum you give them at the start of the second year, as long as they register the next sum in full in your account.

[meatboy]

this looks simular to the sinmathaya subthawee deposit acc.you save a certain amount every year for three years,but it must be left to mature two years,total 5yrs.

[meatboy]

Bangkok bank were showing us something to day.

1st year deposit 300k and receive a payout of 30k

Second year deposit another 300 (so total one 600) and receive another 30k pay out.

Third year deposit another 300k (900total now) and payout 30k

For the next 7 years no more deposits, your total 900k is stuck but you receive a payout of 40k anualy. After the 10years is up the 900 is returned.

There is a life insurance element / cash lump sum paid out incase of account holders death but I didn't have time listen all the details. From an interest point of view I'm thinking to do this and the life cover is not really an issue/ bonus.

i think someone has their sums wrong or is it me?

for the first 3yrs you average 6%,10%=1st,2nd=6%,3=3,3%,4th.yr-10yr=4.4%.

there's goner be a rush to bkkb.

I suggest you do your calculations one more time and use a calculator this time

what does your calcalator tell you?

[chiang mai]

Bangkok bank were showing us something to day.

1st year deposit 300k and receive a payout of 30k

Second year deposit another 300 (so total one 600) and receive another 30k pay out.

Third year deposit another 300k (900total now) and payout 30k

For the next 7 years no more deposits, your total 900k is stuck but you receive a payout of 40k anualy. After the 10years is up the 900 is returned.

There is a life insurance element / cash lump sum paid out incase of account holders death but I didn't have time listen all the details. From an interest point of view I'm thinking to do this and the life cover is not really an issue/ bonus.

These are insurance products, BB is pushing them quite aggressively (as is CIMB and others).

[fletchsmile]

Roughly i make it.

First year 10%

Second year 5%

Third year 3.33%

Years 4-10 = 4.45%

I'm going back bkb to look at details properly and most likely set it up tomorrow. I''ll report back and confirm how it is

See my post above, if you pay the 300k at the start of the year and the 30k is received at the end, they have succeeding in dressing this up and misleading you.

More accurately if this is the case you have paid 300k day 1, then 270k net day 365/6, then another 270k net day 730/731.You need to look at the cashflows and timings. All they might be doing is giving you some of your own capital back/ reducing your premiums. It's only after year 3 onwards you're getting net receipts instead of making net payments. Think about that for a moment...

Fletch

I think you're turning this in a glass half empty / half full discussion.

There is no bank in the world that pays you interest at the start of your investment is it. So the 30.000 Baht you receive at the end of year 1 means 10 % interest on your 300.000 have you have invested for the period of past year, regardless if they take it from the sum you give them at the start of the second year, as long as they register the next sum in full in your account.

Not really. I'm just trying to illustrate that the way to appraise longer term insurance products which levy penalties, surrender values and commit or oblige you to keep paying should be appraised differently to bank accounts and bank interest. Money isn't registered in your account in the same way as bank accounts and there will be surrender value profiles, which in early years will be less than you put in...

Think about it:

If they paid 60k at the end of year one and your next premium was 330k would you still think it is right to calculate 60/300 as a 20% return? The net paid is on the next installment would still be 270 (330-60)

What if they refund your entire 300k at the end of year 1, and you're committed to paying 570k in year 2. Would you consider that a 100% return? The net paid would still be still 270k (570-300)... and so on

They are simply playing around with cashflows.... That's why I'd say looking at the return after 1 year, 2 year etc is not the right way to look at it, and an IRR method is much more realistic. Particularly when you can't access your capital till a much later date.

Also: This is a 10 year policy. If able to cash in after 1 year, it's likely the surrender value on 300k might be ball park around only 200k (crude estimate). That's a loss, so to claim income earned in year 1 doesn't reflect economic reality.

Also: When you break a fixed deposit early on a bank account there is often an interest penalty. This insurance policy in all likelihood (like others on BBL's website ) takes siginificant penalties from your capital.

Fletch

[jbrain]

Think about it:

If they paid 60k at the end of year one and your next premium was 330k would you still think it is right to calculate 60/300 as a 20% return? The net paid is on the next installment would still be 270 (330-60)

What if they refund your entire 300k at the end of year 1, and you're committed to paying 570k in year 2. Would you consider that a 100% return? The net paid would still be still 270k (570-300)... and so on

Fletch

If they pay me 60.000 after year 1 that would mean I got indeed a 20% return on the initial 300.000 investment,taking in consideration of course that the initial 300K still is in the account, regardless of what my next premium would be as that will pay interest 12 months later.

If they refund my entire 300.000 at the end of year 1 that would mean I received no interest at all, just my initial investment.

By the way, the way you count gives the exact same end result .

[meatboy]

fletch you are spot on with what you say,they are insurance products,i have one in front of me from a diff.bank,there is a plus if you die early into the term[first 5yrs] but if you want to cash in the policy i will give you one example,paying a yearly premium of 60k a year you will get one payment at the end of yr.2[8,000bht] if you want to surrender at the end of the third yr.you will get [102,000] so add the 8,000 you had means you have lost 70,000bht.and the life cover is only 400,000bht.the term is over 14yrs.paying in 60k for 6yrs.so you pay in 360k then you have cover for the next 8yrs.of 400k.you will get 3 payments of 8k over this period.so if you live through the full term you pay in a total[first 6yrs] 360k,receive 48k.plus 400k at the end of yr 14.so all in all you have cover from day 0ne and make 88k.

[jbrain]

fletch you are spot on with what you say,they are insurance products,i have one in front of me from a diff.bank,there is a plus if you die early into the term[first 5yrs] but if you want to cash in the policy i will give you one example,paying a yearly premium of 60k a year you will get one payment at the end of yr.2[8,000bht] if you want to surrender at the end of the third yr.you will get [102,000] so add the 8,000 you had means you have lost 70,000bht.and the life cover is only 400,000bht.the term is over 14yrs.paying in 60k for 6yrs.so you pay in 360k then you have cover for the next 8yrs.of 400k.you will get 3 payments of 8k over this period.so if you live through the full term you pay in a total[first 6yrs] 360k,receive 48k.plus 400k at the end of yr 14.so all in all you have cover from day 0ne and make 88k.

But the one you mention now pays only a fraction of the return the Bangkok Bank offers.

[fletchsmile]

Think about it:

If they paid 60k at the end of year one and your next premium was 330k would you still think it is right to calculate 60/300 as a 20% return? The net paid is on the next installment would still be 270 (330-60)

What if they refund your entire 300k at the end of year 1, and you're committed to paying 570k in year 2. Would you consider that a 100% return? The net paid would still be still 270k (570-300)... and so on

Fletch

If they pay me 60.000 after year 1 that would mean I got indeed a 20% return on the initial 300.000 investment,taking in consideration of course that the initial 300K still is in the account, regardless of what my next premium would be as that will pay interest 12 months later.

If they refund my entire 300.000 at the end of year 1 that would mean I received no interest at all, just my initial investment.

By the way, the way you count gives the exact same end result .

One of the key points you're missing is the 300k isn't "in your account" like a bank account. It's a premium paid which you can't recoup until later. Your surrender value after one year is much less than 300k, as in year 2 it's less than 600k.

Look again also at what you are saying:

1) if they pay you 30k after year 1, you think you are getting 10% income. Next payment net is 300 - 30 = 270 or they penalise you

2) if they pay you 60k after year one, you think you are getting 20% income. Next payment net is 330 - 60 = 270 or they penalise you

3) Yet if they give you 300k and don't call it "income" you feel you are getting just your initial 300k back so 0% interest and you're still expected to pay the premium or they won't give you the 300k

How would you feel if I describe under (1) and (2) you are not really getting any income at all, just a smaller part of your capital back compared to (3)

4) If they gave you 300k "income" back after year 1 only after you pay 570 next year would you look at it differently under (3)

5) What about 299k or 301k after year 1 after paying 569 or 571.

Where's the line between capital and income?

6) What happens if they give you 600k "income" after year 1, but only after receiving your payment of 870 first. 870 - 600 = 270 net or they penalise you

These go on and on, but the key question is:

7) What happens if I ask you to invest 300k at start and give you 0% 1 year later, then invest 270k and give you 0% a year later, then invest 270k a year later before starting to give 30k and then 40k's. Are you still happy? This is effectively what they're doing (excluding tax of course)

The key point is all these scenarios give the same result, same cash in and out at the same points in time, so the apparent interest rate you think you are getting after year 1 is meaningless. Especially as you can't get at your capital until later, without significant penalties. It's not a bank account.

The more accurate way of looking at it is as per my post #90 and looking at net cashflow movements and finding the internal rate of return or.

It's 4.X% IRR (or 10 year yield) with a 10 year lock in. Net receipts don't start until end of year 3. Full principal is only recovered without penalty in year 10.

It's not a bank account. It also doesn't have a decent secondary market either like say a 10 year bond.

Fletch

Edited February 19, 2013 by fletchsmile

[Naam]

It's 4.X% IRR (or 10 year yield) with a 10 year lock in. Net receipts don't start until end of year 3. Full principal is only recovered without penalty in year 10.

It's not a bank account. It also doesn't have a decent secondary market either like say a 10 year bond.

it is ² ! am i right or wrong Fletch?

[mccw]

I didn't make it down bkb today .

I see what your saying fletch; its the same thing but different ways to look at it. For us it would only be a small part of our plan. We have no life insurance and it's not really the point but a welcome bonus. We''re just looking at it as a small piece of stable bht income. Given the 3years of committed payments and 10year lock in obviously it's not for everyone.

[mccw]

I'm going to research these insurance products a bit more before signing up and see if there's a better deal based on our ages.

I realis these are not accounts with personal money in them but like any investment I see it as money in against money out + benefits . Minus costs. taking risks to capital in to account.

costs and risks are minimal and returns comparable to what a low yielding property might generate with out any of the head ache. benefit of death pay out is a decent bonus.

Property is much better when chosen right. But I don't think this product is too bad as a little diversification.

How about Thai bht dividend paying stocks?

[meatboy]

fletch you are spot on with what you say,they are insurance products,i have one in front of me from a diff.bank,there is a plus if you die early into the term[first 5yrs] but if you want to cash in the policy i will give you one example,paying a yearly premium of 60k a year you will get one payment at the end of yr.2[8,000bht] if you want to surrender at the end of the third yr.you will get [102,000] so add the 8,000 you had means you have lost 70,000bht.and the life cover is only 400,000bht.the term is over 14yrs.paying in 60k for 6yrs.so you pay in 360k then you have cover for the next 8yrs.of 400k.you will get 3 payments of 8k over this period.so if you live through the full term you pay in a total[first 6yrs] 360k,receive 48k.plus 400k at the end of yr 14.so all in all you have cover from day 0ne and make 88k.

But the one you mention now pays only a fraction of the return the Bangkok Bank offers.

lets have the details then.

[meatboy]

I'm going to research these insurance products a bit more before signing up and see if there's a better deal based on our ages.

I realis these are not accounts with personal money in them but like any investment I see it as money in against money out + benefits . Minus costs. taking risks to capital in to account.

costs and risks are minimal and returns comparable to what a low yielding property might generate with out any of the head ache. benefit of death pay out is a decent bonus.

Property is much better when chosen right. But I don't think this product is too bad as a little diversification.

How about Thai bht dividend paying stocks?

we have looked at a few the one i have mentioned doesnt give you much life cover if you were to die after the premiums are paid,we would rather have critical illness cover,so if one of us became ill then we are not dipping into our capital,but those plans we were shown was worse than these life cover ones.

[up-country_sinclair]

Apparently those with a Krung Thai credit card are eligible for 6.25% on a 3 month fixed rate deposit.

The catch (and there always is one), you can only use your KTC points towards the deposit. More specifically, 1,000 points = 10,000 Baht. So, if you have 50,000 KTC points, you can use them as a 500,000 Baht deposit which will earn you 7812 (before taxes) in 3 months.

I heard about this from my wife who got an email from KTC today, and the offer expires at the end of this month.

As always, DYODD.

[fletchsmile]

Up-country_sinclair,

Interesting variation on a loyalty point scheme. 2 quick questions if you know:

1)What happens to the points after the 3 months expires. Do you get the points back? Do they convert to cash? or are they just used and disappear?

2)What's the normal points to cash conversion rate?

For Stan Chart Credit Cards for example 10,000 points = 1,000 baht if you cash them into things like gift vouchers, or food voucher discounts atrestaurants. KTB seems to be the other way round which is unusual. Hence question 1)

Fletch

Edited February 21, 2013 by fletchsmile