Living Off Your Investments ...

[kaisaigai]

Hi all,

I was wondering how many of you actually pay the bills in Thailand by living off your investment portfolio. I am building a well-diversified portfolio, albeit a small one , and hopefully it will provide me with enough income to live in Thailand. I am a bit scared though to be totally dependent on the performance of my stocks and bonds et cetera...and a severe bearmarket will definitely disturb my sleep.

I expect an average return of around 7,5% per year and after inflation (2,5%) en taxes this will result in an real annual yield of circa 4%. My tolerance for risk is pretty low, although I know - being only 32 - I should probably invest more than 60% in stocks.

For those of you who are in a similar situation, I would like to hear more about your strategies.

By the way I will settle for a monthly income of around 25.000 baht, providing that I own an apartment/house so I won't have to pay rent. I will be looking for a place to live somewhere outside BKK. After my savings/investments have reached the value of 200.000 euro, I would be able to take the leap...can't wait...

or I might move to Thailand earlier and do some teaching work, while my current small investment portfolio will hopefully turn into the above mentioned amount over time.

[Sir Burr]

Sorry mate, you don't have enough.

25,000 bht a month even with an apartment is not enough if any emergencies arrive.

Conventional wisdom says that whilst you are young, you should invest in stocks, because you are in for the long term and more importantly, you are still earning money from a job.

Once you retire, wealth accumalation is no longer the goal; it is wealth preservation. The bulk of your retirement money should be in ultra concervative bond, fixed deposits and gilts with maybe 10% still in stocks to take care of inflation.

If you rely on your stocks to support you, sooner or later; if, not when, you will take a big hit when the stockmarkets nose-dive. You say you are thirty-two? You can expect to live until seventy. The chances of the market going down by shit-loads within the next thirty-eight years is pretty good.

Forget retiring, you really don't have enough. Go back to work.

As a rough idea, you will need house, car and at least US$500,000 before you can even think of retirement at such a young age.

Edited February 1, 2006 by Sir Burr

[kc-phil]

Dude. I am in a similar boat. I can’t fight the itch to shove off from my home shores and explore the world on a more indefinite time schedule. That said, I have had my illusions kicked out of me by talking with lots of expats and monitoring boards like TV to get an idea of what’s truly involved in living abroad.

For openers, I would recommend talking with an investment professional about your investment strategy rather than relying solely on advice from strangers on message boards.

Secondly, how are you going to buy a house or condo from 200,000 euros and still have enough money to generate the interest you will live on? I think your calculations might be a tad on the optimistic side.

Third, when are you planning to buy this place? Two days off the plane or after a year in the country? How do you know you will want to stay in Bangkok for a long time? What if after a year you decide you want to move to Samui or travel on to Viet Nam or, heaven forbid, move home? Buying real estate in foreign country is a big step and not one to be taken lightly.

Fourth, if you retire at 33, what are you going to do with your time for next 35years? Sit in Nontaburi and count grains of rice? If you are going to try and start a business, where is that money going to come from? I’d be real careful with that 200k nest egg….it can go pretty quick if you aren’t careful and TL can be a tough place to earn a buck….

Good luck. Keep in touch…..

[womble]

You are young, still 32 this gives you one very important advantage over older investors, the magic of compounding. To quote Einstien 'The eighth wonder of the world'.

You should put all this money into a Mutual fund, let a pro take care of it as if you think you can retire now on that amount and buy a house, you obviously can't invest the capital succesfully using your own knowledge.

If you go it alone....

You say your don't have a high risk tolerance, fine, but with age on your side you should at least be semi agressive in your investment strategy. Go for around 55% in equities, around 35% in fixed income securities and the rest in cash or equivalents. Don't touch any of the earnings, let them compound and when you have some spare cash add to the portfolio. Trust me in later life you will be extremely comfortable. If you try to retire now and live off that amount you will regret it big time.

Oh and if you really do take the crazy decision to retire so young and not use proffessional advice or a fund manager, make sure you diversify as any hit from the markets or structual changes in the economy which may take place over time will send you straight back home looking for a job.

And if you do decide to go it alone make sure you rebalance your stocks at least annually. Cos if those waitings change you could be in for a shock one day.

Just my two cents worth......

Edited February 1, 2006 by womble

[BillyParadise]

The common wisdom is if you want your capital to last 50+ years, then 4% is the max you should withdraw each year.

So if you want 25k baht per month, that's 300k baht per year (sounds low to me - but hey, I live in an expensive place). You should have 7.5 million baht to your name - 160k euro. Plus the cost of the apartment.

Personally I'd want 5x that.... so I guess I'll be saving a while yet myself.

BP

(see www.retireearlyhomepage.com)

Edited February 1, 2006 by BillyParadise

[Steve2UK]

A lot of sense in the replies so far..........

One more volatile/negative factor to keep in mind for the future - exchange rates. I'm a Brit, so I think in terms of £ sterling versus baht - but the same principle applies to the US$ and Euro.

Pre-1997, it was generally £ = 35-40 baht. For much of 2005, it was £ = 72-75 baht. During 2005, while I was planning my move to Thailand for 2006, I based all my calculations on £ = 65 baht and thought I was being very cautious and conservative in my budgeting. It's now £ = 69 baht.............

Over the last couple of months, the baht has been appreciating against the main currencies (UK£, US$, Euro, Japanese yen and Chinese yuan). Will that trend continue? I don't know - and neither do you. Be very careful..............

[ace]

I estimate £1,000 per month required, based on 60 / 65 thb per £.

I tried living on a teacher's salary already (25-30,000 thb per month) in Bangkok and didn't enjoy it.

3 pronged strategy:

1. Property (UK)

2. Stocks (ISAs - global)

3. Pension (Private)

This is standard investment practice, not rocket science.

Goal should be reachable in 10 years if IT market remains good and I maintain my skills.

Though 10 years is a long wait...

[GuestHouse]

Some good advice, especially from Steve and his warnings about exchange rates. I'll add the interest rate you need to consider is not 2.5% (the back home rate) but around 7~8% the Thailand inflation rate.

You also need to consider that your plan works for getting by now when you are young and fit... it will not work for long term when you have to consider the responsibilities of life that will inevitably come along.

And then one final point. What if things go wrong?

What if we have a change in the establishment that goes really anti foreigner, where are you going to go then?

Money is about one thing only - CHOICES and when I was in my early thirties I too was frustrated by the thought of having to work the way I was working for another 20 or 30 years... But, and this is the big but. In our 30s we have the energy and the outlook to take on a lot more than we do when we get to our 50s and 60s.

The choices you would like to make now are the choices you are going to need to make when you are older. Don't burn your chances for the future.

Our thirties are a time to be busy in life, building a future....Something I'm only beginning to realize now as I aproach my late 40s.

[BKK90210]

Some good advice, .....And then one final point. What if things go wrong?.....Money is about one thing only - CHOICES...... The choices you would like to make now are the choices you are going to need to make when you are older. Don't burn your chances for the future.

Our thirties are a time to be busy in life, building a future....Something I'm only beginning to realize now as I aproach my late 40s.

Good advice 'Guesthouse' and spot on!

Being 32 is still very young to make the big leap to an unknown future about your life and in LOS. Think carefully and take any advices here to your heart...about pros & cons....seriously. Don't think with your heart or your small head.....use your big head instead!

I had done many things suggested above and it worked out for me....and here my little story:

I told myself I want to be able to retire at 50 and not have to worry about the $$$$.....I asked myself then what can I do to achieve my goal.

When I was in 20s...I went to school and had my master in Structural engineering. I knew without an education I can only go so far but not beyond. Then I had my own engineering firm when I was 30 and today is my 14 yrs....never had any single lawsuit. I always pay attention on both of my professional work and life.....while never forgot my main goal. I live simple life and as flugal as when in my university's years, eventhough I'm making $90 per hour. I don't buy things I don't need. I found that many people spend too much on the things they want but not need. In the meantime I also own realestates to guard againt the inflation and make sure have a good inverstment portfolios. Throughout my life I've made some bad decisions and good decisions, I can always learn from....but never stayed far from my real goal.

As results, I'm now 44 ....in the top 15% of the US population in term of net equity...and be able to retire anytime I wish. I also married my best friend when we're still at the universiy...and still going strong after 20 yr!. Most of the time we don't like the same things and we both have our own interests and opinions....but we both always fit together - well just like jigg-saw pussles...this is a true companionship to me. Now we both chose Thailand to be our next destination for our retirement because of many things....not only just because things are cheaper. We both have taken time to learn Thai language beforehand....therefore now we both can read, write quite ok....but very well in speaking. We hope to move to Thailand in a few years from now.

Retirement with money means you have the luxury of doing so many things or trying new adventures what your heart desired...and therefore come the experiences Thailand has to offer that no other place can.....This is the meaning of happiness and a true of retirement to me.

Just my thought

BKK

[RAZZELL]

Some interesting posts....

Thanks guys...

[Gary A]

Unfortunately sometimes being young is a curse. There are simply too many years ahead of you to have any idea of what the future will bring. Currency changes, inflation and world economy are not static things. I too wanted to retire early but it didn't work out. I did manage to finally retire at 58 years old. I decided that rent would likely be the biggest variable that I faced so I bought a condo to cover that. Owning a place to live makes it easier to project your needs. Looking at and listening to the gloom and doom characters made me think long and hard about how much I really needed. I decided that $1,500 US a month would be safe for my lifestyle. When I am able to collect Social Security my nest egg will still provide for any emergency that I can think of. The plan was to start collecting at age 62 but as things are I will probably wait until I can collect full benefits at age 66. YES! Things are going well.

[thaistick]

$1500 a month is slightly better than someone on welfare gets and I make that much a day from just my penny stocks.And don't count on Social Security being there.

Good luck!

[Gary A]

Quite frankly I think you're full of SH!T. If you need more than $1500 a month to live happily in Thailand you won't live long anyways. Drinking myself to death is not the way I want to go. If I told you what it takes me to live happily up country you would tell me that I'm full of SH!T.

Different strokes for different folks. And YES, I would live like a pauper on my income if I were living in the states. I DON'T live in the states.

Social Security will still be around after I'm long gone.

$1500 a month is slightly better than someone on welfare gets and I make that much a day from just my penny stocks.And don't count on Social Security being there.

Good luck!

[PeaceBlondie]

Original poster, you don't say when you'll retire, or how much you have saved up so far. I'd say, wait until you have US$400,000. Or, a fixed pension with COLAs, or a combination of the two. As it has been pointed out, the historical inflation rate is well above 2.5 percent per annum; figure at least 3.5 percent.

The experts talk about diversification, but if you weren't so impatient, you could keep it all in stocks for the next thirty years. My dad didn't diversify until he was in his 70's, and by the time he died at 84, was entirely in fixed income bonds.

Living in Bangkok on 25K, even with housing already purchased, is roughing it, with no margin for error. for example, I've got a health crisis today, and I'm heading for Samitivej hospital. If they can't solve it, on to Bumrungrad. You've got to have the resources for that sort of emergency.

Looking back now on that 40-some years of full time work, I hardly know how I managed to keep on working at all those difficult jobs. The thing that made it possible to retire at age 56 is that for 22 years, my employer and I were saving about 26 percent of my gross income toward retirement. The trick, young man, is to live on HALF of whatever you gross. For decades.

Good luck. Thailand, and several more paradises, will still be here when you've got the cash saved up. But please wait until you've got enough. However, don't keep saving until age 80 and then totter on over here.

Edited February 2, 2006 by PeaceBlondie

[johnnyk]

thaistick, sounds like you're hung up on the numbers.

listen to gary. if you want to live in siam, then its the siam col that counts not what $1500 does anywhere else.

we are glad you make that much on your penny stocks.

gary has the life he wants and is doing just fine.

hopefully you will do just as well.

in the meantime, he lives in siam and you are a wannabe living vicariously in falangland and hoping to squeeze in a 2-week trip.

Edited February 2, 2006 by johnnyk

[thaistick]

Farangs or haoles in Hawaii are as rare as they are in Thailand.And yes,different strokes for different folks.To be able to spend a week in Paris last September and Rome in November and seeing Cairo and Luxor in Egypt this March costs but the good life costs.Bare minimums are bare minimums.No thanks!

[Gary A]

Different strokes for sure! I hated Paris. If you were to hand me a ticket for a round the world first class tour, I'd try to sell it. I certainly wouldn't go even if I had to give that ticket away. In fact I would enjoy giving that ticket to someone who would enjoy it. From time to time I have business in Jomtien that I have to personally take care of and I HATE that trip. As long as I have my Thai wife I'm perfectly content to live in the boonies. Some of my friends have died in harness. I never had any plans to try to keep up with my highly mortgaged neighbors. I owe NO ONE a dime and I like it that way. Enjoy your trip but don't forget to worry about your money. Money is only important when you don't have any.

Farangs or haoles in Hawaii are as rare as they are in Thailand.And yes,different strokes for different folks.To be able to spend a week in Paris last September and Rome in November and seeing Cairo and Luxor in Egypt this March costs but the good life costs.Bare minimums are bare minimums.No thanks!

[thaistick]

Hated the Louvre,Musee D'Orsay,Montmarte,Notre Dame,Moulin Rouge,Champs Elysee,Marais,

Tuileries Gardens,Luxembourg Gardens,Invalides,Place de la Concorde,Pantheon,Opera Garnier,

Arc de Triomphe,Eiffel Tower,Seine night cruises,St. Germaine,Left Bank,Pantheon,Saint Chapelle,

Bordeaux,street performers,violinists in the Metro,stunning and thin Parisian women,etc.?

I hate Paris so much I go once a year and am getting an apartment in the Marais district.The only thing worth hating in Paris is in the suburbs and its American EuroDisney.

Drove through Ohio once and that is as close to a boring provincial hel_l on Earth as possible.

Edited February 2, 2006 by thaistick

[Heng]

Numbers aside, once you have your home and whatever toys you require paid for here (or anywhere), your funds from whatever income streams you have will last longer here than in the west. And needless to say, if your income stream is of any substantial amount (although of course substantial is a relative term), it goes hand in hand that because of the low cost of living here, your wealth will continue to grow because you can simply continue to plow whatever you have left back into your investments.

[Gary A]

Excuse me Thaistick, I did enjoy the Louvre. They have more Egyptian artifacts than Egypt. I DID try to think of anything else I enjoyed and I can't think of anything. The south of France is like being in another country. The people are kind and gracious. I couldn't believe I was still in France after being in Paris.

[Gary A]

My income is not that substantial but I now have more disposable income than I ever had before in my life. I spend approximately 30 percent of it. I gave my children the last property I had in Ohio and told them not to figure on inheriting anything because I plan to spend the rest. (They laughed). My net worth grows every year and I really should spend some of it or my children WILL inherit a little. My biggest expenses are UBC TV, Ipstar Internet, health insurance and car insurance.

Numbers aside, once you have your home and whatever toys you require paid for here (or anywhere), your funds from whatever income streams you have will last longer here than in the west. And needless to say, if your income stream is of any substantial amount (although of course substantial is a relative term), it goes hand in hand that because of the low cost of living here, your wealth will continue to grow because you can simply continue to plow whatever you have left back into your investments.

[Heng]

All good, Gary. Sounds like you have found a good balance.

My income is not that substantial but I now have more disposable income than I ever had before in my life. I spend approximately 30 percent of it. I gave my children the last property I had in Ohio and told them not to figure on inheriting anything because I plan to spend the rest. (They laughed). My net worth grows every year and I really should spend some of it or my children WILL inherit a little. My biggest expenses are UBC TV, Ipstar Internet, health insurance and car insurance.

Numbers aside, once you have your home and whatever toys you require paid for here (or anywhere), your funds from whatever income streams you have will last longer here than in the west. And needless to say, if your income stream is of any substantial amount (although of course substantial is a relative term), it goes hand in hand that because of the low cost of living here, your wealth will continue to grow because you can simply continue to plow whatever you have left back into your investments.

[Firefan]

I am with Heng and Gary - I jokingly tell my friends that what they spend on their car back home (payments, service, parking fees, extras, fuel, oil, insurance, road taxes, enviromental taxes, bridge tags, fines Etc.) I live a very good life for here in Thailand.

$1500/mth here, when owning ones housing, is certainly enough for a fine lifestyle for most - and meanwhile the remaining investments can be left to grow.

Back to the actual portfolio; with 50 years ahead I would fear having only 10% exposure to equities. Personally I have about 40% equities, 30% bonds and 30% commodities/gold/reits(I call it "real stuff"). All is globally and currency wise diversified.

Cheers!

Edited February 2, 2006 by Firefan

[BlackJack]

you can invest in New Zealand

now paying the highest at call interest rate in the world at over 10%

there is a foreigner tax of 10% on your interest earnings

so if you make 1000 dollars then the witholding tax is 100 dollars

however the risk is the NZ dollar devaluation - (

then Australia pays 6% at call - again 10% witholding tax

i get 9% net on a condo i own (

share markets in Australia are strong and will continue as many blue chips have 10 year plus contracts with China

BHP for example up 150% over the past 2 years

most commodities share portfolios paid net 20% plus last year

but all these investments are unsure

bricks and mortar - see 97 crash in Thailand and Tsunami - real estate prices stayed and then went up

the best investment you can make is having a vasectomy

no kids fees, no school fees, no hospital fees, fashion, games etc etc

dont have kids and you will immediately have a super fund of 500,000 plus dollars for the future

[GuestHouse]

So Thaistick, what are you telling us, that you are loaded? Why are you telling us? What have you got to prove? And who have you got to prove it to?

Next time you are in Rome, send me a PM, I'll make a point of staying in doors so I don't run the chance of meeting you down the Cotto - Hel_l I don't need to feel any lower down the social scale....

But why and I here? Why was I in NY, London, The Hague, Tokyo, Beijing, Bangkok, Singapore... How much was I getting paid to be there? ... that's another story, and I don't need to tell anyone, I have nothing to prove.

I do have one thing I doubt needs much proof, and that is people who make claims like $1500 profit a day on penny shares are usually talking out of their bottoms (to be polite).

It’s just a gut feeling, traveling around as I do, I get to meet a lot of Walter Mitty’s and I have to say, all the alarms are ringing.

Sorry, I should add, I'm not saying you don't make $1500 a day on your penny shares.... I just doubt it very much.

I wouldn't go as far as to call you a liar... Perhaps a dreamer... but liar would be too harsh.

[Sir Burr]

Sorry, I should add, I'm not saying you don't make $1500 a day on your penny shares.... I just doubt it very much.

I'm sure he does make $1500 a day (sometimes), he just neglects to say that he loses $1500 a day sometimes. That's the nature of share trading.

[kaisaigai]

Thanks to all for the sound advice that has been given so far.

I am aware of the fact that it's quite ridiculous to think about retiring at such a young age. I am just longing for an escape from my current miserable life (having burn-out symptoms....like insomnia but I won't bother you with that).

The easy-going lifestyle that Thailand has to offer is quite tempting for me and despite all the scepticism I will probably take the plunge even before I have reached the 'meagre' amount of €200.000.

As I am used to living frugally, I do think that 25.000 baht will be enough. Buying a condo will provide me with a natural hedge against euro/baht-fluctuations. By the way, I hope I can top that amount with 10.000 baht per month by sub-letting my apartment in Holland. But given the risks I guess this won't be sustainable.

All in all I know that it's probably better to stay and work here at least another 8 or 10 years...but the idea alone makes me depressed

I am interested in stories of tv-members who have actually retired early in thailand and made a succes of it...

[~G~]

I am aware of the fact that it's quite ridiculous to think about retiring at such a young age. I am just longing for an escape from my current miserable life (having burn-out symptoms....like insomnia but I won't bother you with that).

I think what you need is just some time off, you are too young to consider retirement. Will you limit yourself to living on 25K a month for the next 40+ years? Why should you? Take a long break and don't buy any condos.

[Jack Jones]

Your 200,000 euro would earn 4.5% in a standard saving account here in the Uk which would give you a monthly income of 36,000 B, not enough in my opinion. I would want close to 60K a month to live in Thailand and be comfortable.

[Taggart]

I am with Heng and Gary - I jokingly tell my friends that what they spend on their car back home (payments, service, parking fees, extras, fuel, oil, insurance, road taxes, enviromental taxes, bridge tags, fines Etc.) I live a very good life for here in Thailand.

$1500/mth here, when owning ones housing, is certainly enough for a fine lifestyle for most - and meanwhile the remaining investments can be left to grow.

Back to the actual portfolio; with 50 years ahead I would fear having only 10% exposure to equities. Personally I have about 40% equities, 30% bonds and 30% commodities/gold/reits(I call it "real stuff"). All is globally and currency wise diversified.

Cheers!

Regarding Firefan's portfolio, I agree with everything he says. My own portfolio, may not be the same, but like his, it's diversified. A portfolio of mostly nominal bonds will not protect you from the ravages of inflation.