I Took A Big Step Today

[Gary A]

The 2005 stock market was very good to me. January of 2006 was also quite good. I emailed my broker today and told him to sell all my portfolio and I mean ALL of it. I'm going to start spending my kid's inheritance.

I asked him to set something up for me to start taking a monthly draw and still try to get a decent interest rate. I think interest rates will continue to go up. Most of my money is still in a 401K so how much I take will depend on NOT having any tax liability. I will sleep good tonight!

My biggest decision now is how much to keep in baht and how much in dollars. The baht is weakening so that is good for me. I worked VERY hard for my little nest egg and I'm determined to enjoy it.

[Carmine6]

The 2005 stock market was very good to me. January of 2006 was also quite good. I emailed my broker today and told him to sell all my portfolio and I mean ALL of it. I'm going to start spending my kid's inheritance.

I asked him to set something up for me to start taking a monthly draw and still try to get a decent interest rate. I think interest rates will continue to go up. Most of my money is still in a 401K so how much I take will depend on NOT having any tax liability. I will sleep good tonight!

My biggest decision now is how much to keep in baht and how much in dollars. The baht is weakening so that is good for me. I worked VERY hard for my little nest egg and I'm determined to enjoy it.

Based on prior discussions, I'm going to be in the minority, but I'd keep a lot of that in the US. Move enough money to Thailand so that you won't feel bad if the Baht strengthens. Maybe a year's expenses. Then you can try to move spending money over when the exchange rate kind of rises during the year. You can kind of skip months or quarters when the rate seems low since you have the cushion in the bank.

In the US you'll have a lot of options to earn a decent interest rate to try to tread water against inflation. In Thailand I'm not sure you could do that.

People on the board keep saying the dollar is going to drop because of the debt, oil prices and all kinds of other things. But betting on Baht against the dollar is a tricky game. If inflation in the US stays low (and Bernanke is said to be a big proponent of targeting a figure), you're playing currency of a higher inflation country against a low inflation country. That should keep the Baht from strengthening a whole lot. The US came in with a 4.7% unemployment rate for January and that doesn't include the growing number of illegal aliens working here. GDP has been fine in spite of oil prices. So I wouldnt' worry about the debt just yet. Inflation maybe, but if Bernanke is better than Greenspan, he'll firm up the dollar and keep inflation low.

[Firefan]

Brave step Gary! I know from experience how hard it can be to do ANYTHING when it comes to selling...

I am sure you have run the nos so no need to discuss that (personally I would want SOME equity exposure - but your risk profile is obviously different) - except remember that you generally want your nest egg to at least keep up with inflation (3-5% looking at the 2 countries you are attached to) - and as carmine points out, that can be hard in Thailand.

Time deposits here in Thailand are however on an upwards trend.

Personally I diversifiy currency wise GLOBALLY - and keep about a year of expenses in Thailand (some cash, some easy access via atm funds).

Cheers!

[Gary A]

Actually three of my mutual funds were global funds. I had over 35% of my portfolio in a global energy fund (PSPFX). Yesterday it was up .25 and today it was down .60. The volatility scared me and helped me to make my mind up to bail out. This small globe we live on has many problems and I'd rather just live in the boonies and enjoy my life without worrying about what will affect the markets. Most of my funds will remain in dollars. I'll be happy if the exchange rate stays where it is or even better if the baht weakens to 40. I originally calculated my financial requirements when the baht was 25 to a dollar.

Brave step Gary! I know from experience how hard it can be to do ANYTHING when it comes to selling...

I am sure you have run the nos so no need to discuss that (personally I would want SOME equity exposure - but your risk profile is obviously different) - except remember that you generally want your nest egg to at least keep up with inflation (3-5% looking at the 2 countries you are attached to) - and as carmine points out, that can be hard in Thailand.

Time deposits here in Thailand are however on an upwards trend.

Personally I diversifiy currency wise GLOBALLY - and keep about a year of expenses in Thailand (some cash, some easy access via atm funds).

Cheers!

[~G~]

I emailed my broker today and told him to sell all my portfolio and I mean ALL of it. ~

Feels good to turn those paper profits into cash doesn't it? I recently sold a mutual fund which gave me 25% profit in the last year.

My biggest decision now is how much to keep in baht and how much in dollars. The baht is weakening so that is good for me. I worked VERY hard for my little nest egg and I'm determined to enjoy it.

Nobody can really tell you if the Baht will be weaker or stronger. If your main spending is in Baht, holding most in $ will be speculative. However, as the Thai financial market is very limited, conservative investments overseas will yield more.

[britmaveric]

Just remember - trends are what you look at it. Bht vs $ had been pretty much the same over the last decade and a bit.

Edited February 8, 2006 by britmaveric

[lanny]

Just remember - trends are what you look at it. Bht vs $ had been pretty much the same over the last decade and a bit.

Well, I agree that you need to watch trends but the Baht has not been all that constant in relation to the dollar.

In 1996, before the big crash, the rate was hovering around 25. By then end of 1997, until about 1999, the rate was fairly stable around 35. In 2000, it had moved to 40, and then, 2001, as high as about 45. I know these rates because my salary was paid in Baht but calculated in dollars. So, every move meant a change in the size of my monthly pay check.

You can also make false conclusions from trends. If you were watching the trend of the number of horses in relation to the population of the US for the last half of the 19th century, and projected the trend to today, the average American city would be at least 6 feet deep in horse manure!

[johnnyk]

There are really only two bets against the US$ and that is either Euro or Yen.

The three main currencies of the world move cyclically against each other.

The baht is a very minor-league currency and aside from minor fluctuations there is no reason for it ever to appreciate significantly against any of the the big three.

[pnustedt]

Also consider tax implications. Currently I have PR in HK and am not taxed on any profit from my investments.

Everything is geared up to my retiring to Thailand in two yrs - my original plan was to take a substantial amount with me but I now think I will leave it here and drip feed my income as I require it. Perhaps have a float which would enable me to take advantage of any short term fluctuations in currency exchange.

[OldAsiaHand]

Based on prior discussions, I'm going to be in the minority, but I'd keep a lot of that in the US. Move enough money to Thailand so that you won't feel bad if the Baht strengthens. Maybe a year's expenses. Then you can try to move spending money over when the exchange rate kind of rises during the year. You can kind of skip months or quarters when the rate seems low since you have the cushion in the bank......Betting on Baht against the dollar is a tricky game.

Well reasoned, cogent, intelligent, and incisive.

Which, stripped of all the butt kissing BS, means I agree with you completely.

What's more, I practice what you preach and have never regretted it.

Edited February 9, 2006 by OldAsiaHand

[JimGant]

how much I take will depend on NOT having any tax liability

How are you going to do that? There'll always be a Federal tax liability, unless you're in one of those new Roth 401(k)s. You can avoid State taxes, however, if you move to Thailand and relinquish your state residency.

[Carmine6]

how much I take will depend on NOT having any tax liability

How are you going to do that? There'll always be a Federal tax liability, unless you're in one of those new Roth 401(k)s. You can avoid State taxes, however, if you move to Thailand and relinquish your state residency.

Since it's regular income, the progressive tax code should take care of that. I'm assuming the 10% penatly doesn't come into play, but either way it argues for leaving a lot of it there and taking slowly over time.

[Meerkat]

Based on prior discussions, I'm going to be in the minority, but I'd keep a lot of that in the US.

Don't you pay tax on interest in the US? Why not open an account at somewhere like HSBC or StanChart here in HK? You don't need to be a resident, HK is a USD clearing centre (so you can clear USD cheques as easily as in the US) and they offer excellent spot rate spreads - certainly a lot tighter than the UK for instance.

[Old Croc]

The 2005 stock market was very good to me. January of 2006 was also quite good. I emailed my broker today and told him to sell all my portfolio and I mean ALL of it. I'm going to start spending my kid's inheritance.

Good on you Gary! I'm not going to give advice on where to keep your money, just wish you all the best in spending it. The secret is to use your last dollar on the day you die.

Croc (a fellow SKIer)

[Carmine6]

Based on prior discussions, I'm going to be in the minority, but I'd keep a lot of that in the US.

Don't you pay tax on interest in the US? Why not open an account at somewhere like HSBC or StanChart here in HK? You don't need to be a resident, HK is a USD clearing centre (so you can clear USD cheques as easily as in the US) and they offer excellent spot rate spreads - certainly a lot tighter than the UK for instance.

If it's in a 401K rollover or other tax defered account, there's no tax until the money is taken out. Plus interest on certain government bonds isn't taxable in a regular account. The personal exemption and standard deduction for federal tax purposes totals $16,400 for a married couple so that can be withdrawn tax free from a 401K or rollover, or that much interest earned. The next $14,600 would be taxed at 10% so not bad.

A lump sum withdrawal however would likely push into the 28% to 35% tax brackets. Quite a hit just to move it. But for money already in regular accounts, it wouldn't hurt to put it somewhere tax free.

[Gary A]

After a lot of looking and talking to my broker the interest rate is still pretty dismal. I am out of the stock market but I have put 60 percent of the stock proceeds into what is technically stock but it doesn't depend on the stock market. The rest is in a money market and my monthly draw will last five years. These funds are pretty stable and pay a decent return. The funds are PHT, PTY and PFN. Even at that I did put a 15 percent stop loss on them just in case there would be a total meltdown. The monthly draw is direct deposited into my Citibank account and at $10,000 increments I will put the money in CD's.

[OldAsiaHand]

I have put 60 percent of the stock proceeds into what is technically stock but it doesn't depend on the stock market.

It would be interesting to know what you mean here. Are you referring to one of those guaranteed return funds that finances the guarantee by keeping almost the entire fund in fixed income and then puts a tiny part in the market looking for a kicker?

[Firefan]

I presume Gary refers to the 3 funds he mentions. All of them are closed end funds with a focus on lower-grade/higher yielding bonds incl. emerging market bonds and a very high payout %. (close to 10%).

Gary; you should check that the funds do not sell out of some of the holdings in order to keep the high yields mentioned - I.e. that the money you get are not just return of your own capital. Some closed end funds do that as part of their strategy.

Cheers!

[Gary A]

I think part of the confusion arises from the misinterpretation that these

are actual 'companies'. These are closed-end bond funds. As opposed to

open-end funds (what we call mutual funds), these funds have a specific

dollar amount prior to listing that never theoretically changes, except as

buyers and sellers determine value. The number of shares outstanding does

not change.

Nothing in life is certain except death and taxes. The yields are attractive

for the time being and since it pays every month I'll be sitting on them until

something changes. I DO have a stop loss set at minus 15 percent of the

purchase price. In the past 12 months only one has varied that much and now

it is in about the middle of the high and low.

I had one oil company stock too. Credo Petroleum. I made a LOT of money

off this little company. I recently sold out at $28. Today it is down to $23.

After I sold at $28 it went to $31 but then dropped like a rock. Life is good

but maybe we do need a little gamble in our life just to keep things interesting.

I am in the process of studying penny stocks, certainly not that I think I will

make any money but for the fun of it Maybe set up a small fund of maybe $5,000

and see where it goes. So far it appears that the brokers make the most money.

I presume Gary refers to the 3 funds he mentions. All of them are closed end funds with a focus on lower-grade/higher yielding bonds incl. emerging market bonds and a very high payout %. (close to 10%).

Gary; you should check that the funds do not sell out of some of the holdings in order to keep the high yields mentioned - I.e. that the money you get are not just return of your own capital. Some closed end funds do that as part of their strategy.

Cheers!

[Firefan]

Closed end funds(CEF) can certainly be a good tool in a portfolio, and can often be bought at a discount to the underlying value - which adds to the yield.

Like gary I can not help fiddling with more trading/fun/gambling stuff but have a specific amount allocated to that - and in a seperate account.

As I did not have time to fiddle late - I dumped it into a couple of CEFs GIM (foreign bonds) and IGR (intl. real estate reits) both paying a nice yield - but will have to get back into some more fun trading soon!

Cheers!