RIP Wayne Guest

[wayland0503]

I am interested in saving money on taxes. I make about 1.4 million baht a year and have to pay out about 275,000 baht in taxes every year. If I invest in an LTF then I can save money on taxes. But what LTF should I invest in? Are some better than others? I have looked into the Bualong fund from bangkok bank and recently got literature from the (yellow bank) Krungsri bank. Who to go with? Any advisement about doing this type of investment would be great!

[ThailandInvestmentGuide]

Welcome to Thaivisa Wayland ...

Yes LTF are indeed a good choice for many ppl getting paid in THB. There are many relevant threads in Thaivisa that provide both general info and discussion concerning specific funds. Try a forum search using key words like "mutual funds" to locate some of these earlier threads. I also discuss this topic in my book (click on my profile for further info)

Further, member 'fletchsmile' will be along in a few moments to eloquently present the merits of LTF and specifically, certain Aberdeen and ING funds ... look for his earlier posts on this topic as he knows his stuff

Edited December 7, 2012 by ThailandInvestmentGuide

[samran]

ING Funds and Aberdeen also have funds, amongst other non Bank providers.

[fletchsmile]

Welcome to Thaivisa Wayland ...

Yes LTF are indeed a good choice for many ppl getting paid in THB. There are many relevant threads in Thaivisa that provide both general info and discussion concerning specific funds. Try a forum search using key words like "mutual funds" to locate some of these earlier threads. I also discuss this topic in my book (click on my profile for further info)

Further, member 'fletchsmile' will be along in a few moments to eloquently present the merits of LTF and specifically, certain Aberdeen and ING funds ... look for his earlier posts on this topic as he knows his stuff

Hehe... I guess I'm getting predictable in my old age Yes LTFs are definitely my favourite investments in Thailand. Taking TIG's advice I did a Thai visa search using keywords "fletchsmile" and "LTF". These 3 came up:

http://www.thaivisa.com/forum/topic/543892-pay-off-car-loan-or-build-savings/page__hl__+fletchsmile%20+ltf#entry5176765

http://www.thaivisa.com/forum/topic/530423-investments-at-25-years-old/page__hl__+fletchsmile%20+ltf#entry5027429

http://www.thaivisa.com/forum/topic/560298-how-are-your-investments-doing/page__hl__%20fletchsmile%20%20ltf

There are a lot more threads on this on TV, but I think they archive some in terms of search function. These have some good ideas in as a start.

As Samran says Aberdeen are a great benchmark. I hold their LTF, and would be quite happy to add to it. I also rate ING, and have 2 LTFs thru them: Good Governance Funds and Big Cap Div fund: though they could be changing management, so see them as a hold and monitor if you have them, rather than adding new funds.

[kaspercat]

What do you think about Americans holding LTF? Especially if they are above the foreign income exemption allowance?

I see its a headache to report this passive overseas investment.

[fletchsmile]

What do you think about Americans holding LTF? Especially if they are above the foreign income exemption allowance?

I see its a headache to report this passive overseas investment.

Interesting question - probably best answered by Americans and actual experience of handling the admin and taxes.

My take (as a non-US):

1) I like equities as an investment class, as historically over longer time frames they exceed inflation for returns.

2) I think Thai equities make sense as part of your investments if you live in Thailand and plan on being here longer term, as A) it makes sense to have some THB assets to reduce your FX risk, B ) address inflation specific to Thailand. In the same way a UK or US person would have core holdings in their own markets. Additionally I think the Thai equity markets still have good potential over the next 5 - 10 years, especially compared to western markets, plus the shifting balance of economic power from west to east. A UK citizen should consider some Thai equity exposure because of growth rates that will exceed the UK, on the other hand not sure it would be in a Thai investor's best interests to invest in the UK on the same premise - except for diversification

3) LTFS are a tax wrapper which strengthens the case for 1) and 2) and returns are generally tax free in Thailand (although divs may be taxable depending on your circumstances

4) With LTFS you get tax relief at your marginal rate of tax (higher end of your tax rate). All things being equal as a US citizen even if you pay tax on your your overall returns from mutual funds this relief would likely still put you in a better position compared to plain investments without tax relief

5) The difficulty comes comparing them to US products with tax adantages, eg Roth IRA, 401ks etc which are also tax based products

6) Increasingly US citizens are likely to find wealth managers outsisde the US in many places like Thailand don't want to deal with them because of the extra admin hassle, US rules and so on. So I'd see a point (if it isn't here already in some cases) that they might end up preculded from the advantages

Would also be interested in comments from US people who use them - if any.

Edited December 7, 2012 by fletchsmile

[QED]

I am thinking of setting one up this year for the max tax reduction, which I believe would be 41,666 per month contribution. I really don't want to get involved with 'financial advisors' here who will just try and sell me loads more crap that I don't want or need, but where can I get access to these funds?

I worked out I can claim back 15,416 pm tax on this monthly payment, do I do this at the end of the year, or is it at source (ie deducted from gross salary)?

[Lazy Sod]

You can access these funds either directly by contacting one of the providers directly (I suggest Aberdeen Thailand), or through one of the resellers such as one of the big banks here.

You then tell your HR/payroll dept. how much you will be paying into an LTF this year so that they can recalculate your tax deduction.

In January of each year Aberdeen send me a statement confirming how much I paid in the previous year, there are two copies, one for me and one marked for the attention of the revenue dept. which I give to our HR/payroll dept. for submission with my annual tax filing.

That's it.

[QED]

You can access these funds either directly by contacting one of the providers directly (I suggest Aberdeen Thailand), or through one of the resellers such as one of the big banks here.

You then tell your HR/payroll dept. how much you will be paying into an LTF this year so that they can recalculate your tax deduction.

In January of each year Aberdeen send me a statement confirming how much I paid in the previous year, there are two copies, one for me and one marked for the attention of the revenue dept. which I give to our HR/payroll dept. for submission with my annual tax filing.

That's it.

Sounds easy, thanks!

[GarryP]

It was my understanding that an LTF was a one time payment fund. That is, you can buy a fund in your chosen amount and that there is no requirement to purchase further the following month or even the following year. I could be wrong though. This is unlike the RMF, for which you have to make a purchase every year, although the amount is not fixed, and can only close out (cash in) the fund upon reaching the age of 55. However, there is no need to cash it in then if you do not so wish.

For maximum tax benefit you should be aiming at both LTF, RMF and life insurance coverage. Fletch's posts on this give more details in regard to LTF's.

I will be starting using LTFs this year for my savings program and tax reduction. Following all these threads with great interest.