Retirement Planning For Los

[TexasRanger]

I'm doing some retirement planning to ensure I will have enough money to retire on in around 15 years or so. I have a couple of pensions from the UK but obviously they aren't doing so well these days so I am loathe to put a lot more money into them.

I was considering the possibility of saving a big lump sum and just buying a pension annuity with cash but don't know if this is possible considering I spend so much time out of my home country.

I do have a property overseas but buying another would cost a lot to borrow so not sure thats such a good idea. Our main home in Thailand is paid for so a roof over the head will never be an issue. Fortunately I earn quite good money so would like to take advantage of that to feather the nest. I am wondering what others are doing and if anyone has some good ideas. One major issue is my fear of high risk investment in case I lose it all and leave my family wanting. Not after a fortune, just enough to live comfortably in the later years. Any bright ideas/experience welcome. Knob swinging and sarcasm not so much. :-)

[whiteman]

keep saving save save save

[TexasRanger]

To what end though, we don't know how long we will live (unfortunately)

[MichaelJohn]

15 years is a long time. What I did .....

1) when I considered there to be the minimum in my pension fund to live off in retirement I stopped contributing. You can't take money out so I didn't want to lock too much in there. I invested in other things (property & land) that could be cashed if required.

2) I "actively manage" my pension fund - I don't like risk but I (think) I can do better than a fund manager making generic decisions. E.g. I invested some on my fund in Japan when Abe took over as I thought he'd be radical and Japanese markets would do well. I also invested in USA markets at the turn of the year when it seemed obvious (to me) that the economy was on the way back up. I'll move back to more cautious funds shortly as I think I've had gains that I'm happy with.

3) if you have cash you must do something with it as bank returns are poor. I think if you study hard you can find something providing a decent return - land has delivered my biggest return followed by property rental.

4) Thailand is a country where your enjoyment is directly linked to the amount of money you have. The more you have the more you can enjoy yourself :-) So, keep saving and pray the pound picks up in 15 years :-)

[StevenHeidbriderSr]

Made me think of my six year plan but that went out the window when my spouses health worsened and mine too. Six year plan became a 1 month plan. Thank God I had been saving for many years and could afford to retire here.

[davejones]

4) Thailand is a country where your enjoyment is directly linked to the amount of money you have. The more you have the more you can enjoy yourself :-) So, keep saving and pray the pound picks up in 15 years :-)

That's true of all countries.

[davejones]

I've done very well from property over the years, and I think now could be a good time to invest in UK property. Interest rates are very low, and likely to stay there for years. And the government have just announced some lending scheme that seem destined to drive up property prices over the next few years. And 15 years is plenty of time to build up a nice property portfolio. Then live off the rental income, or sell up.

[yoshiwara]

I've done very well from property over the years, and I think now could be a good time to invest in UK property. Interest rates are very low, and likely to stay there for years. And the government have just announced some lending scheme that seem destined to drive up property prices over the next few years. And 15 years is plenty of time to build up a nice property portfolio. Then live off the rental income, or sell up.

That is OK if the property one purchases can be readily sold when the time comes. Some 'down-market' areas might yield good returns but a different situation when one wants to sell other than through an auction.

[Mousehound]

I must be the only person in the world that has lost money on property. In fact a lot of money lost. It seems I always have to sell when the market crashes. My best investment has odly been wine. With a nice investment of 1971 Grange Hermitage purchased at & $95 per dozen to mark my daughters birth. Simce then I have purchased a few bottles every year. The odd thing is that I don't drink wine much - just as well. And, if the market really crashes and I'm broke I shall take up the bottle and drink myself to oblivion with some very fine wine.

[rsokolowski]

4) Thailand is a country where your enjoyment is directly linked to the amount of money you have. The more you have the more you can enjoy yourself :-) So, keep saving and pray the pound picks up in 15 years :-)

It is not just Thailand it is every place on this planet. As someone else also said save, save, and save some more. Edited April 23, 2013 by rsokolowski

[TexasRanger]

So just a large pot of money? Has anyone here ever bought an annuity with a cash lump sum?

[MaiChai]

20 years living off and on in Thailand makes me not want to retire here. You won't have the same rights as a Thai and will always be at a disadvantage. Then there is the escalating health care costs here. I would never want to sever links to a country where i do have citizen rights. I will spend my summers in the UK and winter in Se Asia. I have also retired before and I would prefer to do some work in my old age. So I will never fully retire until I am unable to work.

I don't trust pension funds so a mixture of property and investments wrapped up in a pension is the way to go. Rental income is a good way to finance your old age.

Edited April 23, 2013 by MaiChai

[TexasRanger]

I agree about the healthcare, that's always a worry, I can afford the good coverage now but in the future? I too plan to work for as long as I can but that too will be decided by health. I still think I would have a better quality of life here than the old country. Just need to make sure I have the funds.

[ice4351]

I would invest in a condo or house where you will want to live out your days in Thailand Prices will go up greatly in 15 years. If you pick a good location the value of the property will go up to. You could rent or lease it out for now. Also consider if you want to have a car or not and consider the cost of that. Health insurance is the other thing you need to be concerned about. Location is key to wherever you live. I would consider central Pattaya where you could walk to everywhere if needed be. Not having a car will save you lots of money.

[boston2202]

Don't be sucked in to so called 'alternative, non-market correlated' investments that offer low volatility (i.e. low risk) and target double digit returns which seemed to be actively marketed in the offshore environment...... While a 12%pa return with low risk looks very attractive, there is significant underlying risk with many of these investments which are not disclosed, and unfortunately a few of these have encountered problems recently & investors can not get their money back (or lost considerable amounts).

If you are living & working in Thailand and therefore paying Thai tax, consider an LTF issued by a Thai bank / investment company. For starters, it will give you a tax deduction plus it will get you exposure to the local Thai market, and if you are going to be spending your retirement money in Thailand, then this also removes possible exchange rate risk. The money only needs to be remained invested for 5 calendar years (actually it can be accessed in just over 4 years if you time it right) before you can cash it out tax free.

When investing, the main issues that you should look at is diversification of asset class and quality of asset. No matter what asset class you invest in, quality is paramount. Don't be put off using managed / mutual funds as there are some very good managers out there that have averaged well over 8%pa, but like any other asset that can freely traded, there will be volatility and periods where the value of the investment falls. If you are presented with a fund that never seems to have a negative period, I would be very skeptical.

If you invest in a diversified portfolio of quality assets, which would include shares, bonds, commodities, property and cash and can accept that there will be some volatility in the short term, this has proven in the past that it does create wealth for investors over the longer term. Plus, if it is invested outside of the pension environment you have the flexibility to access funds prior to what the pension regulators determine what your retirement date / age is.

Well that is my humble opinion on investing anyway........

[sirchai]

I'd say that thinking about the future does make sense. But in 15 years? We'll have ASEAN, plus six.

Many things will change and people get sick, die, or suffer of other problems. I settled down here 11 years ago, when life's much cheaper than it is now.

One thing I'd consider is to take care of your health .That's your most important capital.

Just watch what's going to happen.-

[mikecwm]

http://www.financialpost.com/story.html?id=2257623

Here is article from the Canadian Financial Post with some ideas re - investing in Property Management companies.

The private ones seem to pay around 8% annually, paid monthly with an increase of your original investment of 3-5% annually.

Anyone with experience of this?

I will soon have money to invest and with retirement only 2 years away could get used to 8% + my investment increasing.

There must be similar companies in the US (TexasRanger - must be US, right?).

I'm sure gold is a good long term bet, but keeping it safe is another matter.

Edited April 23, 2013 by mikecwm

[TexasRanger]

That's some stuff to think about. I am a great believer in not putting my eggs in one basket. To that end I have a property rented out in the UK that I was lucky enough to buy before prices went crazy, also have a rubber tree plantation in Thailand but I am sensible enough to realise something as simple as a brush fire could wipe that out. I did consider buying a couple of cheapish condos here to rent out but don't personally know anyone who has done this to find out if it is worth doung or not. A property investment fund is something I had not considered but sounds interesting.

[laislica]

Remember at the end of the 60's when Britain was broke?

They imposed a freeze on taking money overseas.

If you travelled by car they allowed an extra £15 on top of the £50 personal allowance.

This would be my worry, they have done it before AND CAN DO IT AGAIN.

"On 20th July, 1966, the Prime Minister decided, for no economic reason as far as I can tell, to impose a £50 limit on the travel allowance for British citizens abroad. That £50 was computed thus. The total number of British citizens travelling outside the sterling area was divided into the aggregation of expenditure and it was decided that the average expenditure per person was a trifle less than £50. The Chancellor therefore decided on a £50 limit."

If you are going to live here full time, despite the warnings about not being a full citizen and health matters, then I would consider having something in Thailand which generated wealth.

You can, under the right circumstances, buy your way into a Thai citizenship but it is costly and takes ages.

I spend half a year in the south east of Spain and the other half in Thailand.

(Livin the dream as a retiree for the last 13 years)

Good luck with what ever you choose to do.

[SpokaneAl]

I believe in a diversified portfolio of primarily index mutual funds. I watch my asset allocation and modify via additional investing, and when necessary taking money out. Studies and data tell us that the numbers of actual mutual fund managers who can actually beat the market over time gets smaller and smaller as that time period increases.

While some have had good luck with property investments, I find the friction (in the form of high costs and often extensive time needed to sell) to be a hindrance. When I want to reallocate or sell some mutual funds, I can do it on line and the money is in my checking account within a couple of business days. This is especially important to me when residing in Thailand (which we do as snow birds for 4-6 months a year). I do not want to worry about property management issues, especially when the property is half way around the world from my current location.

And while I admittedly know absolutely nothing about the British pension system, one comment made concerning its poor returns as a reason not to invest does trouble me. If one has 15 years until retirement and the investment is in the markets, a flat or down market is a good thing for the next few years - you are investing money when the markets are on sale. Why wait until the sale is over and then invest? A flat or down market at this period of your investment life will give you the opportunity to buy many, many shares at reduced prices.

[travelman]

My advice

"Don't keep a lot of money in Thailand. It's better for you. Invest in UK/US Stock market in trending markets otherwise go for bonds."

[Diazo]

Texasranger. I thought this post would stir up a lot of interest and a wide range of answers. And it certainly has done that. As a long time investor, and training as a financial planner I can tell you our general advice on annuities. The are absolutely fabulous products.....for the person selling them. Advice,read the fine print and stay clear. Another thing I've learned after 40+ years of doing this, not one ever takes a professionals advice unless perhaps that professional is stealing from you. Then they listen to all the advice. Not ever thinking this pie-in-the-skie promise can not be achieved. Bernie Madoff comes to mind. He promised guaranteed 12% return month in and month out. But first TR it is you that must decide what will keep you awake at night. Could you sleep knowing your investment lost 5%, or perhaps you would get restless if it lost 15%. There is a test we give folks to determine this. Once you've determined that you can e placed in an appropriate product. I too am a real estate investor and have done extremely well. But this is in U.S. real estate where we get a tremendous tax break for owning RE. I don't know the tax laws of any other country. But if this you cup of tea you may have real estate investment clubs in your country. A great way to learn this end. In the U.S. you can go to nationalreia.com, and find all the clubs. If you want consistant fairly even returns I would suggest you look into developing what we call a" Permanent portfolio". This takes a 25%,25%,25%,25% setup in different areas of the market which have no market correlation. Regardless what you do you have a fairly good time horizon to do it in {15 years). This assuming you have a personal budget that is within the parameters we use as appropriate. But again this is based on U.S. standards. I've never researched whether it could apply to any country. Probably could since it is predicated on 100% of income. But as a real estate investor in the U.S. you could easily be setting on a princely sum in just 5 years.

But I ramble on...watch out for annuities. Never bought one never would. O.K. all you annuity salesman now lets hear your pitch!!!

[Diazo]

Boston2022,

You first suggest in part not to pay attention to those that suggest investing in ".....non-correlated" investments. Then later you posit that would should invest in diversified portfolio all of which are non-correlated. I agree w/ your position on diversification, which in and of itself, is non-correlated. We have very good historical data that will show a relatively smooth return of just South of 10% return with the "Permanent Portfolio" approach Which by the way is made up of an equal balance of a Total Market index fund,

Bond Fund, Gold Fund, and cash. But I certainly agree with the remainder of what you said.

[Diazo]

SpokaneAl,

Don't ya just love this topic. Enjoyed you last paragraph. Oh so true! But for many we see this bums and bust only with 20/20 hindsight. Take every boom and bust back to the Tulip craze of the 1600. They too thought the price of tulips knew now top. Then the last guy that bought found the top. Many a soul has bought "his" when everything was at rock bottom fire sale prices, only to watch it go lower. Historically the average joe isn't ready to buy until the fever has hit, and he SELLS once it has hit bottom. I think one must really know the market that he chooses to invest in. I bought oodles of real estate when there were not to many FOOLS left to buy like you were at a sale in a candy store. The recent U.S. real estate but offered property for at or less than the land beneath it was worth. Don't disagree w/ anything you said, but it is very hard for many to understand when the top is near or the bottom for that matter.

[Joe Mamma]

Well, the erosion of the western world is going to take many casualties. The people who diversify and use the Asian markets and opportunities are going to be ahead. I can't imagine how Europe or the US will be in 15 years, but i don't think it will be good. In 14 years i have seen the baht double in strength against the US dollar. Or is it the US dollar has weakened by 50%?

[jackflash]

TexasRanger,

Two things:

- I'm another who lost money on property. Bought a big country property which was going to be my retirement fund, then the government secretly rezoned the area so now it's worthless. I can only hope that things might eventually change. You shouldn't assume that land will continue to be a good investment.

- I always assumed I would retire to Thailand. Now I find that living in Thailand is more expensive than living at home.

You shouldn't assume that in 15 years you will still want to move to LOS.

Edited April 23, 2013 by jackflash

[Joe Mamma]

My advice

"Don't keep a lot of money in Thailand. It's better for you. Invest in UK/US Stock market in trending markets otherwise go for bonds."

I converted 90% of my US dollars to baht when it was in the low 40's per dollar. Now at 25 or 27 baht per dollar you suggest going back to a shrinking currency that is fueled by over-printing from the treasury and panicked gold hoarders? Used to be west is best and east is least, now the reverse is true.

[Diazo]

Mikecwm,

I don't know if REIT's (which is what this is) are taxed the same in Canada as they are in the U.S. Bu in the u.S. this would not be like a straight 8% yeild as it is taxed as a return on capital, and thus taxed higher than other investments. Same goes for gold. But it is even taxed at a much higher rate like it were art etc. Oil trust and the like are taxed at a similarly higher rate also. My point is this all 8% stated returns are not equal once the tax man cometh.

[TexasRanger]

TexasRanger,

Two things:

- I'm another who lost money on property. Bought a big country property which was going to be my retirement fund, then the government secretly rezoned the area so now it's worthless. I can only hope that things might eventually change. You shouldn't assume that land will continue to be a good investment.

- I always assumed I would retire to Thailand. Now I find that living in Thailand is more expensive than living at home.

You shouldn't assume that in 15 years you will still want to move to LOS.

I think other than the property I have now I may have missed the property boat back home.

As for retirement in LOS, I live here now and have a wife and child here so don't really have much option than to retire here really.

[boston2202]

Boston2022,

You first suggest in part not to pay attention to those that suggest investing in ".....non-correlated" investments. Then later you posit that would should invest in diversified portfolio all of which are non-correlated. I agree w/ your position on diversification, which in and of itself, is non-correlated. We have very good historical data that will show a relatively smooth return of just South of 10% return with the "Permanent Portfolio" approach Which by the way is made up of an equal balance of a Total Market index fund,

Bond Fund, Gold Fund, and cash. But I certainly agree with the remainder of what you said.

The so called 'non-correlated investments' I am referring to are the ones that market themselves as 'alternative strategies' and not correlated to any market (equity, bond, commodity)..... not wanting to name names but funds that get involved in Legal Financing, Life Settlements, Student Accommodation that generally are domiciled in places that are unregulated are the ones that I have major concerns with. I am NOT saying that they are all are dodgy, but recently there has been a few of these so called funds encountering significant problems for investors and they are not very transparent with their underlying asset holdings or valuation methods.

Diversification of asset class (in my opinion) is not the same as being uncorrelated to the market.

Anyway, I still stand by my comment that investing in a diversified portfolio of quality assets still is appropriate for medium to longer term wealth creation.