Retirement Planning For Los

[khunPer]

15 years is a good retirement planning horizon. I would spread the investments, so if one area works not so well, others may do better. And remember, stock market moves up and down, when up you fell like walking on the waters, when down you may feel very depressed, but looked at over long term stocks are a good investment.

You will always have a currency risk, if you save up in for example £ and is going to use the money in bath. There are some fund possibilities in Thai banks, Bangkok Bank, SCB and presumably others have them, and they seem to work well. You can choose between bonds and several stock portfolios, of which some pay dividend, others accumulate. I tried them and they work fine, last year up 19% plus around 3% dividend to accumulated 30%. That may be a possibility for some of the savings, to avoid currency risk. Buying healthy moneymaking company stocks wills normally always give you some dividend, even the going rates are down.

It may be wise to spread investment in different market areas, like European stocks/bonds, American, Asian, BRIK or BRIKS and so. Often banks may have portfolios you can choose from and check how they have performed in the past, which of course is no guarantee for future performance.

An often-used retirement saving plan is to have overweight in stocks in the beginning and low risk bonds when you get close to retirement age, to limit the risk. Cash is better placed in low risk bonds than a bank account.

I have done a mix of self administrated tax beneficial retirement savings (stocks & bonds) and some private saving (stock & bonds) to plan my future here in LoS – plus I had some property “at home”, which I was lucky to sell at the right time in exchange of buying a new home here. So far it have worked well, but flotation in currency exchange rates are worth to have in mind.

[maidtorngkitmark]

If/When interest rates rise a fixed-rate annuity will lose significant cash value and the payment stream will have less value in a higher interest rate environment.

The markets are experiencing a bond bubble as many governments are printing money to purchase bonds. Rates are also very low now and at some point they must rise.

Careful about annuities in this environment !

Good luck

[TheBulldog]

I have one suggestion that several of my friends and clients are into - pm me direct.

[belg]

the best investment ? get a snip at the doctor's office...

[connda]

Where ever you live: Think Cyprus! That's the new model in the West. Put your money in a bank -- the banksters will gamble it away and you will pay for the losses complements of your government. What do you do? Use you're own imagination. Bury it in your back yard. You'll probably get a better rate of return after you factor in the 75% haircut you'll get otherwise. You think that Thailand is corrupt? The West has taken corruption to a levels that are beyond criminal - and all 'legal' of course.

You got to love it. Legislating corruption as legal. Jokes on you. But it ain't funny.

[sailor59]

Where ever you live: Think Cyprus! That's the new model in the West. Put your money in a bank -- the banksters will gamble it away and you will pay for the losses complements of your government. What do you do? Use you're own imagination. Bury it in your back yard. You'll probably get a better rate of return after you factor in the 75% haircut you'll get otherwise. You think that Thailand is corrupt? The West has taken corruption to a levels that are beyond criminal - and all 'legal' of course.

You got to love it. Legislating corruption as legal. Jokes on you. But it ain't funny.

I was planning to retire in Thailand this year with my Thai wife and son who was born in NY. All my money were in the Bank of Cyprus and now at 53 I have nothing. Even the first "safe" 100,000 euros may be available after years or even decades as I read in some papers.

No word from them, not even a email with some kind of info or explanation.

I wasn't a business man, I worked in the States since I was 17 years old and I thought that the safest place to put your money was the bank.

I moved them from Greece after the 1010 crisis to Cyprus and they f.... me good!

If I ever have money again the only place that I will invest them is Deep Up my A**!

[gaucho]

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%?

yes and remember around 17 years back almost overnight massive depreciation of thai baht ....many investors had bought condos and with currency fluctuations were worth half what they paid ...no place is safe as far as certainty goes ...had a scum bag talking about 12 to 16 percent returns guaranteed yeah sure ...too good to be true ...be careful

[Pacificperson]

I am about five months from collecting a pension that will not be inflation indexed. One big worry is inflation, so I leveraged up and bought an apartment 4-plex on a cheap 30 year loan. It is cash flow positive with a gross rental return of over 9%. It was the best inflation hedge that I could think of. If inflation picks-up, the rents will increase, while in real terms the mortgage payment will decrease. It will not cover all of the inflation loss on my pension, but it will help out.

Edited April 23, 2013 by Pacificperson

[overherebc]

Don't know if it applies to you but did to me. When you stop paying uk tax you can't put anymore in uk private pensions. Believe got to do with opting out etc.

[Naam]

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%?

yes and remember around 17 years back almost overnight massive depreciation of thai baht ....many investors had bought condos and with currency fluctuations were worth half what they paid ...no place is safe as far as certainty goes ...had a scum bag talking about 12 to 16 percent returns guaranteed yeah sure ...too good to be true ...be careful

one could also argue that many investors bought condos in 1998 and made a killing, on both exchange rate and capital gains, since then.

[Plastic Brontosaurus]

30% in cash (term deposits in AUD, CNY and GBP but change as required over time) spread over three or more non-related banks in three continents.

30% in real estate (ideally spread over a few different countries on different continents).

30% in shares (get the iBillionaire app for the iPhone and copy some strategy on there, or play the markets yourself but don't let some guy at the local bank branch or brokerage do it. The fact that they're still working for a living is a good indicator of why you shouldn't.

10% in bullion (long term as an emergency fund; gold is dodgy right now but long term it will likely hold up; buy small units such as pure gold coins - Maple Leafs , Kruger rands and the like you could use to pay with in crisis situations). Keep it in a safe or in a secret location (buried or embedded in a wall in the house that nobody knows apart from yourself and the little drawing in your last will).

Is what I would do...

Edited April 23, 2013 by Plastic Brontosaurus

[TexasRanger]

Don't know if it applies to you but did to me. When you stop paying uk tax you can't put anymore in uk private pensions. Believe got to do with opting out etc.

Yeah, still paying UK tax at the moment but that may change soon in which case I believe I can still contribute but lose tax relief.

[VBF]

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.

Those are pretty much my thoughts - I've been working summers in the UK and wintering in SE Asia for some time. Some pension funds are pointless - especially as you can invest in the underlying funds but OUTSIDE the Pension wrapper. The only advantage is for taxpayers where relief is allowed. If you PM me I can give you the name of my adviser - a UK IFA who handle both UK residents and Expats.

[Robby nz]

Only one problem with all of these things Health.

Me, I had never had a day sickness in my life and the only time I had ever been to a Dr was for the odd stitch here and there.

Then one day something was not right, diagnosis the big C,

OK 3 years later I am fit and in good health after various treatment but once something like that gets into your system it is always there.

An old friend who had just retired and had big plans and investments to match got a nasty cancer and died within 3 months, he said to me when I visited him in the hospice just before he died.

"If there is something you want to do, do it now"

I live by that now, its why I'm in Thailand, all the plans and investments mean nothing when your dead.

"If there is something you want to do, do it now"

[ThailandInvestmentGuide]

<snip> A property investment fund is something I had not considered but sounds interesting.

Perhaps you might then be interested in reading about this style of investment ... Thai property funds ... as one possible component in your portfolio: http://kelive.maybank-ke.co.th/KimEng/servlet/PDFDownload?DBId=2&rid=20732〈=1

[TechnikaIII]

Such a luxurious "problem" you have.

If you were Thai, I'd suggest walking away from it all for a while, shave your head, take the robe and seek a new meaning of life.

Edited April 23, 2013 by TechnikaIII

[dontoearth]

If the past is a good guide. I was in Thailand working in 1997. A beach condo ON THE BEACH was probably in the mid 30's in USD. Today price those condos! You could live well on less than 1K a month of US money. Calculate that now! In general I would plan on big inflation and eroding value of western currency. It is hard to get thai baht in thai banks as a falang. If you can manage it safely this will definitely help with the eroding value of western currencies. If you can purchase a condo now you will be far ahead of the game in 15 years. Property is always a good hedge against inflation. As far your life in the west squirrel away money but don't deprive yourself. We never know when we have eaten our last meal. I am 57 now and will pull the plug on my western life style in two years to enjoy some retirement time in Thailand. I wish I had bought the beach condo. I did squirrel away money. Should be fun.

[TheGhostWithin]

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%?

Joe,

There is a fundimental problem in your analysis (apart from no facts being presented, which is OK because it is a non-academic theory).

The issues I have is that yes, 14 years ago western countries were moving away from industrialisation and into commercial consumerism. Salaries of mostly non-urbanised populations were significantly lower than those in considerably more developed western economies.

Industrial production was of (mostly) advanced technoligies, or utilising advanced technoligies which gave them a competitive edge over BRICK nations. Countries such as Japan had humble beginnings, you may remember the term "Jap crap" when your children were playing with their toys if you had any.. I used to have toys which I referred to with the same inference. As time passed, Japanese companies vertically integrated and became more advanced, producing companies such as Sanyo and Sony.

We are now seeing virtical integration in China, with the west returning to a degree to industrialisation to fund their consumerism of the past 20+ years. If anything, the market is adjusting these asian currencies in a forced action by the US federal reserve, Japanese Central Bank, and others to "fair market value exchange rates" - some countries, such as China (and even arguably Thailand) artificially manipulate rates to ensure an uncompeitive advantage over western economies, enslaving the western world to a degree (those of us without millions in the bank).

I would strongly suggest to you that leaning on Asian economies in this period of "currency wars" is a highly risky move, the market agrees with me - China is one of the markets biggest losers worldwide this year, Thailand will turn as well once the governments story of "I can't kick the can anymore, its' too heavy" begins to show in the next 12-18 months.

[TheGhostWithin]

30% in cash (term deposits in AUD, CNY and GBP but change as required over time) spread over three or more non-related banks in three continents.

30% in real estate (ideally spread over a few different countries on different continents).

30% in shares (get the iBillionaire app for the iPhone and copy some strategy on there, or play the markets yourself but don't let some guy at the local bank branch or brokerage do it. The fact that they're still working for a living is a good indicator of why you shouldn't.

10% in bullion (long term as an emergency fund; gold is dodgy right now but long term it will likely hold up; buy small units such as pure gold coins - Maple Leafs , Kruger rands and the like you could use to pay with in crisis situations). Keep it in a safe or in a secret location (buried or embedded in a wall in the house that nobody knows apart from yourself and the little drawing in your last will).

Is what I would do...

I have to ask.. why invest in CNY term deposits? You do realise that China is Ruled by the Chinese Communist Party, and that assets within the territories of China can be withheld as it is considered theirs, right?

Also, I am curious on your recommendation of the iBillionaire app? On what grounds are you recommending this? This kind of name dropping without proof of long term success should really be backed up with data before trying to convince someone to invest serious money..

[Phronesis]

If you have 15 years until retirement, all INVESTMENT advice is facile.

For X and Y generation, the single most important wealth generating plan moving forward is to avoid taxation.

The boomers are about to eat the planet and send ALL WESTERN GOVERNMENTS broke getting hip replacements.

The boomers are the golf ball in the garden hose and moving forward the tax revenue required to fund their pensions, medicare and pharma, far outweighs that which may be generated from taxing X and Ys.

THE SUMS JUST DON'T ADD UP

As a result X and Y gens will be taxed to the nuts all of their working lives and then when finally arriving exhausted...and penniless...at the retirement finish line (that will be raised by western governments to 75 or 80 years) guess what....no pension for us because the government is broke.

The single most important thing you can do to plan for your retirement is to avoid taxation.

Oh....and don't factor any government pension into your plan....they simply won't exist in 15 years time...except for politicians and bankers...

Edited April 23, 2013 by Phronesis

[TheGhostWithin]

If the past is a good guide. I was in Thailand working in 1997. A beach condo ON THE BEACH was probably in the mid 30's in USD. Today price those condos! You could live well on less than 1K a month of US money. Calculate that now! In general I would plan on big inflation and eroding value of western currency. It is hard to get thai baht in thai banks as a falang. If you can manage it safely this will definitely help with the eroding value of western currencies. If you can purchase a condo now you will be far ahead of the game in 15 years. Property is always a good hedge against inflation. As far your life in the west squirrel away money but don't deprive yourself. We never know when we have eaten our last meal. I am 57 now and will pull the plug on my western life style in two years to enjoy some retirement time in Thailand. I wish I had bought the beach condo. I did squirrel away money. Should be fun.

You did read the article on the BOT (Bank of Thailand) concerned the other day about condos in Thailand being in a bubble, didn't you? You do realise that in Pattaya, about 66% of property values are in condominiums, and only 30% in housing, don't you? When holdings of condominium holding values surpass housing holding values in an area which is not an intentionally compacted metropolitan area such as New York, Singapore or Hong Kong, it may be precisely the time not to invest in such things. This is the Pattaya market.

Bangkok is like a ship with a hole in it, in which the crew can see it sinking, but the crew are too drunk to take a cork from one of their wine bottles and plug the hole.. this is exactly what is going on in Bangkok.. you really want to put your money there? Think carefully..

[jcnbkk]

I am about five months from collecting a pension that will not be inflation indexed. One big worry is inflation, so I leveraged up and bought an apartment 4-plex on a cheap 30 year loan. It is cash flow positive with a gross rental return of over 9%. It was the best inflation hedge that I could think of. If inflation picks-up, the rents will increase, while in real terms the mortgage payment will decrease. It will not cover all of the inflation loss on my pension, but it will help out.

Interesting. I'm from the west coast, so. cal. Have a small pension. Bought a small complex. My ROI is only 3-4%. If I had to factor in debt service on a large loan would be even less. Maybe you bought at better time or area.

Between small returns and the higher baht I now have concerns expanding on that strategy.

[ExpatJ]

Regarding Annuities- rates are horribly low now so not a great time to buy. BUT IF you have a large lump sum i would recommend putting a portion into annuities, because you are buying peace of mind. There are plenty of retirees around who are managing their own funds, sweating and stressing daily trying to figure out how long they will live to so they can calculate how much they can spend every month from their shrinking pension pot.

Last time i checked (2011/12) 400,000 US$ will give you @2,200 US$ guaranteed income per month for the rest of your life.

My retirement plan (15-20 yrs time horizon similar to yours)

- Annuities for around 2,000 $ per month. Peace of mind priceless.

- Company pension if my contract ended this year i would still be able to get @2500$ per month fixed benefit pension starting age 60 this could be as high as 8,000$ per month if i work right up until im 60.

- Rental property income est. 2-5,000 $ per month- comprising of 2-3 rental properties in Asia (paying cash, no mortgages in each case to reduce risk) with each unit giving @2,000$ per month rental. Critically each unit will be in well managed condo which has its own management office who can find tenants, manage property for me in return for one months rental income per year (you don't want to be stuck being old in possibly ill health having to run around managing properties).

- High dividend blue chip stocks i.e. Shell oil etc. I hope to have enough to generate @1,000 $ per month.

This should yield btw 4500$ per month in worst case (assuming none of my condos rented out, dividend stocks failing miserably, i lose my job next year and my pension at 60 is fixed as it is now) and @15,000$ per month if the stars align and i keep my job till 60 (but highly likely I will be laid off work well before though).

[mickjn]

Buy an annuity.IMO give a finacial advisor, 20 grand to show you how to lose your money.Sell everything your have put your money in the bank you will get interest maybe not a lot but enough to live in LOS.1994 I was in a hospital dying from a brain tumor.Had it cut out took me 2 years to get better a year,came back twice again.Had a massive dose of radiation left me with deficits. Got to know 10 people in hospital some younger some older I am the only one left. 1998 I packed a bag and I has off.Now in LOS about 10 months of the year,it is easy to do but you have to want to do it.

[Pinot]

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!!!

Annuities are a bad idea. With the very low rates they simply can't match what you can do in the stock market. My suggestion would be to start studying the stock market. It's easy to manage investments online. My primary objective is dividend income. I own a variety of reasonable risk equities that return about 6% annually. There is also growth of the underlying investment so the total return has consistently been 12-14% a year for the last three years of retirement. I actually have more than what I started a few years ago despite drawing off $35k/year. I do this by owning 15 different equities. A big portion of this is high yield corporate bond mutual funds, senior loan funds and some general bond funds. I also own a few stable stocks like Chevron who throws off 4%. You can do this but if it sounds too tough, get help. Interview a number of advisers and find someone your comfortable with. By the way this can be done with Thai investments. I use Charles Schwab in America.

Edited April 24, 2013 by Pinot

[mikecwm]

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. But in the U.S. this would not be like a straight 8% yield 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.

Probably the US is different to Canada.

I've been doing some research and it appears as if the monthly 'distribution' can be taken as capital drawdown - so no taxes due until you've drawn down 100% of you capital - http://www.centurionapartmentreit.com/tax-efficient-growth.

"Because of the depreciation (capital cost allowance) that a REIT is able to deduct from income in any given year, in many years a large proportion of distributions (if not all) may be distribution of capital. This return of capital isn´t taxed in that year. It goes to reduce the investors Adjusted Cost Base (ACB). The investor will pay taxes at capital gains rates, when the ACB falls below zero (ie they have gotten all of their money back) or they sell their REIT units. This means that an investor may be able to defer taxes for many years and have the additional flexibility of timing their tax liability".

Once the capital has been used as monthly "distributions" then Capital Gains comes into play.

This is taxed on only 50% of the gain - so a personal tax rate of (for example) 40% would only be 1/2 of this = 20%.

Now I'm no expert. I'll have money to invest very soon, so I'm on a steep learning curve and also happy to leave my investments in Canada where I can hopefully be reasonably secure - and where my financial adviser can organise money to be put in my bank for transfer to LOS when required.

If anyone has experience with REITs I'd be pleased to learn from your experience.

I will also diversify. I tried that already - buying silver which promptly dropped 25% in value!

I'm sure it will be a good investment in a few years, but I did feel a bit of a fool at the time.

Edited April 24, 2013 by mikecwm

[Pinot]

Re

mikecwm, on 24 Apr 2013 - 12:50, said:

Diazo, on 23 Apr 2013 - 14:04, said:

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.

Probably the US is different to Canada.

I've been doing some research and it appears as if the monthly interest can be taken as capital drawdown - so no taxes due until you've drawn down 100% of you capital - http://www.centurionapartmentreit.com/tax-efficient-growth.

"Because of the depreciation (capital cost allowance) that a REIT is able to deduct from income in any given year, in many years a large proportion of distributions (if not all) may be distribution of capital. This return of capital isn´t taxed in that year. It goes to reduce the investors Adjusted Cost Base (ACB). The investor will pay taxes at capital gains rates, when the ACB falls below zero (ie they have gotten all of their money back) or they sell their REIT units. This means that an investor may be able to defer taxes for many years and have the additional flexibility of timing their tax liability".

Once the capital has been used as monthly "distributions" then Capital Gains comes into play.

This is taxed on only 50% of the gain - so a personal tax rate of (for example) 40% would only be 1/2 of this = 20%.

Now I'm no expert. I'll have money to invest very soon, so I'm on a steep learning curve and also happy to leave my investments in Canada where I can hopefully be reasonably secure - and where my financial adviser can organise money to be put in my bank for transfer to LOS when required.

If anyone has experience with REITs I'd be pleased to learn from your experience.

I will also diversify. I tried that already - buying silver which promptly dropped 25% in value!

I'm sure it will be a good investment in a few years, but I did feel a bit of a fool at the time.

REITs are way too volatile for me. People jump in and out of them reaping the high dividend. A small position in the best REITs could be justified for some but a retiree looking to hold principle should stay clear. Speculating in silver and now asking about REITs is crazy. You need a plan. One that doesn't include speculating with high risk investments.

[TexasRanger]

Thanks for a variety of information, also for the numerous pm's.

[mccw]

Annuities look like a rip total off. What if the company goes bust?!

One could achieve better results from rental property and then be able to pass something on to the family. But almost anything would be better than just giving your money away.

[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.

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.

Yes, that's a good point. So make sure you always buy in good areas, even if you get less rental yield.