Retirement Planning For Los

[NeverSure]

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.

I still say that one of the biggest mistakes investors make is believing what they see in a rapidly rising market, or a fallen market. They falsely believe that things will always be the way the are, or have been in the recent past. The recent past could mean at least 30 years, but certainly 5, 10, or 15 years.

Some people can't wait to buy when things are expensive, and refuse to buy when they are cheap. When things are cheap they lose all faith, and when things are expensive you can't convince them that they might not always be expensive. Markets fluctuate, and sometimes wildly.

The baht has doubled in the past ten years? (Against major currencies?) So therefore it must continue to go up? Real estate has crashed in the US so therefore is will always cost less than replacement cost? The stock market drops to 1/2 so therefore get out? The stock market is setting record highs so therefore buy?

The people who I have seen make the most money as investors have been contrarians.

I'm not talking about a guy I know who became fabulously rich by starting a large chain of tire stores, or a guy who became rich with a patent, or Bill Gates with Microsoft. I'm talking about the average guy who had some money to invest in someone or something else.

Someone who can correctly identify when something is cheap, but it's due to over selling, and can see that the underlying fundamentals call for a higher price is the one who will make the money. Someone who buys the highs because everyone else including the cab driver is, is the one who will probably lose his butt.

I'm tired of debating Thailand, but I will just say that it's expensive, and I will repeat that just because something has recently been a certain way is no promise that it will be that way tomorrow.

At the very least, diversify, and today that means in different economies and different currencies, and different asset types.

[NeverSure]

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

Markets fluctuate. Does anyone think that the problems in China and Japan and S. Korea couldn't affect Thailand? Does anyone think that a recession in the West wouldn't further affect those countries' exports and economies? Does Asia live in some bubble that is immune to conditions in the West, or rather does Asia's collective economy rely on exporting to the West?

Thailand has destroyed its rice export business through sheer stupidity, and has thrown another wrench in the works called a new minimum wage. If these acts of international stupidity are a harbinger of things to come, then Thailand won't be smart enough to continue to compete on the international scale with manufacturing and exports. Too strong a baht alone will cost it customers and investors. Who would build a big factory in Thailand today with the new minimum wage and the expensive baht hampering the sale of products? It is all over the news how Thailand's exports are already hurting and that's not counting the lack of rice exports. That's manufactured goods.

I just wouldn't put all of my eggs in one basket, as they say.

[NeverSure]

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..

I'm enjoying your posts. You are one clued in guy, among some others, and then there are a few sheeple who are following the flock to the edge of the cliff.

[NeverSure]

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.

I can't say that what you bought is a good investment. I don't know your market and it varies all over the US. So do properties and locations within each market.

The rentals I've bought were in good locations, in good condition, and at fire sale prices. You couldn't build the buildings to replace them today at the prices I paid, even if the land was free. At some point in time, as the population grows, and residences are torn down or burn down, there should be a real demand again. If there is and building starts, replacement cost will cause the values of my properties to really jump. Ordinary inflation is in play too, as the cost of nails and carpet increases every year.

In the US, you get three cash flow streams from rentals, but not all at once. You get the net rental income, you get significant income tax deductions on your other earnings, and at the end if you hold long enough there could be an increase in value of the property.

There are no guarantees in life, but US real estate is at fire sale prices, below replacement cost. If the rental income will just barely justify the investment, then any increase in rents from inflation, the tax savings, and a possible increase in sales price are icing on the cake.

Just of course, don't put it all into one basket, duh.

[yoshiwara]

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.

I still say that one of the biggest mistakes investors make is believing what they see in a rapidly rising market, or a fallen market. They falsely believe that things will always be the way the are, or have been in the recent past. The recent past could mean at least 30 years, but certainly 5, 10, or 15 years.

Some people can't wait to buy when things are expensive, and refuse to buy when they are cheap. When things are cheap they lose all faith, and when things are expensive you can't convince them that they might not always be expensive. Markets fluctuate, and sometimes wildly.

The baht has doubled in the past ten years? (Against major currencies?) So therefore it must continue to go up? Real estate has crashed in the US so therefore is will always cost less than replacement cost? The stock market drops to 1/2 so therefore get out? The stock market is setting record highs so therefore buy?

The people who I have seen make the most money as investors have been contrarians.

I'm not talking about a guy I know who became fabulously rich by starting a large chain of tire stores, or a guy who became rich with a patent, or Bill Gates with Microsoft. I'm talking about the average guy who had some money to invest in someone or something else.

Someone who can correctly identify when something is cheap, but it's due to over selling, and can see that the underlying fundamentals call for a higher price is the one who will make the money. Someone who buys the highs because everyone else including the cab driver is, is the one who will probably lose his butt.

I'm tired of debating Thailand, but I will just say that it's expensive, and I will repeat that just because something has recently been a certain way is no promise that it will be that way tomorrow.

At the very least, diversify, and today that means in different economies and different currencies, and different asset types.

I will agree with all except the last paragraph. A successful business is clearly focussed and the same applies to stocks. Thin diversification is rarely a way of delivering substantial success as small holdings are held back by not only their size but trading costs and so it is an essentially defensive play (if that is what you want). Diversification also proved to be NBG even for that in 2008. It is the lazy man's way to invest (fine if you want to be lazy). Better to focus on a handful of stocks and have the time to follow their ups and downs and understand what is going on. No guarantee of success but offers potential and interesting for the challenge it presents.

[TheGhostWithin]

I will agree with all except the last paragraph. A successful business is clearly focussed and the same applies to stocks. Thin diversification is rarely a way of delivering substantial success as small holdings are held back by not only their size but trading costs and so it is an essentially defensive play (if that is what you want). Diversification also proved to be NBG even for that in 2008. It is the lazy man's way to invest (fine if you want to be lazy). Better to focus on a handful of stocks and have the time to follow their ups and downs and understand what is going on. No guarantee of success but offers potential and interesting for the challenge it presents.

From my experience, the best way to invest is to research. 90% of your time should be on researching holes, 5% should be on recording and monitoring when the holes you have identified eventuate, and 5% should be spent on identifying good investments in times that the market is falling.

Thailand is at market peaks, it is currently at a period of relative political and civic calm - though those of us who have been watching Thailand for long enough understand that the longer the calm, the more ferocious the response will be the next time something happens. It is in this period of time as markets go, that most investors are entering the market - these are the same investors who typically will end up losing. They are the mom and pop investors, the institutional investors have already entered the market, and will begin to exist as non-institutional money enters.

If you want to make money at the moment, look very hard - I cannot find anywhere to put my money, but as a Kiwi our investment options with local banks are very limited (they are very conservative). I would like to invest in Africa with an established bank in some sort of Africa fund, but they do not offer this option here. Do you know the worlds largest online payment system is not Paypal? It is called M-Pesa and operates in various African countries. It is more advanced than Paypal, and effectively runs as a surrogate bank and is already more advanced than PayPal. These are the types of products I would love to invest in, if I had a trusted source to access them.

[rgs2001uk]

^^^^^^

If you want to make money at the moment, look very hard - I cannot find anywhere to put my money,

I have the exact same problem.

I have come to the conclusion, another property in the UK.

I have a piece of land bought years ago in Australia, I am now being offered silly money for it, I dont need the money, and because I dont know where to put it, have decided to keep the land, maybe sell it in another 15 years dependant on market conditions.

[ebcal]

I echo the many remarks on diversification and think it is pretty common sense to diversify at several levels in terms of asset classes and economies/countries as well to lower risk. However, in diversifying the asset class, I would not be so quick to write off annuities. Yes, there are many bad annuity products out there,
and yes, they have their drawbacks, but also they have their advantages and may make sense for some people as one part of their retirement portfolio.

I think the many bad annuity products out there probably have given the better annuity products a worse rap than they deserve. Yes,
annuities may not have a great return compared to stocks, and yes, may not be as attractive in a period of low interest rates, and do lock up all your
capital and most annuity products are fixed, so wont adjust for inflation. That said, think there are still some cases
where it may make sense for some people, depending on their situation, risk tolerance, investment savvy.

I have seen studies mentioned that have shown that a portfolio of single premium annuities and stocks outperforms a portfolio with only

stocks/bonds and no annuities. So, the portfolio with the combined annuity and stocks had a higher percentage that it did not run out of money as compared to a portfolio of only stocks and bonds. So, while many financial advisors may steer clear of all annuities, some financial advisors will recommend annuities as one
part of your retirement portfolio, e.g. maybe use annuities to cover most of your fixed monthly expenses, and then other investments for all the rest.

The common answer most people give about annuities is that they are a rip off, high expenses, no liquidity, no inflation hedge and they can invest themselves and earn more than annuities. As stated, I think the many bad annuity products out there probably give the better annuities a worse rap than they may fully deserve. However, agree that in
most cases, people are probably right that they can earn a better return than most annuity products, usually through stocks, bonds or mutual funds.

However, those statements that people can do better than annuities also do not account for a few points: which is the risk of losing a big chunk of capital, were there to be a big financial crisis, ala 2008. And the guaranteed return for a lifetime, so hedging longevity risk. With investing yourself in stocks/bonds, a big market drop could cause a big
reduction in your monthly income from these investments, so an annuity hedges against this risk. Can you live with that risk or is that income stream needed to
live on for basic living expenses. Also, payments are guaranteed for life, so you wont outlive the income stream. And the statement that you
can do better than annuities also assumes all people can be investment savvy enough to invest (unless you say just get an investment advisor) and get better
returns and are willing to monitor the investments regularly, rather than a one time purchase and forget of many annuities. So, a statement that
annuities are bad for all, may be too wide a statement and may not hold true for all people.

Yes, annuities have the risk that the annuity company can go under, so picking a solid company is important and make sure it is covered by

state insurance, in case it were to go under, and the amount you have under each company then also becomes important, similar to FDIC. And this risk
is probably much lower than a stock dropping or a company cutting its dividend.

So, I would not be so quick to rule out any annuity as one part of a retirement portfolio for all people. I think there are still some
people where an annuity product may make sense as one part of the retirement portfolio. And of course, pensions and SS
are annuities, (although pensions can be lump sum too) so could be people already have an annuity as part of their retirement portfolio, rather than having to purchase one.

And we should not count on SS as a major pillar. We have now started paying out more than we are paying into SS, so the time we will run out of SS money keeps moving earlier. So, likely we will have to move the retirement age later and/or reduce the benefit. Either way, SS should not be relied upon.

[Pinot]

"SS should not be relied upon."

Nonsense. SS has been a whipping boy for the right since it was started. A few tweaks will extend the the money in the SS coffers a generation.

Otherwise a good post about annuities. The issue remains a very poor return that can be bested by most investments. See http://www.immediateannuities.com/ for some comparisons of different products.

[ebcal]

A few tweaks will extend the money.......?? What are those tweaks?

Those tweaks are either increase the age you can claim full retirement benefits and/or reduce the benefits. There are not many choices when the amount being paid out exceeds the amount coming in.

So, if you are counting on SS as a main pillar and you are suddenly not able to claim as much as you planned on at a certain age and have to wait more years or get a reduced benefit, then it is probably wise not to rely on SS as being a main component of your retirement portfolio. Would be better to plan it in as a minor part of the portfolio, that one can still get by, were SS to be reduced or even not exist, although I know not all people may have that luxury to do this.

But, for those that do have the luxury, I think it would be prudent not to make SS a "main" pillar of the portfolio.

Edited April 29, 2013 by ebcal

[rgs2001uk]

A few tweaks will extend the money.......?? What are those tweaks?

Those tweaks are either increase the age you can claim full retirement benefits and/or reduce the benefits. There are not many choices when the amount being paid out exceeds the amount coming in.

So, if you are counting on SS as a main pillar and you are suddenly not able to claim as much as you planned on at a certain age and have to wait more years or get a reduced benefit, then it is probably wise not to rely on SS as being a main component of your retirement portfolio. Would be better to plan it in as a minor part of the portfolio, that one can still get by, were SS to be reduced or even not exist, although I know not all people may have that luxury to do this.

But, for those that do have the luxury, I think it would be prudent not to make SS a "main" pillar of the portfolio.

But, for those that do have the luxury, I think it would be prudent not to make SS a "main" pillar of the portfolio.

I dont wish to appear trite or flippant, I would take the above a stage further, dont not include SS in any part of your portfolio.

Any pensions or whatever else you wish to call them form no part of my portfolio, and will be regarded as nothing more than a bonus, if I ever get them.

[ExpatJ]

A few tweaks will extend the money.......?? What are those tweaks?

Those tweaks are either increase the age you can claim full retirement benefits and/or reduce the benefits. There are not many choices when the amount being paid out exceeds the amount coming in.

So, if you are counting on SS as a main pillar and you are suddenly not able to claim as much as you planned on at a certain age and have to wait more years or get a reduced benefit, then it is probably wise not to rely on SS as being a main component of your retirement portfolio. Would be better to plan it in as a minor part of the portfolio, that one can still get by, were SS to be reduced or even not exist, although I know not all people may have that luxury to do this.

But, for those that do have the luxury, I think it would be prudent not to make SS a "main" pillar of the portfolio.

But, for those that do have the luxury, I think it would be prudent not to make SS a "main" pillar of the portfolio.

I dont wish to appear trite or flippant, I would take the above a stage further, dont not include SS in any part of your portfolio.

Any pensions or whatever else you wish to call them form no part of my portfolio, and will be regarded as nothing more than a bonus, if I ever get them.

That's a good, realistic, strategy. In any case, the reality is that anyone who is 20 years or more away from SS payments,will likely get nothing at the end of the day.

[yoshiwara]

^^^^^^

If you want to make money at the moment, look very hard - I cannot find anywhere to put my money,

I have the exact same problem.

I have come to the conclusion, another property in the UK.

I have a piece of land bought years ago in Australia, I am now being offered silly money for it, I dont need the money, and because I dont know where to put it, have decided to keep the land, maybe sell it in another 15 years dependant on market conditions.

It really depends on what the land is worth and if the silly money is a figure to play with.

[Pinot]

ExpatJ, on 30 Apr 2013 - 08:13, said:

rgs2001uk, on 29 Apr 2013 - 21:41, said:

ebcal, on 29 Apr 2013 - 21:19, said:

A few tweaks will extend the money.......?? What are those tweaks?

Those tweaks are either increase the age you can claim full retirement benefits and/or reduce the benefits. There are not many choices when the amount being paid out exceeds the amount coming in.

So, if you are counting on SS as a main pillar and you are suddenly not able to claim as much as you planned on at a certain age and have to wait more years or get a reduced benefit, then it is probably wise not to rely on SS as being a main component of your retirement portfolio. Would be better to plan it in as a minor part of the portfolio, that one can still get by, were SS to be reduced or even not exist, although I know not all people may have that luxury to do this.

But, for those that do have the luxury, I think it would be prudent not to make SS a "main" pillar of the portfolio.

But, for those that do have the luxury, I think it would be prudent not to make SS a "main" pillar of the portfolio.

I dont wish to appear trite or flippant, I would take the above a stage further, dont not include SS in any part of your portfolio.

Any pensions or whatever else you wish to call them form no part of my portfolio, and will be regarded as nothing more than a bonus, if I ever get them.

That's a good, realistic, strategy. In any case, the reality is that anyone who is 20 years or more away from SS payments,will likely get nothing at the end of the day.

"Likely?" There is a two trillion $ surplus at the moment. "SS is going broke" is a lie constantly repeated by the right. SS is going broke if you watch Fox News.