Personal Pension Plans / Offshore Investments

[paulbkk]

i've lived in thailand for 8 years, I'm english and i'm 32 years old, i'm starting to think it's time to start a pension, i worked for a few years in the uk, but didnt really start a pension, i do lots of part time and freelance english teaching and earn app 70000 baht a month. i want some information on good personal pension plans or offshore investments for my future retirement. because i work part time in many places i dont have a company pension offered by any of the places i work for, so i think a personal pension is best for me. if anyone could give me some advice or website addresses. i just plan to have enough to live comfortably when i retire at about 60-65 years old. i dont plan on returning to live in the uk at all, please feel free to pm or just reply, your replies are most welcome to point me in the right direction, thanks very much paul

Edited April 23, 2006 by paulbkk

[Firefan]

Just a fast reply; be very carefull with the socalled "financial advisors" out there getting a commission/kick backs from products sold. You do not really need a "pension plan"(normally a legal tax shelter) in your situation as you are already offshore/tax free unless you have special connections to England(house/homebase/wife there) which you imply you have not. The "pension plans" (or wrappers or whatever they want to call it) just come with even more fees and charges as well as lock down periods where you can not touch the money.

If you need more advise just throw me a PM, but full disclosure; I charge 1 beer for advise and will not sell you ANYTHING even if you beg(as I do not work with investments for people living in Thailand)!

Cheers!

[paulbkk]

so your saying dont invest in personal pensions just save normally into a good rate of interest saving account??

Edited April 24, 2006 by paulbkk

[GuestHouse]

At your age I'd be looking at saving in stocks rather than intrest paying accounts, because historicaly they do better.

The idea is to build up sufficient capital to be able to retire on the intrest. To do that you need to have an idea how much income you need to retire. In real terms this might be the amount you spend now (I take it that you have some money left over each month, hence your question).

So, assuming that you spend Bht50K per month, you need to build capital that gives that amount of intrest for you to live on in the future.

As a rough guide, you need a capital of about 20 times your desired income.

So 50k per month = Bht600K/Year and that requires a capital of 20*600K = 12 million Bht.

I recently did an assessment of the growth history for my own private investments and it turns out I have averaged 6.9% growth over the last 29 years.

If we plug that into a calculation based on what I acheived (6.9%) and your age, it works out that to retire at age 65 on Bht50K per month (Basis above) you need to save Bht 9700 per month.

If you want to retire at 60 on Bht50K a month you need to save Bht14000/month.

In both cases you'd have to find an investment that is growing at an average of 6.9% over the period from now until you retire

Taking care of inflation.

To negate inflation you'd have to increase these figures in line with inflation (usually in line with your pay rises over the period).

Your UK Pension

If you have not been paying National Insurance Payments back home then you should consider doing so. There is of course no guarauntee that UK pensions will be in existance by the time you retire but on the other hand the payout is a good return on investment as they stand now.

I believe the current minimum payment is less than GBP400/year for which you would receive GBP105/week.

You'd have to pay the 'back years' that you missed (if any) but on the basis that you have missed 8 years and that you retire at 65 this represents a return on investment of almost 7.3%.

The growth figures I have given are based on investments I made with Unit Trusts, Private Pensions, Pesonal Purchase of Shares and ISA's. I think they are pretty realistic given the fluctuations in the stock markets over the period since I started investing.

Edited April 24, 2006 by GuestHouse

[Firefan]

No, I am saying just save directly into low cost mutual funds/index funds and exchange trade funds. No need to have extra costs for the "priviledge" of being charged higher fees, have access to worse, more expensive funds with front end loads and having your money locked up in a "wrapper"(an insurance product) or "pension" when the end result is the same (and worse after the extra costs).

Whether you chose more bonds/high interest that stocks(equities) is really up to your risk profile/time horizon - but based on the little info you gave you should certainly have SOME stock exposure(via funds/ETFs).

First read a few books. "Boogleheads Guide to Investing"(or something like that) springs to mind. After reading that you know more than most investment advisors I have met. Well written and good for a beginner.

Cheers!

[Firefan]

Good post by Guesthouse there btw. Back paying for those years in the UK seem like a great idea and will also increase your overall portfolios safe withdrawal rate (see www.retireearlyhomepage.com) as there will be SOME steady guarenteed money for the rest of your life (disclaimer:I am not a UK pension rules expert). Cheers!