Retirement Nest Egg

[expatgaz]

I know this has been done before but it interests me.How much nest egg is enough and how to invest it.

How abt half a million U.S D is that enough cash ? and if so how would you invest it ?

EPG.

[kc_phil]

its all in here:

http://www.thaivisa.com/forum/index.php?showtopic=66197

[GuestHouse]

The simple rule is to accept that when you retire you no longer have the ability to go back and earn more money for your retirement fund - It's a one shot chance.

So retirement investment needs to be first and foremost 'SECURE'. That's usually bonds or equivelent.

If you need to make your retirement investment grow in order to continue in retirement, then you don't have enough to retire.

The logic behind this is that an insufficient fund will run out as time passes and as time passes going back to work is less of an option.

So it's all about protecting your income and not at all about earning more retirement fund. The time to earn more retirement fund is when you are working.

[naka]

I know this has been done before but it interests me.How much nest egg is enough and how to invest it.

How abt half a million U.S D is that enough cash ? and if so how would you invest it ?

EPG.

Half a Million U.S., probably not, unless you are pushing 90 and

intend to move with you're teerak to Udon

Google this, "buying a house for your teerak in Thailand"

Naka.

Edited May 9, 2006 by naka

[The Skipper]

Here is a good retirement calculator.

http://fireseeker.com/

Invest 70% stocks 30% fixed and safely take 4% / year.

That's about it.

[naka]

Here is a good retirement calculator.

http://fireseeker.com/

Invest 70% stocks 30% fixed and safely take 4% / year.

That's about it.

Shame on you Skipper !

Naka.

[KhunPadThai]

Here is a good retirement calculator.

http://fireseeker.com/

Invest 70% stocks 30% fixed and safely take 4% / year.

That's about it.

Nonsense. There is nothing safe about 70% in stocks and taking out 4% per year. Studies have shown that , if the future is like the past, this combination would probably enable your funds to outlive you. But the future may not be like the past. In particular, US equities may continue to underperform T-bills as they have since 1998. If you were a university endowment fund you could afford to take a fifty-year horizon, but you are not so you can't.

It irks me when people apply an oversimplified rule-of-thumb which they don't understand and then describe the resulting "plan" as safe. That's like the mantra, "houses only go up in value." Well, houses normally go up in value, but usually not much more than inflation. Then sometimes they go down in value as they are proceeding to do now.

[lordofdelusion]

Financial Planning = oxy moron. Too many variables. The longer the "plan" the more variables. Just maximize your earnings today. Tomorrow you can reassess....and the next day. I agree with the last post. A set formula...???? nonsense

[Thaiquila]

I agree it is foolish to put things on automatic.

However, I totally disagree that older people should be 100 percent in fixed income vehicles, and most financial planners would agree with me.

[Gary A]

I think it depends on the definition of fixed income vehicles. I have 75 percent of my retirement money in ETF closed end funds. My annual return is over 9 percent and the dividends are paid monthly. I like the feeling of a bird in the hand because I can actually spend the dividends as they are paid and not to have to sit on them until I sell a stock. I sleep well.

I agree it is foolish to put things on automatic.

However, I totally disagree that older people should be 100 percent in fixed income vehicles, and most financial planners would agree with me.

[Thaiquila]

I admit that's a good return. What is the risk factor with those funds? If very low risk, I see your point.

I was talking more about people putting all their money in grade A bonds or CD's and getting 5 percent, not enough to handle inflation very well.

Edited May 11, 2006 by Thaiquila

[Gary A]

Obviously I think they are very safe. They are not volatile like regular stocks and since they pay a monthly dividend they are easy to keep track of. The number of shares does not increase or decrease and the net asset value is easily compared with the selling price. Some sell for a premium to their NAV and some sell at a discount. I have 40 percent in foreign and 60 percent in US funds. The only thing that is likely to reduce the yields is if the interest rate goes crazy.

I admit that's a good return. What is the risk factor with those funds? If very low risk, I see your point.

I was talking more about people putting all their money in grade A bonds or CD's and getting 5 percent, not enough to handle inflation very well.

[Heng]

I tend to stick to institutional risk vehicles (multi currency) as opposed to instruments with direct market risk (most funds and stocks... or anything with the little asterisk at the bottom that says something along the lines of "your results may vary, you may lose your shirt"). That mostly keeps me in 5-6% returns and most would say I'm not beating inflation, but then if you consider that most of us here would be in the top .001 of income earners over a worldwide spectrum and everyone else all the way to the bottom can't be getting anywhere near "beating inflation," I don't lose any sleep over it. After hearing sales spiel from dozens and dozens of cold calling brokers, it feels like "you're not beating inflation" sounds more like "we want your investment commission."

[Gary A]

The below figures are from an ETF called PHT, one of five that I own. Looks pretty solid to me but I still have a 15 percent stop loss set on all of them. The dividends are based on a share price of about $17. I'd be interested to see if anyone sees a weakness or a potential loss situation.

13-Apr-06 $ 0.138 Dividend

13-Mar-06 $ 0.138 Dividend

13-Feb-06 $ 0.138 Dividend

28-Dec-05 $ 0.138 Dividend

8-Dec-05 $ 0.138 Dividend

10-Nov-05 $ 0.138 Dividend

13-Oct-05 $ 0.138 Dividend

13-Sep-05 $ 0.138 Dividend

11-Aug-05 $ 0.138 Dividend

13-Jul-05 $ 0.138 Dividend

13-Jun-05 $ 0.138 Dividend

11-May-05 $ 0.138 Dividend

13-Apr-05 $ 0.138 Dividend

11-Mar-05 $ 0.138 Dividend

11-Feb-05 $ 0.138 Dividend

13-Jan-05 $ 0.138 Dividend

9-Dec-04 $ 0.27 Dividend

10-Nov-04 $ 0.413 Dividend

13-Oct-04 $ 0.138 Dividend

15-Sep-04 $ 0.138 Dividend

12-Aug-04 $ 0.138 Dividend

14-Jul-04 $ 0.138 Dividend

14-Jun-04 $ 0.138 Dividend

13-May-04 $ 0.138 Dividend

13-Apr-04 $ 0.138 Dividend

11-Mar-04 $ 0.138 Dividend

12-Feb-04 $ 0.138 Dividend

14-Jan-04 $ 0.138 Dividend

5-Dec-03 $ 0.138 Dividend

13-Nov-03 $ 0.138 Dividend

16-Oct-03 $ 0.138 Dividend

16-Sep-03 $ 0.138 Dividend

14-Aug-03 $ 0.138 Dividend

15-Jul-03 $ 0.138 Dividend

16-Jun-03 $ 0.138 Dividend

15-May-03 $ 0.138 Dividend

15-Apr-03 $ 0.138 Dividend

14-Mar-03 $ 0.138 Dividend

13-Feb-03 $ 0.138 Dividend

15-Jan-03 $ 0.138 Dividend

6-Dec-02 $ 0.138 Dividend

12-Nov-02 $ 0.138 Dividend

16-Oct-02 $ 0.138 Dividend

13-Sep-02 $ 0.138 Dividend

15-Aug-02 $ 0.138 Dividend

16-Jul-02 $ 0.138 Dividend

[Khun ?]

Gary

I never thought much of the ETF craze that has taken place in the last few years myself. My broker who manages a growth fund of stocks for me has returned 20% on average since I started it 3 years ago ( 30% in 05 to bring the average up to 20%) talked me into a managed ETF investment, very active at that about 5 trades a week. The return last year was 38% and so far this year I am up 14% on it ( in about 50 different ETF's at most times). I also done well on some CEF's BGR and GGN but I did just sell off most my income investments which was mainly Muni bond funds and a few CEF's. I couldn't pass up 13% gains on them for about 10 months time on the muni CEF's. They started to drop since interest rates have went above 4.5%. Don't fall in love with investments, they are simialr to bar girlsand need to be changed when they don't act right.

Now that I have reached 50 keeping with safely managed accounts is the only option. Learned the hard way, but stick with regulated managers when you find a good one.

Much of the offshore stuff can have fees and hidden expenses that will equal what taxes would be

on profits in taxable accounts plus a royal pain to get to. Don't let someone lock up your money in accounts you cannot get out of without expenses. This is the old annuity type investments that the broker /seller makes a killing off of and they hit you with both front and back end fees that they will not much talk about.

The offshore people are dealing in this type of stuff but calling it savings accounts and

it is garbage for the most part. Best just to stay away from anything where you have to go through a middleman to get into someone elses mutual funds. No fund is worth going through a unregulated middleman.

With money market paying around 5% it would be wise to keep a good bit of cash, under the present world conditions. A years worth of expenses is my estimates as you can always put it to work in the market if you get the next hot idea, otherwise you will have the 5% for sure return. Always good idea to keep a year of expenses in like cash investments if you are planning to retire in the next 5 years. GED is a good bond at todays prices that is quite safe for quarterly income

for the not want to watch crowd.

Good Luck

I think it depends on the definition of fixed income vehicles. I have 75 percent of my retirement money in ETF closed end funds. My annual return is over 9 percent and the dividends are paid monthly. I like the feeling of a bird in the hand because I can actually spend the dividends as they are paid and not to have to sit on them until I sell a stock. I sleep well.

I agree it is foolish to put things on automatic.

However, I totally disagree that older people should be 100 percent in fixed income vehicles, and most financial planners would agree with me.

[GuestHouse]

Blessed is the final salary pension scheme.

[The Skipper]

Here is a good retirement calculator.

http://fireseeker.com/

Invest 70% stocks 30% fixed and safely take 4% / year.

That's about it.

Nonsense. There is nothing safe about 70% in stocks and taking out 4% per year. .......

...It irks me when people apply an oversimplified rule-of-thumb which they don't understand and then describe the resulting "plan" as safe. That's like the mantra, "houses only go up in value." Well, houses normally go up in value, but usually not much more than inflation. Then sometimes they go down in value as they are proceeding to do now.

Nonsense?

For someone with a long term investment horizon, equities are a good way to go.

Use the retirement calculator to see if your investment plan would have survived the last 140 years.

With a proposed 70%/30% split, a withdrawal of 4.00% of your starting portfolio, in 100.0% of the years back tested to 1871, the portfolio would have maintained a positive balance.

Your Success Rate is 100.0% for the previous periods tested back to 1871.

Sure, no guarantee of future results, just a good indication how things will most likely turn out.

[Thaiquila]

Just like anything, you have to balance the risk and reward. And remember, for a lot of people, they are willing to chance much less than 100 percent probability, so they can try even more in equities, and even greater withdrawal rates, and if is starts to look bleak, they can perhaps suffer some more in later years, but if it goes well, they get to enjoy alot more of their money ... while they are alive, which is the only way.

Dying with all of your nest egg is in my opinion kind of a FAILURE of planning.

Edited May 13, 2006 by Thaiquila

[KhunPadThai]

Nonsense?

For someone with a long term investment horizon, equities are a good way to go.

Use the retirement calculator to see if your investment plan would have survived the last 140 years.

With a proposed 70%/30% split, a withdrawal of 4.00% of your starting portfolio, in 100.0% of the years back tested to 1871, the portfolio would have maintained a positive balance.

Your Success Rate is 100.0% for the previous periods tested back to 1871.

Sure, no guarantee of future results, just a good indication how things will most likely turn out.

Do you really not understand the difference between being "a good way to go" and being "safe?"

[Gary A]

The past few years I have gotten used to NOT touching my nest egg. This year I decided to get totally out of the stock market and at least spend my dividends. I have them direct deposited into my US bank account. Since I have lived well within my means for so long it has become a habit and I actually feel guilty for buying things I have no need for. There is just my Thai wife and I but we have two vehicles plus a motorcycle. I feel stupid paying the insurance and maintenance on both and still feel it is a waste. With the extra money in my bank from the dividends just sitting there I recently bought a 4.5 percent CD and will likely buy another soon. I simply can't stand to see my money doing nothing. If I decide I want a big ticket item I decide that I can't touch the savings or investments because I will lose the interest. I'd like to build a new house but the wife says it will just be more work for her so she isn't interested. She is quite content with the house we have.

The past two days I have listened to my friends cry because the US stock market has dropped very quickly. I'm glad I'm out of it. The baht also seems to be weakening so things look good for me. The markets, exchange rates, inflation and the problems on our small globe are many and retiring early seems very risky. I would like to be younger but then I would still be working and not have my pensions to support me. Everything is a compromise. Answers are very elusive. What to do is the BIG question for all of us.

Just like anything, you have to balance the risk and reward. And remember, for a lot of people, they are willing to chance much less than 100 percent probability, so they can try even more in equities, and even greater withdrawal rates, and if is starts to look bleak, they can perhaps suffer some more in later years, but if it goes well, they get to enjoy alot more of their money ... while they are alive, which is the only way.

Dying with all of your nest egg is in my opinion kind of a FAILURE of planning.

[Firefan]

AS mentioned we have discussed this many times here before and conclusions have ranged from needing 20000 Baht/mth to needing 400000 Baht per month with the median being around 40-80000 Baht per month.

So (naturally) there is no clear answer, and the method to figure out whether $500k is enough for YOU is to go here for a longer period of time and live the lifestyle you would be satisfied with while making a detailed budget - with room for inflation/increased medical costs with age, replacement costs of big items(cars Etc.) and so forth.

Personally I would feel comfortable with $500k in a globally, asset class wise and currency wise, low cost, well diversified portfolio if my budget was at or below Baht 80k/mth - I.e. 4-5%. I would then also adjust for inflation (but only when needed - I.e. not blindly following the official numbers).

Gary; you seem to have a good grasp of living below your means! Congrats with that!

Skippers link is a good calculator based on more than 100 years of history(which is the best we have unless one believes in crystal balls ) - only problem I see is that it is based on a USA based portfolio only, only US large caps(SP500) and US bonds and expecting the retiree to blindly increase withdrawals with inflation no matter WHAT the market does. Most people will slow down spending a bit if they see their nest egg dwindle.

Personally I want a 2 budget system: ok budget covering ok lifestyle but with little travel and luxuries (say $18k in your case) and discretionary budget (say $6k in your case) for extra travel, buying a motor bike, massages, and so forth. In bad market years I would then only use the "ok budget".

Cheers!

[LivinLOS]

Here is a good retirement calculator.

http://fireseeker.com/

Invest 70% stocks 30% fixed and safely take 4% / year.

That's about it.

Nonsense. There is nothing safe about 70% in stocks and taking out 4% per year. .......

...It irks me when people apply an oversimplified rule-of-thumb which they don't understand and then describe the resulting "plan" as safe. That's like the mantra, "houses only go up in value." Well, houses normally go up in value, but usually not much more than inflation. Then sometimes they go down in value as they are proceeding to do now.

Nonsense?

For someone with a long term investment horizon, equities are a good way to go.

Use the retirement calculator to see if your investment plan would have survived the last 140 years.

With a proposed 70%/30% split, a withdrawal of 4.00% of your starting portfolio, in 100.0% of the years back tested to 1871, the portfolio would have maintained a positive balance.

Your Success Rate is 100.0% for the previous periods tested back to 1871.

Sure, no guarantee of future results, just a good indication how things will most likely turn out.

I dont know what your using for historical calculations but theres no way a 70% equity portfolio would have netted a profit during the 29 crash.. Markets took may years to get back to those levels.

I strongly suspect that the inflation may not be taken into acount in your 'posative balance' when preservation of purchasing power is obviously the name of the game..

[The Skipper]

Here is a good retirement calculator.

http://fireseeker.com/

Invest 70% stocks 30% fixed and safely take 4% / year.

That's about it.

Nonsense. There is nothing safe about 70% in stocks and taking out 4% per year. .......

...It irks me when people apply an oversimplified rule-of-thumb which they don't understand and then describe the resulting "plan" as safe. That's like the mantra, "houses only go up in value." Well, houses normally go up in value, but usually not much more than inflation. Then sometimes they go down in value as they are proceeding to do now.

Nonsense?

For someone with a long term investment horizon, equities are a good way to go.

Use the retirement calculator to see if your investment plan would have survived the last 140 years.

With a proposed 70%/30% split, a withdrawal of 4.00% of your starting portfolio, in 100.0% of the years back tested to 1871, the portfolio would have maintained a positive balance.

Your Success Rate is 100.0% for the previous periods tested back to 1871.

Sure, no guarantee of future results, just a good indication how things will most likely turn out.

I dont know what your using for historical calculations but theres no way a 70% equity portfolio would have netted a profit during the 29 crash.. Markets took may years to get back to those levels.

I strongly suspect that the inflation may not be taken into acount in your 'posative balance' when preservation of purchasing power is obviously the name of the game..

Not a profit every year of course but can survive the bad years.

Edited May 14, 2006 by The Skipper