Return on money from pension fund - risks

[moogradod]

I will (early) retire this summer and move from Switzerland to Thailand by the end of this year. I will take all the money from my company pension fund out instead of getting a pension. I will get an additional persion in 6 years. My wife is Thai.

I now need to plan how to invest the pension found money. It is several hundred thousand Swiss Francs, but below one million.

• Investment must be outside of Thailand, but easily accessible from LoS without much cost involved
• There must be some sort of dividend payed yearly or quarterly, which is then used to finance part of the living
• As the above might not be enough, part of the invested sum must as well be accessible if needed - using up the invested money
• Exchange rate risks must be kept to a minimum (not investing in volatile currencies)

Of course I would look into possibilities in Switzerland first but I suspect that many of you might have done something similar. Maybe you can help me with:

1. Is a return of around 4.5% realistic given a moderate to low investment risk - if not - what is realistic ?
2. Has anybody implemented such a scheme (money plus continuous return while using up the basic invested money) - does this exist actually ?
3. Are there any problems setting up such an investment without travelling to the particular country (risk, fraud, legal issues)

Any ideas or comments are highly appreciated. Thank you for your help.

[FiftyTwo]

At current times you would be lucky to make 4% in a medium risk.

Very bad idea to take money out of company pensions, returns elsewhere are rarely as good.

Big chance of losing your money.

[moogradod]

Thanks FiftyTwo

But I am retiring early with 59 years (meaning I do not get the full pension, but only a fraction) and then it depends on how long you live - and this may - unfortunately - be quite limited for me, too. Taking into account that my wife is quite young, she then gets an even smaller fraction of the pension. So the option to take out the money is in my particular case better. I just need to invest it in the best possible way.

I thought that even a simple fixed asset account in LoS gets you more than 3%. There must be options overseas (funds etc.) which do not mean to much risk and yield more.

Edited March 9, 2014 by moogradod

[FiftyTwo]

Thanks FiftyTwo

But I am retiring early with 59 years (meaning I do not get the full pension, but only a fraction) and then it depends on how long you live - and this may - unfortunately - be quite limited for me, too. Taking into account that my wife is quite young, she then gets an even smaller fraction of the pension. So the option to take out the money is in my particular case better. I just need to invest it in the best possible way.

I thought that even a simple fixed asset account in LoS gets you more than 3%. There must be options overseas (funds etc.) which do not mean to much risk and yield more.

I and many other pension holders thought the same, I know of nobody who hasn't made large losses in a short space of time. Thailand is on the brink of civil war, it's not a good place to hold large amounts of money, 1MBht tops IMHO.

But,

Australia can still get you 4% on a yearly bank investment, maybe you could look into that.

[CeeBee]

But - the AUD is declining and 10% tax is deducted as well.

[watcharacters]

.

I think K Bank paid 3.5% last year but I'm not positive about that.

[Naam]

But - the AUD is declining and 10% tax is deducted as well.

-during the last 5 years AUD gained 27.9% vs. Thai Baht (see graph)

-there is no tax on any AUD invested outside Oz,

-yield on triple A rated Australian government bonds presently,

maturity 10 years = 4.16%

maturity 15 years = 4.58%

of course risk of currency fluctuation vs. Thai Baht still exists.

note: sometimes i wish that people who have no idea...

[Naam]

Exchange rate risks must be kept to a minimum (not investing in volatile currencies)

should you find a non-volatile currency i'd be grateful if you let me know as i am looking for one too, unfortunately since many years without success.

[Naam]

.

I think K Bank paid 3.5% last year but I'm not positive about that.

why waste a full page if you are not positive about that?

[DogNo1]

Personally, I invest in a portfolio set up for me by Richard Lehmann who writes the monthly Income Securities Investor newsletter. My holdings are moderate to low risk and return around 5% per year. Since you ask, there is no way make a good return on your money while also drawing down the amount of capital that you have invested. If you can, its good to leave some money on the table to be reinvested. Incidentally, the Motley Fool just announced yesterday that they will manage the funds of anyone who has a Motley Fool One subscription for 0%. That's right, they will manage your money for nothing if you buy the yearly subscription to One. If you're interested, you can check fool.com for details. I subscribe to their options advisory and make a little on options every year. So far as stable currency goes, I suggest the US dollar. Good luck!

[wordchild]

if you are prepared to put in the time and effort, putting together your own investment portfolio can be both great fun and very rewarding; i would very much agree with DogNo1 checking out sources like Richard Lehman or Motley Fool would be a good start. If you dont want to take on too much risk then look for well managed collective funds that pay a good dividend. As a matter of interest (and not a recomendation) there are some pretty attractive equity yields available in your own home market eg Zurich Ins (yield 6.3) Swiss Re (yield 5% plus likely capital return) Swisscom (yield 4.6%) etc. Most importantly if you dont want to waste a fortune in fees and potentially lose a chunk of your capital stay clear of Thai based financial advisors.

Edited March 10, 2014 by wordchild

[CeeBee]

Herr Naam

The AUD has been declining substantially against the USD and other major currencies (and the Thai Baht) in recent months. Further declines are expected.

I will tell my Thai bank that the tax deducted from my AUD account should be reversed.

[SheungWan]

if you are prepared to put in the time and effort, putting together your own investment portfolio can be both great fun and very rewarding; i would very much agree with DogNo1 checking out sources like Richard Lehman or Motley Fool would be a good start. If you dont want to take on too much risk then look for well managed collective funds that pay a good dividend. As a matter of interest (and not a recomendation) there are some pretty attractive equity yields available in your own home market eg Zurich Ins (yield 6.3) Swiss Re (yield 5% plus likely capital return) Swisscom (yield 4.6%) etc. Most importantly if you dont want to waste a fortune in fees and potentially lose a chunk of your capital stay clear of Thai based financial advisors.

I would give serious consideration to the Swiss home market yields listed above.

[taiping]

Suggest invest in a range of Asian shares using a share broker in Hong Kong. For many years I have used Phillip Securities (HK).

A dividend yield of 4.5% is entirely realistic.

Use this site to pick suitable stocks, using yield or p/e criteria . . .

http://www.finet.hk/mainsite/investment/calculation.html

Of course, funds can be transferred anywhere from the HK broker to LoS or wherever.

Risks are share price volatility and exchange rate risk from (say) HK shares to Thai Baht.

Commission charges for share dealings are low but commission for fund SWIFT transfers are a bit high, so suggest doing fund transfers once or twice a year.

[oxo1947]

Thanks FiftyTwo

But I am retiring early with 59 years (meaning I do not get the full pension, but only a fraction) and then it depends on how long you live - and this may - unfortunately - be quite limited for me, too. Taking into account that my wife is quite young, she then gets an even smaller fraction of the pension. So the option to take out the money is in my particular case better. I just need to invest it in the best possible way.

I thought that even a simple fixed asset account in LoS gets you more than 3%. There must be options overseas (funds etc.) which do not mean to much risk and yield more.

I and many other pension holders thought the same, I know of nobody who hasn't made large losses in a short space of time. Thailand is on the brink of civil war, it's not a good place to hold large amounts of money, 1MBht tops IMHO.

But,

Australia can still get you 4% on a yearly bank investment, maybe you could look into that.

I have my money in Oz....& there is a 10% (on profits ) non citizen tax,--- I believe you can get comparable rates in Singapore & hold your money in whatever currency you wish there also. If its just a bank deposit rate that you are looking for.

Edited March 10, 2014 by oxo1947

[belg]

keep your money where it is, are you in a rush to lose it all and come to complain here as another one would have bitten the dust?

RENT... dont buy anything that cannot be put into your name...

nough said...

[Overcome]

I'm not able to directly answer your questions but a few comments may help

- be extremely cautious in taking action on any advice you receive unless the source is above reproach. Thailand is still the wild west when it comes to the 'financial planning' business

- even worse is taking advice or implementing any advice from a company or individual located outside Thailand in which case you have zero protection

- I would do as you ate doing and keep investments out if Thailand - the risks and likely volatility makes this a good move (nit investing here)

- you should be able to transfer funds into your Thai bank by internet from most developed markets in 24-47 hours

- what you want - a fixed drawing that slowly depketes the capital at the beginning but accelerateds as the capital gets lower is known as an annuity. These are offered by some insurance companies and there are two types ) one offers just the financial calculations for a fixed term and the other guarantees the yearly income as long as you live - fall off your perch early and the company makes a windfall profit - live to 120 and they lose

- the money is already in one if the most sophisticated and well regulated global markets where you are more likely to find sensible advice - why not leave it there, find a mid tier financial management crowd and then make sure your investment funds can be managed online by you (selling some mutual funds is not hard) and make sure your bank has online facility for you to log in and make a transfer direct to your Thai bank

- when eventually you do thus always attach nites to the fund transfers for living costs, household expenses, etc. Don't use terns like 'capital' otherwise you'll end up explaining things you shouldn't need to explain. And avoid humour as I have experienced saying you plan to use the money for plutonium ends up making a problem. It seems as long as its clear the money us for living expenses its ok but not ok if you ate transferring funds for investment purposes, money laundering, drug running, terrorist funding ir plutonium. Especially plutonium.

-what you really need us an asset allocation strategy based in your needs and risk tolerance. if you could get this done you could probably manage the investments yourself. if you send me a private message I can give you some suggestions

sorry fir the spelling errors Im too mean to buy the app

[prakhonchai nick]

Wherever you invest your money, consider how easily your wife can access it after your death.

In most cases where an investment is in your sole name, probate will be required to release funds. This is not only time consuming but can be expensive, which may well use up all the extra interest you thought you had earned.

As an example, obtaining funds invested in the Channel Islands and Isle of Man (favourites for the British expats) will cost upwards of 100,000baht to release. Some overseas countries also try and take a percentage of your invested funds.

[USNret]

Personally, I invest in a portfolio set up for me by Richard Lehmann who writes the monthly Income Securities Investor newsletter. My holdings are moderate to low risk and return around 5% per year. Since you ask, there is no way make a good return on your money while also drawing down the amount of capital that you have invested. If you can, its good to leave some money on the table to be reinvested. Incidentally, the Motley Fool just announced yesterday that they will manage the funds of anyone who has a Motley Fool One subscription for 0%. That's right, they will manage your money for nothing if you buy the yearly subscription to One. If you're interested, you can check fool.com for details. I subscribe to their options advisory and make a little on options every year. So far as stable currency goes, I suggest the US dollar. Good luck!

Agree with Motley Fool newsletter for investment advice. They post free tidbits on investment sites that are pretty worthless, but their paid newsletters are great. I've done well following Motley Fool Stock Advisor for 8 years now. With Motley Fool Options over the past year, I'm making something like 20% annual returns. Nothing is safe nor guaranteed, but I'm very impressed in both up & down markets. Haven't tried Motley Fool One, but I am using their newish SuperNova service. The jury is still out as to whether this one is worth it or not; it's pretty expensive.

[JimHuaHin]

But - the AUD is declining and 10% tax is deducted as well.

Did the 10% tax come in late last year???

Was that part of the last federal budget?

[Pinot]

I have been living on dividend income since I retired to Thailand. You can pretty easily find safe investments producing 4%. Risk increases as you look for higher dividend income. The trick is to find those investments that produce that steady dividend income and growth in the underlying investment. I have more money now then when I came here four years ago. Just remember the risk/reward rules. Diversification will lower risk. Stay away from gold. I would not invest in Thailand. I can't be more specific because I can only recommend American market investments but low cost ETFs are the way to go. Some people prefer investing in specific companies like Exxon and McDonalds with steady dividends and growth. If you don't know what you're doing get help and start educating yourself. I would get a number of opinions. Investment counselors take their cut off the top so beware.

[scorecard]

This is not a reply to your specific question, but it is a response to agree with several comments from TV members.

I'm aware of several guys who live in Thailand after having taken early retirement but also suffered a big reductions in their payouts. All of them are now in personal financial circumstances whereby they need to watch every Baht, and strongly limit their spending to essentials only.

All of them now wish they had continued working until the full retirement age.

I'm not suggesting that you share more personal details her, that's your private business and it should stay that way.

Good luck.

[JimHuaHin]

I checked out the Australian situation before retiring last year.

I kept all of my pension money in the pension fund, as they had very good returns on investments and provided me with enough to live on in Thailand. Only minor downside is that the pension fund can only pay monies into a bank in Australia, so I have to transfer the pension into my Thai bank when I need money.

Also kept my savings in an Australian bank short-term investment account (one month on call), currently earning 4.67%, before tax.

Yes, the A$ has been sliding a little againt the Baht and US$, but ....

[CMBob]

Best advice I can offer is to go talk with an investment adviser or two before you leave Switzerland this summer. And the second best advice I can give you is don't invest your life savings or pension money based on what you read on a message board or on the internet in general unless you're absolutely sure you can discern from good and bad advice.

You sound like a smart guy, obviously old enough, and Swiss. Why not take advantage of the financial experts in Switzerland over the next several months? Try to use somebody you know and trust or, if you don't know anybody that well, ask some friends who you trust who they use and trust.

I would join in with the comment or two that Thailand isn't exactly the best place in the world to invest any significant sum given the ever-present fragility of the government; besides, given the educational system here, I really wouldn't bet any significant amount of my money on Thailand's long-term economic future.

Edited March 10, 2014 by CMBob

[peterpop]

Of course you must accept that reward comes with risk. I have invested in the Thai stock market. It went up quickly about 18 months ago and has now retreated, but I am still showing a small profit. Thai industry is VERY resilient. There are many real bargain stock s out there and now is a good time to get in.

I suggest you study investing in stocks both here and in UK. I use Beaufort Sharedealing in London that accepts ex patriot account holders. The UK market has been excellent this last year and I am up about 40% but I do not invest in Funds or Bonds, only small medium individual companies. But if this too difficult I recommend 'Invest Trust ' companies. These are like shares, no periodic management fees. Many of these will get you your 4% and capital growth as well. Invest about 25% of your available funds slowly over the next year to feel your way in.

Don't worry about taking gains early.

[jacksam]

Seriously why ask this on a forum. Some of the advice above is very sound and some rubbish. Most like myself would not know the details of swiss tax law etc. I mean I didn't even realize you guys can still get a "pension" In Australia this is subject to strict asset test.

In any event the best advice is to see an expert. .

For my 2 cents worth shares have been very good over long term in the past. My concern (but won't happen for some time, but will happen) American debt is a tomb bomb.

[robertthebruce]

The problem with the ''Stock'' market is, your investment can go up or down..

If i was you, i would definetly keep my money in ''Switzerland'', why not buy a property and rent it out ??, so at least you are getting rent money, and also the property prices are increasing...

If not ''Switzerland'' , London is a great place to invest in property, especially the right areas...., its all about ''Location Location Location''..

best of luck whatever you decide,

Cheers

[weescotsguy66]

as with all investments it is good to have a diversified portfolio, between equities, rental properties, managed funds and hard cash.

due to your age 59, if any investment does recover you money in 15 years it is only an investment for your wife not for you.

for renting a house 35k gets you a 3 bedroom house no private pool but a good public pool and good security (see SP 5 in Pattaya)

use ddproperty.com for location

Bangkok is out due to prices but as you see Hua Hin is nicer for older people, Pattaya is noisy but lots of choices of expat food. But also look at Pathum Thani, handy for Bangkok and Udon Thani nice for the wife with her Issan culture.

Electric 3k no air con culture 6K if you like air cons 500 to 1K for water

Internet 600b TV 600 to 2500 VPN account 150b

access to money from abroad use currency exchanger like currency solutions free movement above £10k but there are lots out there avoid using banks of any kind. ATMs use Aeon only see another thread but only as a last resort.

most private hospital are good bumingrad is very pricy

[onni4me]

Well, if I were in your shoes I would purchase couple studio flats or maybe 2-room ones. You know your country and the rental level. Good location and small size flats are always sought after.

Nowadays situation IMHO does not make stock market attractive. Virtual currency pumped into it is a bubble waiting to burst. Rental property is more permanent and if you can't manage it yourself, hire a company to look after.

This way money coming to your account every month and a related credit card to make purchases or withdrawals. If you are not a seasoned investor, don't start now.

[littleboylost]

I have been living on dividend income since I retired to Thailand. You can pretty easily find safe investments producing 4%. Risk increases as you look for higher dividend income. The trick is to find those investments that produce that steady dividend income and growth in the underlying investment. I have more money now then when I came here four years ago. Just remember the risk/reward rules. Diversification will lower risk. Stay away from gold. I would not invest in Thailand. I can't be more specific because I can only recommend American market investments but low cost ETFs are the way to go. Some people prefer investing in specific companies like Exxon and McDonalds with steady dividends and growth. If you don't know what you're doing get help and start educating yourself. I would get a number of opinions. Investment counselors take their cut off the top so beware.

I too am getting around 4% return through dividends, however, be aware that the value of your portfolio can and will fluctuate on a daily basis. If you need extra cash quickly you may have to sell some investments when the market is at a low.

I use a company called Fisher Investments based in the Bay Area (San Francisco). Google them for more info.

Agree regarding the comment about ETF's. A good way to go if you are nervous about investing in individual companies.