Investments & Savings Thailand.

[Thaibelg]

Hi Guys,

I’m an expat living and working in Thailand for 10 years and have been sending regularly savings back home in Europe. I’d always found the Thai Baht not favorable and decided to make a loss with currency exchange rates and banking fees, just to have my savings in a more “stable” currency.

But lots of things have changed in Europe these days, you have the weakening of the EURO (still relatively good for foreigners coming on Holidays to spend their money here), but on the other hand the Thai Baht is also devaluating against strong currencies, because of the ongoing political turmoil. Besides that we’re encountering an inflation of currency, due to the rising cost of goods, food etc.

I know there’s no ideal solution for this. But I’d like to hear some opinions here as to what may be the best long-term strategy on savings? Keeping it here in Thailand in Thai Baht or sending it to an off-shore account in EURO, USD?

Thanks!

Thaibelg

[davejones23]

I keep some in UK and some here. So one side gains and one side loses. So everything balances out.

[AyG]

Surely it depends in which currency you expect to spend the money. If your future expenditure is going to be in Baht, save in Baht and vice versa. That way there's no exchange risk. (Fluctuations of 30% or more in exchange rate within a year are not uncommon.)

[meatboy]

you tell me anywhere in the uk.where you can get 3.5% interest yearly,and where offshore can you get a favourable rate.

taking into account you have to change the bht.to your currency and pay for the trans.

[Naam]

But lots of things have changed in Europe these days, you have the weakening of the EURO...

please enlighten us why you think the EUR is weakening and provide some sample exchange rates.

[Card]

you tell me anywhere in the uk.where you can get 3.5% interest yearly,and where offshore can you get a favourable rate.

taking into account you have to change the bht.to your currency and pay for the trans.

The higher interest rate in Thailand is offset by the higher inflation rate. Same with rates in the UK.

in my opinion, property is a good bet to invest in in Thailand. Can rent out, or use for own pleasure whilst capital gains increases. Pattaya is good for that. I have 3 properties but use them mainly for my own use, but renatls are good if ever I need ther cash.

[JeffreyWitty]

How I see it - and plan:

For my extension of stay, I keep the minimum requirement in baht in a Thai bank. This way - regardless of fluctuations - annually, I have enough to continue to stay (based on marriage in my case, 400,000baht).

The rest I move over in small clumps when rates are in my favor. Generally, a LOT of it is left sitting back stateside in USD - but collecting no interest - but safer than the stock (gambling) market. A lot of people prefer to invest their liquid cash in stocks versus savings. Personally, after being burned hard too many times, I would rather just gain nearly 0% interest than see all my capitol go up in smoke overnight and be broke due to our corrupt stock market. It's better to always have a little bit of something than absolutely nothing.

As for the 400k baht - I see it as in insurance against life in Thailand going bad. If/when it does, I got a nice little nest egg (400k baht) to get me outta here - OR - to goto the wife as a "loyalty" payment after I die to say "thanks dear, love ya, great life! use this money to pay off final bills and get a little piece of young man-@ss on the side!"

Edited April 2, 2014 by JeffreyWitty

[AyG]

in my opinion, property is a good bet to invest in in Thailand. Can rent out, or use for own pleasure whilst capital gains increases. Pattaya is good for that. I have 3 properties but use them mainly for my own use, but renatls are good if ever I need ther cash.

Property a good bet in Thailand? Really?

(1) Foreigners can't own the land the property is on, so there's no security beyond a 30 year lease or lifetime usufruct agreed with someone who isn't one's wife.

(2) Property almost invariably doesn't increase in value over time. Thai people just don't particularly like buying second hand properties.

(3) All properties eventually decay and become worthless. (And even if you maintain your property, there's no guarantee that the person next door will, dragging down the value of your place.)

(4) The property could be destroyed by an uninsurable event.

(5) The rental market may completely dry up leaving one with no income, but pretty much all the same costs.

(6) The returns if you factor in your own time and effort, lost opportunity cost for the money invested, taxes and insurance, the returns are actually pretty pathetic and don't compensate for the risks involved.

[Ludacris]

AyG hit the nail on the head regarding buying property in Thailand.

There's many foreign property agents that frequent the Thai message boards promoting what is in their best interest, not yours.

One of the biggest things I think a lot of foreigners forget when buying here is your property is worth only as much as someone is willing to pay for it. If your house is on your wife's family land, or in the middle of nowhere or in an area overrun with foreigners, or worth so much that most Thai's would rather build their own or buy new for that price, then you're going to have a very difficult time trying to sell. And the last thing I would want is a property or condo that I could only sell to another foreigner that was as guilable as I was (and which is also dependant on the exchange rate and tourism).

Also, all these condo buildings look great when new, but wait and see what they look like in 20-30 years time. We all know how well things are maintained here, and in a couple decades or so and when some tenants stop paying their fees things will start falling apart and never get fixed. If you don't believe me, on your tour ask your agent to show you some units in a few buildings that are 15-20 years old and you will know exactly what I'm talking about. Also ask your agent what the rents are like and if you do the calculations you will see that buying is only worth it if your timeframe is over 15 years (like AyG said, don't rely on capital gains on property here).

Don't forget about rising sea levels and possible flooding in the future.

Lastly, I would be very cautious about paying first world prices in a country like Thailand. If you buy something in Vancouver, LA, New York, London, Paris, etc, you're also getting the municiple gov't and functioning law system that goes along with it - that means decent infrastructure, police, fire, no noise when you're trying to sleep etc, all of which are not present here which eat away at your value for money.

[khunPer]

In my opinion it’s a good idea to keep some – half or a major part – of the savings outside Thailand, and keep enough for Visa deposit, “a rainy day” security account, and some future spending in Thailand; the latter as you need to spend money for living expenses here in Thai currency.

The (little) cash savings I keep in Thailand are a fixed deposit for my Visa extension, which can be a 12-month fixed bank account or a special high-interest fixed account; gives somewhere 2½ to 3½ percent interest (minus 15 percent withholding tax). The interest I cash and save in Fund Books. Makes me relaxed not having to think about income verification or transfer of deposit in time for 3-month seasoning, when renewing my Visa-extension.

“Rainy day” deposit I keep partly in a normal bank account with ATM access, in case of emergency, and partly in a 12-month fixed account that can be cashed at any time with loss of interest. That’s merely for security than saving, so I always have some instant cash available. The amount may be dependable of insurances and what you can afford.

There is a quite high guarantee on Thai bank accounts at the moment, but will be lowered to 1 million bath, I think from 2015, so if more than that, one can split savings between two or several banks.

I normally transfer about one year budgeted living expenses – as it for me may be worth transferring from abroad in one lot at the time of a good exchange rate from foreign currency to Thai bath – these money I place in a bond-saving Fund Book, which normally gives a slightly better (or same) interest than a fixed bank account, but there is no 15 percent withholding tax. Sell off in lots for a quarters living expenses and move to a normal bank account; selling is daily trade price and money available in one bank day. Compared with European bank interest rates, that has been a benefit for me, rather than keeping a year living expenses abroad with regular transfers.

For a smaller long term saving in Thailand I have a few Fund Books with various stock portfolios. Some Funds pays dividend – which can be 2-4 percent or more – and over the past years they have performed quite well in value increase; not huge amounts like when speculation in specific shares, but in average around 10-15 percent annual. It’s a more risky investment, but if something goes wrong firstly the gain is lost; secondly some of the savings, but presumably not all. Using the Fund Books I do not need to know and check the stock market, but leave that to the traders; others may have a different opinion about stock investments and trading, but for the limited amount (all is relative) it may not be worth the effort to do it myself (apart from the joy of playing the stock market roulette). Like with all more risky investment, I never invest more than I can afford to loose (even it may hurt a little).

Property, and especially land, may be the best long-term investment in Thailand; the increase of land prices has in some areas been quite high over the last 10 years, especially fairly cheap farmland up at Isaan has raised three-fold or more. Difficult to predict if that will continue. However, apart from buying a condo, property investment needs to be in partnership with Thais and a company set-up, with all the thoughts of what that can include of risk. Furthermore land and property cannot be cashed instantly, the selling process may take long time.

[Peterphuket]

you tell me anywhere in the uk.where you can get 3.5% interest yearly,and where offshore can you get a favourable rate.

taking into account you have to change the bht.to your currency and pay for the trans.

The higher interest rate in Thailand is offset by the higher inflation rate. Same with rates in the UK.

in my opinion, property is a good bet to invest in in Thailand. Can rent out, or use for own pleasure whilst capital gains increases. Pattaya is good for that. I have 3 properties but use them mainly for my own use, but renatls are good if ever I need ther cash.

Please, don't forget, If you like to sale your property, early, for example after 2 or 3 year you'll pay a lot of tax over your profit.

[belg]

you still have connections in belgium? house ? others ? you want to retire here ? are you married ?

any point of still sending money home, where you get a 1.25% interest on your money and overhere up to 3.50% gross ?

where are you located thaibelg

[Peterphuket]

In my opinion it’s a good idea to keep some – half or a major part – of the savings outside Thailand, and keep enough for Visa deposit, “a rainy day” security account, and some future spending in Thailand; the latter as you need to spend money for living expenses here in Thai currency.

The (little) cash savings I keep in Thailand are a fixed deposit for my Visa extension, which can be a 12-month fixed bank account or a special high-interest fixed account; gives somewhere 2½ to 3½ percent interest (minus 15 percent withholding tax). The interest I cash and save in Fund Books. Makes me relaxed not having to think about income verification or transfer of deposit in time for 3-month seasoning, when renewing my Visa-extension.

“Rainy day” deposit I keep partly in a normal bank account with ATM access, in case of emergency, and partly in a 12-month fixed account that can be cashed at any time with loss of interest. That’s merely for security than saving, so I always have some instant cash available. The amount may be dependable of insurances and what you can afford.

There is a quite high guarantee on Thai bank accounts at the moment, but will be lowered to 1 million bath, I think from 2015, so if more than that, one can split savings between two or several banks.

I normally transfer about one year budgeted living expenses – as it for me may be worth transferring from abroad in one lot at the time of a good exchange rate from foreign currency to Thai bath – these money I place in a bond-saving Fund Book, which normally gives a slightly better (or same) interest than a fixed bank account, but there is no 15 percent withholding tax. Sell off in lots for a quarters living expenses and move to a normal bank account; selling is daily trade price and money available in one bank day. Compared with European bank interest rates, that has been a benefit for me, rather than keeping a year living expenses abroad with regular transfers.

For a smaller long term saving in Thailand I have a few Fund Books with various stock portfolios. Some Funds pays dividend – which can be 2-4 percent or more – and over the past years they have performed quite well in value increase; not huge amounts like when speculation in specific shares, but in average around 10-15 percent annual. It’s a more risky investment, but if something goes wrong firstly the gain is lost; secondly some of the savings, but presumably not all. Using the Fund Books I do not need to know and check the stock market, but leave that to the traders; others may have a different opinion about stock investments and trading, but for the limited amount (all is relative) it may not be worth the effort to do it myself (apart from the joy of playing the stock market roulette). Like with all more risky investment, I never invest more than I can afford to loose (even it may hurt a little).

Property, and especially land, may be the best long-term investment in Thailand; the increase of land prices has in some areas been quite high over the last 10 years, especially fairly cheap farmland up at Isaan has raised three-fold or more. Difficult to predict if that will continue. However, apart from buying a condo, property investment needs to be in partnership with Thais and a company set-up, with all the thoughts of what that can include of risk. Furthermore land and property cannot be cashed instantly, the selling process may take long time.

I'm sorry, I never heard about "Fund Books" , how to obtain? by a regular bank or through brokers?

[GlobalCtzn]

Physical gold and silver bullion. You can thank me later..............................

[khunPer]

I'm sorry, I never heard about "Fund Books" , how to obtain? by a regular bank or through brokers?

Presume most banks have them.

I use Bangkok Bank (for bonds), SCB (for bonds & LTF-equity) and Kasikorn Bank (for equity); the latter seems to have the best variety and good info in English. You can see more on their website:

http://www.kasikornasset.com/EN/MutualFund/ProductsFundFacts/Pages/Default.aspx

The LTF (Long Term Equity Fund) has tax privilege and cannot be sold before after 5 years to qualify for tax benefits (deduction up to 15%/500,000 baht in annual income, no capital gain tax).

You can invest in equity, bonds, money, gold, oil… etc. etc.

Minimum investment is normally 5,000 baht.

[AyG]

I'm sorry, I never heard about "Fund Books" , how to obtain? by a regular bank or through brokers?

Presume most banks have them.

I use Bangkok Bank (for bonds), SCB (for bonds & LTF-equity) and Kasikorn Bank (for equity); the latter seems to have the best variety and good info in English. You can see more on their website:

http://www.kasikornasset.com/EN/MutualFund/ProductsFundFacts/Pages/Default.aspx

It's not the banks which are selling funds - it's brokerages which are part of the same group as the bank.

I presume that a "fund book" is the brokerage equivalent of a passbook, though haven't before come across the term.

[khunPer]

I'm sorry, I never heard about "Fund Books" , how to obtain? by a regular bank or through brokers?

Presume most banks have them.

I use Bangkok Bank (for bonds), SCB (for bonds & LTF-equity) and Kasikorn Bank (for equity); the latter seems to have the best variety and good info in English. You can see more on their website:

http://www.kasikornasset.com/EN/MutualFund/ProductsFundFacts/Pages/Default.aspx

It's not the banks which are selling funds - it's brokerages which are part of the same group as the bank.

I presume that a "fund book" is the brokerage equivalent of a passbook, though haven't before come across the term.

Cannot say who sells the funds, but the banks issue the Fund Book in their own name (just a bank book, which on page 2 states it’s a Fund Book) – probably like many (or most) banks around the World offers some kind of equity or mutual funds to their clients. I use some similar products for some of my savings in Europe.

For example the SCB Mutual Funds are handled by SCB Asset Management Co. Ltd. (“The Management Company”) and supervised by TMB Bank Plc. (Thai Military Bank); Kasikorn Thai by Kasikorn Asset Management Co. Ltd. and supervised by Bangkok Bank Plc. Comparable mutual funds (for example LTF SET20) are (slightly) different in product and performance.

[Peterphuket]

I'm sorry, I never heard about "Fund Books" , how to obtain? by a regular bank or through brokers?

Presume most banks have them.

I use Bangkok Bank (for bonds), SCB (for bonds & LTF-equity) and Kasikorn Bank (for equity); the latter seems to have the best variety and good info in English. You can see more on their website:

http://www.kasikornasset.com/EN/MutualFund/ProductsFundFacts/Pages/Default.aspx

The LTF (Long Term Equity Fund) has tax privilege and cannot be sold before after 5 years to qualify for tax benefits (deduction up to 15%/500,000 baht in annual income, no capital gain tax).

You can invest in equity, bonds, money, gold, oil… etc. etc.

Minimum investment is normally 5,000 baht.

Thank you very much for the info, so they are ordinary bonds and equitys

[mrfaroukh]

I think you are one in thousands who has a job which pay for the living cost and still can save some money to send home. Well most of us including myself just get the money from home to enjoy life here and have no saving plan as life is too short, better enjoy the cash. Hurrraaa

[SheungWan]

you tell me anywhere in the uk.where you can get 3.5% interest yearly,and where offshore can you get a favourable rate.

taking into account you have to change the bht.to your currency and pay for the trans.

You can't, but over the last 12 months the baht has depreciated by well over the 3.5%? interest difference with sterling, so it is not just interest rates one is taking into consideration.

[fletchsmile]

I used to aim for keeping 1/3 of my assets here 1/3 where I came from 1/3 offshore. As circumstances have changed over the years (marriage, kids etc) I now have a have a higher weighting here.

I like equities as an asset class as they're usually liquid and usually outperform cash and inflation over time. Hence Thai equity exposure makes sense to me. If working this is even better by taking advantage of the tax breaks on LTFS and RMFs.

I also spread my money between different currencies: THB/GBP/SGD being the main ones but some USD/AUD etc. Exchange rates are unpredictable. Long term I expect the THb to strengthen vs GBP/USD but meantime it will have ups and downs so better not to get caught short where you need to exchange at poor rates

Personally I see property here for nesting not investing. I like most of my investments to by fairly liquid. Nice to have a home we've bought, but I don't want the hassle of buying somewhere else here. Buying also fixes your expenses so you're not at the mercy of rent rises or worse still funding rent from overseas money which could depreciate in FX terms as well as see rents increase. At least you can also measure your home at replacement cost even if you can't sell it.

I disagree with the mantra of don't invest here, don't bring money here, Thailand is not safe etc. Stick to what you know, and there are plenty of protection measures in place. I would also go as far as to say for many long termers you can't afford not to invest here. Apart from people losing thru their own poor choices (often women), I've seen more people have problems because of not bringing money here and not investing here: suddenly finding their home currency has depreciated being a big one, falling interest rates in the west being another where people rely on say GBP interest to fund a THB lifestyle it can be a disaster. Thailand's inflation and growth is likely to exceed growth and inflation in most developed western countries. Thais are generally becoming wealthier too starting from a low base, so if you don't financially participate in the country you could find yourself being passed by. or at least being caught up more...

Edit: BTW I'd add that following this approach and living in Thailand I was able to reach my financial independence goals much quicker than I would have done staying in the UK system and keeping all my money there.

Cheers

Fletch

Edited April 3, 2014 by fletchsmile

[Thaibelg]

Hi fletch . After reading all reactions, i like yours most. But theres no right or wrong answer to this either...

[Robert2006]

In my opinion it’s a good idea to keep some – half or a major part – of the savings outside Thailand, and keep enough for Visa deposit, “a rainy day” security account, and some future spending in Thailand; the latter as you need to spend money for living expenses here in Thai currency.

The (little) cash savings I keep in Thailand are a fixed deposit for my Visa extension, which can be a 12-month fixed bank account or a special high-interest fixed account; gives somewhere 2½ to 3½ percent interest (minus 15 percent withholding tax). The interest I cash and save in Fund Books. Makes me relaxed not having to think about income verification or transfer of deposit in time for 3-month seasoning, when renewing my Visa-extension.

“Rainy day” deposit I keep partly in a normal bank account with ATM access, in case of emergency, and partly in a 12-month fixed account that can be cashed at any time with loss of interest. That’s merely for security than saving, so I always have some instant cash available. The amount may be dependable of insurances and what you can afford.

There is a quite high guarantee on Thai bank accounts at the moment, but will be lowered to 1 million bath, I think from 2015, so if more than that, one can split savings between two or several banks.

I normally transfer about one year budgeted living expenses – as it for me may be worth transferring from abroad in one lot at the time of a good exchange rate from foreign currency to Thai bath – these money I place in a bond-saving Fund Book, which normally gives a slightly better (or same) interest than a fixed bank account, but there is no 15 percent withholding tax. Sell off in lots for a quarters living expenses and move to a normal bank account; selling is daily trade price and money available in one bank day. Compared with European bank interest rates, that has been a benefit for me, rather than keeping a year living expenses abroad with regular transfers.

For a smaller long term saving in Thailand I have a few Fund Books with various stock portfolios. Some Funds pays dividend – which can be 2-4 percent or more – and over the past years they have performed quite well in value increase; not huge amounts like when speculation in specific shares, but in average around 10-15 percent annual. It’s a more risky investment, but if something goes wrong firstly the gain is lost; secondly some of the savings, but presumably not all. Using the Fund Books I do not need to know and check the stock market, but leave that to the traders; others may have a different opinion about stock investments and trading, but for the limited amount (all is relative) it may not be worth the effort to do it myself (apart from the joy of playing the stock market roulette). Like with all more risky investment, I never invest more than I can afford to loose (even it may hurt a little).

Property, and especially land, may be the best long-term investment in Thailand; the increase of land prices has in some areas been quite high over the last 10 years, especially fairly cheap farmland up at Isaan has raised three-fold or more. Difficult to predict if that will continue. However, apart from buying a condo, property investment needs to be in partnership with Thais and a company set-up, with all the thoughts of what that can include of risk. Furthermore land and property cannot be cashed instantly, the selling process may take long time.

I understand your apprehension but the problem arises from poor purchasing decisions, risk is controlled by mainly buy the purchase price. If you obtain a property in a desirable location, and pay the right price, you have options such as renting for the income or living in it with your money securely parked until you decide to sell. Real estate investing works in any country in the world but it’s a skill that requires a lot of education; most people don’t really understand all the variables.

[khunPer]

In my opinion it’s a good idea to keep some – half or a major part – of the savings outside Thailand, and keep enough for Visa deposit, “a rainy day” security account, and some future spending in Thailand; the latter as you need to spend money for living expenses here in Thai currency.

The (little) cash savings I keep in Thailand are a fixed deposit for my Visa extension, which can be a 12-month fixed bank account or a special high-interest fixed account; gives somewhere 2½ to 3½ percent interest (minus 15 percent withholding tax). The interest I cash and save in Fund Books. Makes me relaxed not having to think about income verification or transfer of deposit in time for 3-month seasoning, when renewing my Visa-extension.

“Rainy day” deposit I keep partly in a normal bank account with ATM access, in case of emergency, and partly in a 12-month fixed account that can be cashed at any time with loss of interest. That’s merely for security than saving, so I always have some instant cash available. The amount may be dependable of insurances and what you can afford.

There is a quite high guarantee on Thai bank accounts at the moment, but will be lowered to 1 million bath, I think from 2015, so if more than that, one can split savings between two or several banks.

I normally transfer about one year budgeted living expenses – as it for me may be worth transferring from abroad in one lot at the time of a good exchange rate from foreign currency to Thai bath – these money I place in a bond-saving Fund Book, which normally gives a slightly better (or same) interest than a fixed bank account, but there is no 15 percent withholding tax. Sell off in lots for a quarters living expenses and move to a normal bank account; selling is daily trade price and money available in one bank day. Compared with European bank interest rates, that has been a benefit for me, rather than keeping a year living expenses abroad with regular transfers.

For a smaller long term saving in Thailand I have a few Fund Books with various stock portfolios. Some Funds pays dividend – which can be 2-4 percent or more – and over the past years they have performed quite well in value increase; not huge amounts like when speculation in specific shares, but in average around 10-15 percent annual. It’s a more risky investment, but if something goes wrong firstly the gain is lost; secondly some of the savings, but presumably not all. Using the Fund Books I do not need to know and check the stock market, but leave that to the traders; others may have a different opinion about stock investments and trading, but for the limited amount (all is relative) it may not be worth the effort to do it myself (apart from the joy of playing the stock market roulette). Like with all more risky investment, I never invest more than I can afford to loose (even it may hurt a little).

Property, and especially land, may be the best long-term investment in Thailand; the increase of land prices has in some areas been quite high over the last 10 years, especially fairly cheap farmland up at Isaan has raised three-fold or more. Difficult to predict if that will continue. However, apart from buying a condo, property investment needs to be in partnership with Thais and a company set-up, with all the thoughts of what that can include of risk. Furthermore land and property cannot be cashed instantly, the selling process may take long time.

I understand your apprehension but the problem arises from poor purchasing decisions, risk is controlled by mainly buy the purchase price. If you obtain a property in a desirable location, and pay the right price, you have options such as renting for the income or living in it with your money securely parked until you decide to sell. Real estate investing works in any country in the world but it’s a skill that requires a lot of education; most people don’t really understand all the variables.

Thanks for your reply, Robert, but I’m not sure I understand, what you are saying – unfortunately English is not my native language – or I have not expressed myself good enough in above post.

I think we agree, as I’m trying to say, that property – in Thailand especially Land – is the best long-term investment. However complicated, as a foreigner cannot own property – apart from some condos – and need to use company set-up or other instruments. My own land investments here have been very good, so far; the reason for not focusing on property above is the foreigner’s limitations in ownership.

[isawasnake]

The money i earn here, I keep here.

Capital gains are not taxed on stocks here, and I also see property as a good investment, especially if you plan to frequent Thailand.