Investing 300k baht for 15+ years.

[Deacon Bell]

I'd like to put 300k baht away for my kid's university in 16 years time.

What are the (best) options available? Long term fixed accounts, perhaps 5-10 years in length? What % are they paying?

The trouble with that is the loss due to inflation.

Another option would be a very small plot of land down south, I'd be looking at a very small plot outside some place like Bang Saphan (200km South of Ha Hin). I'm sure that over the next 15 years land is this area will more than keep up with inflation. A lot more hassle to do it - finding, buying etc. and legally her Thai mother (my wife) would be the legal guardian of it until she is 18 or 20 (?).

What would you do to put away some money (yes I know it's a small amount) for 15+ years?

(Yes I'm aware that it's a tiny amount, no need to comment on that. )

Thanks.

[meatboy]

this is my take on what I would do,at the moment there is not much on offer,but 3% at land and house bank I think its 3yrs.

if its like the one I have and the wife interest is paid monthly into a different acc.therefore you get interest on the interest.

now as its for a child that may complicate getting the tax withheld refunded.there are some childrens accs.available that I saw elsewhere so they might be worth having a look at.or you can get the wife to open one of these monthly savings acc.which I tried to open but got no joy,[have a look at the bank interest forum] about 2months ago these accs.were for 3-5yrs.no lump sum but you had to put in the same every month for the duration if my mind is correct it paid 4%.so for 3yrs.it would be 8,000bht.each month,other than that I don't think there is anything better.

[Deacon Bell]

Thanks.

Having the account in my name is no problem (unless not allowed by the bank). Such as having it in a BAY account in my name at 2.35% paid monthly would be fine.

But over 15 years I am sure that it would take a beating by inflation. If the 300k grows to 500k with interest over 15 years I am sure that it will likely only have the purchasing power of half what it has today.

[meatboy]

Thanks.

Having the account in my name is no problem (unless not allowed by the bank). Such as having it in a BAY account in my name at 2.35% paid monthly would be fine.

But over 15 years I am sure that it would take a beating by inflation. If the 300k grows to 500k with interest over 15 years I am sure that it will likely only have the purchasing power of half what it has today.

there will be a few guys on here that I am sure will have a better idea than me,but dealing with banks you do have to be on your guard,they will tell you anything if they can get your money.a lot of their products are very hard to fathom.

eg.they might try to sell a long term acc.that has life cover in it,and tell you its free,it happened to us in the uk.[when its not]

another time we had a large sum [house sale] to move from one bank to another,they said the would beat the other banks offer so I left the wife for 10mins.but she was not so stupid as they thought,tried to get her to take investment offshore.

[mccw]

Thanks.

Having the account in my name is no problem (unless not allowed by the bank). Such as having it in a BAY account in my name at 2.35% paid monthly would be fine.

But over 15 years I am sure that it would take a beating by inflation. If the 300k grows to 500k with interest over 15 years I am sure that it will likely only have the purchasing power of half what it has today.

Land be your best bet for the kid I think - if you can find such a cheap little piece.

Chock dee

[fletchsmile]

My mum wanted to do similar and give all her grandchildren some money for their 18th birthday. I've 2 girls similar age to yours - slightly older. Given the longer term time frame I figured I could afford to take some investment risk.

Equities are one of the best classes of assets for yielding a positive return over inflation over longer periods of time. Other asset classes help diversify

I split the money into 4 mutual funds: local equity, international equity, international bond fund, and resource/energy fund (for some exposure linked to commodities). So it was reasonably diversified. As I was prepared to take risk I choice Emerging markets for the international bonds and equities, which are indvidually higher risk, but should provide higher return.

The 4 funds I bought were:

Aberdeen Growth

Aberdeen Global Emerging Markets

Aderdeen Emerging Markets Bond Fund

KTAM World Energy Fund

I'd previously invested for them, so the money was just a top up. First time I opened the accounts I did this via Standard Chartered my Bank, by

1) Opening a bank account in each child's name: in the format "child1smile by Fletchsmile" and child2 smile by Fletchsmile". The account used was a "Just One Account". Poor rate of interest but minimum balance of 5k which is all we keep in there. It's just to facilitate fund purchases and sales whenever needed and have a basic bank account for them

2) Opening investment accounts with each fund management account. Bought the funds for them via Stan Chart. I could have gone direct to the fund providers, but preferred doing it all thru Stan Chart. I have a great RM who knows me and my family. She did all the paperwork for me. I just needed copies of their passport/tabian bahn entries and my own passport and long term visa

Then sorted. A few years from now I may make the portfolio a bit more conservative as they approach 18

Worth also mentioning, my brother put his into a simple UK Cash ISA for his youngest of a similar age. The poor rate of interest barely kept pace with inflation. I look after some money for him too, so he asked me to do similar for them after about 2 years when he saw what was happening and we discussed things. i.e his kid earned a couple of per cent total, mine were now well into double digits after 2 years. {BTW Please note there have been times were the funds were worth a bit less than original investment and capital is not guaranteed}

I did the same thing bought 4 funds. This time just in my bother's name as it was simpler for the small amount. I keep track of the 4 funds for him on a spreadsheet as they are mixed in with his other investments. I just log how many units we bought in each fund for his son and the other units belong to my brother. The 4 funds I bought were again:

Local equity (for him a UK equity)

International Equity (Aberdeen Emerging markets again)

International bond fund

Natural resources fund

So did the same thing for my bother and son, just bought thru UK, using the investment accounts I help my brother set up and manage for him

Cheers

Fletch

Edited August 29, 2014 by fletchsmile

[fletchsmile]

Should add, that my wife's idea of investing for the kids is as mentioned buying land. She bought some land in her name from someone who lives near her parents, and says it will belong to the girls when she's gone! Being Thai, she understands land as an investment. The message being that's what she's comfortable with.

Personally I'm not a big fan of land, as it's illiquid and can't always be sold when you want. Plus more work to generate an income from it if you want to do more than just hope for capital gains. I just let her get on with it though, as she's comfortable and happy with it. Anyway it diversifies our assets.

Cheers

Fletch

[Deacon Bell]

Thanks Fletchsmile for the info, it's something I would consider.

[AyG]

As Fletchsmile so rightly says, equities are a good way to invest to get a positive return after inflation. However, markets can crash, so at the 10 year point I'd start locking in some of the gains. Each year I'd sell 15% of the equities and put the money into a bank fixed deposit account.

Fletchsmile's asset allocation is interesting:

- Aberdeen Growth

- Aberdeen Global Emerging Markets

- Aderdeen Emerging Markets Bond Fund

- KTAM World Energy Fund

He doesn't say whether this was allocating 25% to each. If so, I think that is a scarily high allocation to natural resources/energy. Personally I'd say 10% maximum is prudent.

I'm not sure why the emerging markets bond fund is there. Emerging market bonds are intermediate in character between equities and developed market bonds, so don't provide as much diversification as, say, a global bond fund. If the intention here is to gear the investment to the home market, then a Thai bond fund would seem more logical. That said, personally the only bonds I like are index linked bonds as a hedge against inflation. Holding conventional bonds can only detract from performance over the longer term.

I also think the absence of developed market funds a little odd. At times when markets are feeling confident, money will flow to more speculative investments such as emerging markets equity; when markets are more nervous the money will flow in the reverse direction, from emerging markets to developed markets. Holding both should help smooth out returns. Not naming any specific funds, I'd suggest:

25% Thai equities

25% Emerging market equities

25% US large cap equities

25% Europe including UK equities

[ray23]

Just a couple of thoughts, Aberdeen is the safe way to go. Although their fees are pretty high, if I understand correctly you want 300K in in 16 years. Honestly not sure that would cover the cost of University now, much less the 16 years from now.

Land is a safe way to go. But, it is not very liquid. I suppose the possibility of borrowing against it might take care of that.

Am I wrong on the 300 K in 15 years?

Edited August 30, 2014 by ray23

[nanapong]

Buy 300k of Gold and stick it in a safety deposit box at the bank.

[crazykopite]

I have had investments under management for over 20 years in the UK and during that time there have been many ups and downs indeed at one stage my initial investment was crumbling and that was when it had been in there for some 8 years , refusing to panic I rode the storm and today my initial investment is up some 130% but that does not mean that I would not lose it all if the economy went belly up , 300,000 baht is not enough to invest in some managed companies mine for instance is now £100,000.00 that was not the case 20 years ago as the money is for a child if I were you I would only lock it in for 3 years after this time re-invest the money in a fund that is paying more and so on in this day and age I think that would be best as you know you would be getting a guaranteed rate for your child's investment good luck with your child's investment.

[AyG]

Land is a safe way to go. But, it is not very liquid.

Really? A safe way to go? What happens if they decide to build a sewage plant next door, or start a pig farm?

Plus, with the proposed land tax, it's probable that currently unused land will be made productive, depressing the price of land.

[givenall]

I put m money in a college fund in US and the return so far very good and it is taxed free as long as its used for college/uni even outside of US

[Deacon Bell]

if I understand correctly you want 300K in in 16 years.

No, I want to put away 300k that I have now, for the purpose of helping them with uni costs in 16 yrs time.

[Deacon Bell]

Buy 300k of Gold and stick it in a safety deposit box at the bank.

We bought an amount of gold when she was born, which is locked away (with some other items - a birthday card being one).

It is set up to be her 21st birthday present.

I suppose I like to plan ahead.

Adding another lot could be an option I would consider.

[isaray74]

15 years is just too long to lock up your money for a minimum term. Yes it requires little effort and little return. I can show you a way to make $600 usd paid monthly into your account, but the investment you would need to come up with is 380,000 baht. Downfall is your money will be locked in for 18months contract. You can take your money out then, or you can choose to reinvest the 380,000. If you want more info. My email is <removed>

Edited August 30, 2014 by Tywais
email removed as per forum rules

[belg]

so just put it in a bank account as see what bank gives the best % over the years ...

[realenglish1]

Buy a proven mutual fund and leave it there Relatively safe and will return more than a bank will

[Thailand J]

Not in a stock mutual fund, what if u need the money right after a market downturn such as 2008/2009…

Not in a bank the longer you put it in a bank the smaller the amount after inflation adjustment. Interest rate is always less then inflation.

300,000B is just about US$10,000. Not enough to buy land or built an investment portfolio.

I would consider a target fund which will rebalance itself- more stocks now but more bonds at the end.

An example is Vanguard Target Retirement 2030 Fund.

[12DrinkMore]

15 years is just too long to lock up your money for a minimum term. Yes it requires little effort and little return. I can show you a way to make $600 usd paid monthly into your account, but the investment you would need to come up with is 380,000 baht. Downfall is your money will be locked in for 18months contract. You can take your money out then, or you can choose to reinvest the 380,000. If you want more info. My email is <removed>

60% annualised return????

We'd all like a piece of that action, if it was 100% safe and legal........

Or do you mean USD 60 / month? Around 6%, which is a decent enough return.

[BlackJack]

look at morningstar thailand - some of the fund are north of 30% in a year

with thailand heading into ASEAN there are some good dividend funds

krungsri etc

I got into the India and africa funds as there is lots of action there and in 15 years time I think its a good bet -China is pouring hug amounts of money into Africa and India has the population to do what China did over the last 10 years.

Its your call - investing is like gambling

NOTE I am not a financial advisor

[jpinx]

I didn't read all the responses so far - so apologies if I am repeating anything.

I suggest for that size of deposit you look for a bank with decent term deposit rates. That will mean looking abroad. Oz and NZ give about 5.5% and you "might" be able to sort a new account by post, if not actually online. Once established their banking system has a good online service.

Anything you purchase is a definite risk in this country - given the repetitive upheavals, and interesting property-ownership laws.

[Pinot]

A couple of things: NEVER BUY PROPERTY IN THAILAND and gold is a terrible investment. Savings accounts in Thai banks pay poorly, usually not even keeping up with inflation.

The mutual funds mentioned by Ayg above are the way to go.

[Aussieroaming]

You could consider investing in bank shares or such on the SET or back in your home country, then the parcel grows as long as the stock remains strong and you get yearly dividends to top up the parcel. Blue chip stocks are pretty robust over a 15 year cycle.

Good luck.

[peterpop]

My mum wanted to do similar and give all her grandchildren some money for their 18th birthday. I've 2 girls similar age to yours - slightly older. Given the longer term time frame I figured I could afford to take some investment risk.

Equities are one of the best classes of assets for yielding a positive return over inflation over longer periods of time. Other asset classes help diversify

I split the money into 4 mutual funds: local equity, international equity, international bond fund, and resource/energy fund (for some exposure linked to commodities). So it was reasonably diversified. As I was prepared to take risk I choice Emerging markets for the international bonds and equities, which are indvidually higher risk, but should provide higher return.

The 4 funds I bought were:

Aberdeen Growth

Aberdeen Global Emerging Markets

Aderdeen Emerging Markets Bond Fund

KTAM World Energy Fund

I'd previously invested for them, so the money was just a top up. First time I opened the accounts I did this via Standard Chartered my Bank, by

1) Opening a bank account in each child's name: in the format "child1smile by Fletchsmile" and child2 smile by Fletchsmile". The account used was a "Just One Account". Poor rate of interest but minimum balance of 5k which is all we keep in there. It's just to facilitate fund purchases and sales whenever needed and have a basic bank account for them

2) Opening investment accounts with each fund management account. Bought the funds for them via Stan Chart. I could have gone direct to the fund providers, but preferred doing it all thru Stan Chart. I have a great RM who knows me and my family. She did all the paperwork for me. I just needed copies of their passport/tabian bahn entries and my own passport and long term visa

Then sorted. A few years from now I may make the portfolio a bit more conservative as they approach 18

Worth also mentioning, my brother put his into a simple UK Cash ISA for his youngest of a similar age. The poor rate of interest barely kept pace with inflation. I look after some money for him too, so he asked me to do similar for them after about 2 years when he saw what was happening and we discussed things. i.e his kid earned a couple of per cent total, mine were now well into double digits after 2 years. {BTW Please note there have been times were the funds were worth a bit less than original investment and capital is not guaranteed}

I did the same thing bought 4 funds. This time just in my bother's name as it was simpler for the small amount. I keep track of the 4 funds for him on a spreadsheet as they are mixed in with his other investments. I just log how many units we bought in each fund for his son and the other units belong to my brother. The 4 funds I bought were again:

Local equity (for him a UK equity)

International Equity (Aberdeen Emerging markets again)

International bond fund

Natural resources fund

So did the same thing for my bother and son, just bought thru UK, using the investment accounts I help my brother set up and manage for him

Cheers

Fletch

I have been investing for a very long time but I know that most people are extremely wary of investing in the stock market, especially an emergent market like the Stock Exchange of Thailand. However it is easy for an ex pat to open a trading account and the rewards can be high. The advantages are that stocks are valued in Thai Baht and thus the currency exchange risk is avoided, also you keep control a mouse click away.

Two Bank shares spring to mind for long term investing, MBKET and KGI. They both have very high dividend payout and also a potential long term capital growth. No parasitic financial advisers to live off your money either. Exchange traded funds are also available on the SET. There is a choice of these very safe liquid investments that reflect the Thai economy, the Asian economy and others. Definitely worth having a look before you get involved with professional advisers.

[fletchsmile]

As Fletchsmile so rightly says, equities are a good way to invest to get a positive return after inflation. However, markets can crash, so at the 10 year point I'd start locking in some of the gains. Each year I'd sell 15% of the equities and put the money into a bank fixed deposit account.

Fletchsmile's asset allocation is interesting:

- Aberdeen Growth

- Aberdeen Global Emerging Markets

- Aderdeen Emerging Markets Bond Fund

- KTAM World Energy Fund

He doesn't say whether this was allocating 25% to each. If so, I think that is a scarily high allocation to natural resources/energy. Personally I'd say 10% maximum is prudent.

I'm not sure why the emerging markets bond fund is there. Emerging market bonds are intermediate in character between equities and developed market bonds, so don't provide as much diversification as, say, a global bond fund. If the intention here is to gear the investment to the home market, then a Thai bond fund would seem more logical. That said, personally the only bonds I like are index linked bonds as a hedge against inflation. Holding conventional bonds can only detract from performance over the longer term.

I also think the absence of developed market funds a little odd. At times when markets are feeling confident, money will flow to more speculative investments such as emerging markets equity; when markets are more nervous the money will flow in the reverse direction, from emerging markets to developed markets. Holding both should help smooth out returns. Not naming any specific funds, I'd suggest:

25% Thai equities

25% Emerging market equities

25% US large cap equities

25% Europe including UK equities

Hi AyG

Yes I put 25% in each. A few criteria included keeping it simple, spreading risk, setting it up and not doing much for years (until as you say the last few years) as the amounts were relatively small compared to say an education fund. Buying all the funds from within Thailand and relatively low fees (tho not necessarily the lowest) were other factors in keeping it simple, which also restricted the range of funds available

Yes as you say there is an unusually high weighting towards EM and energy/resources stocks. At the time I was buying these sectors had been particularly beaten up so I felt were undervalued. For the resources funds, it's not as risky as might be thought with a significant % from companies like RDSA, Exxon, Chevron, etc.

Also looking forward I think developed markets are going to have a harder time of things than EM, given debt levels, demographics, low growth, general decline and other factors.On the other hand EM should have higher growth, and have less debt problems, better demographics etc, and resources will be continually in demand.

I think your allocations is a reasonable one. For me though 50% in developed markets given the above factors was high. 100% equities is fine just not 50% in developed given US,Europe and Uk problems.

On the fixed income, I would have preferred a good global bond fund too. Quality choice in Thailand is limited though for fixed income. I hold already Tempeton Global Bond and Aberdeen EM. I prefer the latter. With interest rates at all time lows, that puts general bonds at risk. I felt EM bonds offers better. The diversification is reasonable too even against EM equity funds. eg in 2011 the Em equity fund fell 7.2% whereas the EM bond fund went up 9.8%. I did consider all equity as you say, and was tempted to go with something like Aberdeen World Opportunities Fund for global equities instead of the EM bond fund. The funds were already aggressive though. Currencies were also another factor as I'm not a big fan of USF/EUR/GBP for someone building assets measured in THB.

For my brother's kid, I did:

25% UK equity (local being UK instead of Thailand)

25% EM equity

25% international bonds - my favourite strategic bond fund

25% resources/energy

I felt the balance was better, but then again I was choosing from 2500+ funds in the UK instead of under 200 in Thailand. There were other factors, eg wanted to show my brother the parallels, eg resources energy/local equities, plus as he doesn't invest much I wanted to reduce volatility a little too.

Anyway cheers for the input, always go to get other people's intelligent thoughts on your portfolio One reason I'm always happy to put my own stuff on here, maybe helps me at the same time as others Thanks for that.

BTW On the people who suggested cash, my brother's kid earned around 1% - 2% in his first 2 years, while mine earned 20%+ in mainly equities. On those who suggested gold, good luck with the lottery. Good chance your money will be higher or lower than today in 15 years time Not to say I don't own some, but no way could I put 100% in gold.

Cheers

Fletch

Edited August 30, 2014 by fletchsmile

[Baerboxer]

if I understand correctly you want 300K in in 16 years.

No, I want to put away 300k that I have now, for the purpose of helping them with uni costs in 16 yrs time.

If you intend staying in Thailand and the children want to be educated here you might want to consider the Thai companies, like Thai Life as an alternative to investing with banks.

They may have some interesting products for you for this type of saving and worth checking.

[meand]

My mum wanted to do similar and give all her grandchildren some money for their 18th birthday. I've 2 girls similar age to yours - slightly older. Given the longer term time frame I figured I could afford to take some investment risk.

Equities are one of the best classes of assets for yielding a positive return over inflation over longer periods of time. Other asset classes help diversify

I split the money into 4 mutual funds: local equity, international equity, international bond fund, and resource/energy fund (for some exposure linked to commodities). So it was reasonably diversified. As I was prepared to take risk I choice Emerging markets for the international bonds and equities, which are indvidually higher risk, but should provide higher return.

The 4 funds I bought were:

Aberdeen Growth

Aberdeen Global Emerging Markets

Aderdeen Emerging Markets Bond Fund

KTAM World Energy Fund

I'd previously invested for them, so the money was just a top up. First time I opened the accounts I did this via Standard Chartered my Bank, by

1) Opening a bank account in each child's name: in the format "child1smile by Fletchsmile" and child2 smile by Fletchsmile". The account used was a "Just One Account". Poor rate of interest but minimum balance of 5k which is all we keep in there. It's just to facilitate fund purchases and sales whenever needed and have a basic bank account for them

2) Opening investment accounts with each fund management account. Bought the funds for them via Stan Chart. I could have gone direct to the fund providers, but preferred doing it all thru Stan Chart. I have a great RM who knows me and my family. She did all the paperwork for me. I just needed copies of their passport/tabian bahn entries and my own passport and long term visa

Then sorted. A few years from now I may make the portfolio a bit more conservative as they approach 18

Worth also mentioning, my brother put his into a simple UK Cash ISA for his youngest of a similar age. The poor rate of interest barely kept pace with inflation. I look after some money for him too, so he asked me to do similar for them after about 2 years when he saw what was happening and we discussed things. i.e his kid earned a couple of per cent total, mine were now well into double digits after 2 years. {BTW Please note there have been times were the funds were worth a bit less than original investment and capital is not guaranteed}

I did the same thing bought 4 funds. This time just in my bother's name as it was simpler for the small amount. I keep track of the 4 funds for him on a spreadsheet as they are mixed in with his other investments. I just log how many units we bought in each fund for his son and the other units belong to my brother. The 4 funds I bought were again:

Local equity (for him a UK equity)

International Equity (Aberdeen Emerging markets again)

International bond fund

Natural resources fund

So did the same thing for my bother and son, just bought thru UK, using the investment accounts I help my brother set up and manage for him

Cheers

Fletch

You could pay a consultant and not get advice this good. Great info

[NoBrainer]

The big banks in Lao are now paying 7 -7.5% per year for 3 year fixed deposit, and the pay the interest yearly in advance.

Not saying how secure this is, but there is some government guarantee up to a certain level.