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Easy-peasy, long-term and 'safe' investment fund


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Every month, I have a varying amount of profit from my business. It might be $1,000 or it might be $3,000, depending on how the business performed that month.

I am ignorant of stocks and shares investments.

If I put my monthly profits in a Thai saving account, the interest rate will tend towards zero.

So I'd like to drop these varying monthly amounts into some form of share portfolio investment account, where the annual profit on that investment should exceed the bank's rate.

I need:

- A safe share portfolio - I cannot afford to lose my basic investment!

- No requirement for me to do anything, other than deposit my varying funds each month into the investment account - preferably in a Thai bank to avoid overseas fund transfer fees.

- Low operating/management fees

I'm looking to continue this investment on a monthly basis for about 15 years, so that the total investment can then be used as a source of living income in my advanced years - I am 55 now, British and have about a 1% confidence level that the UK government will have money in their kitty to pay out my reduced pension when I'm 65 years old.

I recognize that investment share portfolios can have short-term losses etc, but I'm looking for a long-term investment and profit.

Suggestions??

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As others have mentioned, if you are unwilling to risk a loss on your basic investment, then you do not want to purchase stocks. It's very hard currently to get any decent rate of return unless you are willing to take on risk.

If I could go back in time and do it over again, I would have put small amounts of money into the big names: Google, Amazon, Apple, Philip Morris, General Electric, etc...

It's also possible I would have done better if I had put it all in real estate.

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Well, show me a bond fund these days whose rate of return will beat the rate of inflation. Vanguard broad index ETFs such as VTI offer the safest investment that you can make in the market as a whole but even they can suffer losses depending on the financial situation. Putting your money with a managed fund (except for Vanguard) will cost you 1-2% per year meaning that if the fund returns 4%, then you only get 3% or less. My solution has been to invest in a diversified portfolio of income securities. Richard Lehmann is my advisor. I am broadly diversified with prefferred stocks, company bonds, MLPs and high-dividend-paying stocks. No single holding is greater than 3% of my total portfolio. I used to reinvest the dividends and interest to grow my portfolio but these days I just take the cash. I've had great volatility with some holdings, especially those in energy but I am still getting the monthly income that I want. If my method sounds interesting, take a look at Lehmann's Income Security Newsletter. Good luck.

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What the OP wants he can't have. In a low interest environment a low risk investment strategy means exactly that: low interest rates. Plus, in addition, there is exposure to currency fluctuations between his home currency and the baht. So what he is getting is an exchange of risk for capital decline. On the plus side, the monthly income piles up. so not to worry too much. Long term perspective? Property is one classic response but you need to have a feel for this and has its own challenges.

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Im looking to put away a chunk of savings into fund(s) for a 15 year period.

One first step which is important- is too open an online trading account back in your home country- buying funds through those well known online services- Etrade, Vanguard etc- will have much lower fees than any funds bought in Thailand- over a 15 year period you will save 10,000s of US$ in fees.

I plan to spread the money over 3-4 funds - my first thoughts are 1) an emerging markets (asia focused) 2) Small cap EU/USA fund 3) Index linked Fund USA 4) Index linked UK.

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Well, show me a bond fund these days whose rate of return will beat the rate of inflation. Vanguard broad index ETFs such as VTI offer the safest investment that you can make in the market as a whole but even they can suffer losses depending on the financial situation. Putting your money with a managed fund (except for Vanguard) will cost you 1-2% per year meaning that if the fund returns 4%, then you only get 3% or less. My solution has been to invest in a diversified portfolio of income securities. Richard Lehmann is my advisor. I am broadly diversified with prefferred stocks, company bonds, MLPs and high-dividend-paying stocks. No single holding is greater than 3% of my total portfolio. I used to reinvest the dividends and interest to grow my portfolio but these days I just take the cash. I've had great volatility with some holdings, especially those in energy but I am still getting the monthly income that I want. If my method sounds interesting, take a look at Lehmann's Income Security Newsletter. Good luck.

Do you know whether this fund is available for Thai nationals and what taxes would be payable by Thais? (My guess is that the fund welcomes any investors so my question is mostly meaning whether local laws prohibit Thais from investing in offshore funds or whatever.)

Why this question. My Thai adult son is looking for a long-term growth opportunity. He's explored all the local offerings from banks and local funds, but they are less than impressive plus most of their staff can't answer any more detailed questions.

Can you please advise how to access "Lehmann's Income Security Newsletter".

Thanks.

Edited by scorecard
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There are funds which historically been very safe. For example, neither of these has lost money over consecutive 12 month period in the last five years (and probably much longer - I don't have the data to hand):

http://ruffer.co.uk/cmsfiles/reports/REF_Monthly_report.pdf

http://ruffer.co.uk/cmsfiles/reports/RTRF_Monthly_report.pdf

Of course, past performance is no guarantee of future performance.

However, there's a problem: the performance figures are in Sterling. There's no guarantee that the performance would be the same after taking into account the currency risk.

Unfortunately, there are no similar funds in Thailand.

Suggestions to buy funds such as Etrade, Vanguard are similarly flawed because of the exchange rate risk.

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[snip]

Suggestions to buy funds such as Etrade, Vanguard are similarly flawed because of the exchange rate risk.

How so?

The OP is British and resides in Thailand. If he can transfer excess funds at a resonable rate to UK and e.g. invests on a regular basis into a Vanguard Index fund or into a number of Exchange-traded funds and automatically re-invests the dividents (discipline is the key) he will in 15 years most certainly be ahead of the game (even if the Thai Baht is par with the British Pound)! In addition, most of these funds can be hedged if they are exposed to foreign currencies.

https://www.vanguard.co.uk/uk/portal/investments/about-our-products

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If you invest in anything that isn't in Thai Baht, you are gambling with exchange rates (unless you want to be in another currency for whatever reason). The return on money in bank deposits will never beat inflation. Stock markets rise and fall but over long periods, they have always beaten inflation. This seems to be money you don't really need so if the market crashes by 50%, so what - It will recover in due course. The important thing to remember is that you are IN the market.

There are many excellent stock market investment routes in Thailand (into the SET of course). Here's my advice for investing some of your cash:

Invest some of that money in "Ïndex Linked" funds (or as close to Index linked as you can get): if the market in general goes up so does your investment and vice versa.

Go as direct as you can. Avoid middle men, brokers, advisors and the like. There's no rocket science in this type of investment.

Bangkok Bank have an investment vehicle called B-LTF (Long Term Equity Fund). Year to date returns this year exceed 15% (but even someone that's comatose can make good money in a bull market :-) Fees are more thah acceptable and you can cash in any amount and get paid out in 24 hours.

Go and research what's available at Bangkok Bank - start here.

However, ALL banks in Thailand offer similar investment vehicles - take a look at their offerings too.

But whatever you do, DO NOT invest in "schemes" of any description. There have been thousands of scams involving just about every creative twist you could imagine. If I had to single out any one group that seems to attract particularly hapless investors, it's Property Schemes. Steer well clear of anything that isn't mainstream. You have been warned.

,

Edited by johnopolo
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Safest stock would be the SET50. it is made up of the top stocks in Thailand and you can deposit and invest whatever you want each month.

Bonds are not safe as well as individual stocks are scary if you do not have the training.

i would suggest that you invest in books about finance and investing before you start.

Rich dad series is a good start.

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[snip]

Suggestions to buy funds such as Etrade, Vanguard are similarly flawed because of the exchange rate risk.

How so?

The OP is British and resides in Thailand. If he can transfer excess funds at a resonable rate to UK and e.g. invests on a regular basis into a Vanguard Index fund or into a number of Exchange-traded funds and automatically re-invests the dividents (discipline is the key) he will in 15 years most certainly be ahead of the game (even if the Thai Baht is par with the British Pound)! In addition, most of these funds can be hedged if they are exposed to foreign currencies.

https://www.vanguard.co.uk/uk/portal/investments/about-our-products

The OP refers to putting his income into Thai savings accounts. I therefore assumed that his income was in THB and that he didn't want to lose value in THB. That means that any investment should be in THB or hedged against THB. He could do the hedging himself, since Vanguard won't do it for him. However, that's not keeping things simple enough for him I think.

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Check Morningstar Thailand website.

Aberdeen and Bualuang (Bangkok Bank) have both funds that over a longer period of time performed very well (about 15% over 10 years annualized)

A fixed deposit at the bank will currently give you between 2 and 3.5% per year.

Dont forget the Golden rule, if you care: 25% liquidity (short term deposits will do), 25% gold, 25% stocks, 25% real estate.

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OP says:

»

-A safe share portfolio - I cannot afford to lose my basic investment!

-No requirement for me to do anything, other than deposit my varying funds each month into the investment account - preferably in a Thai bank to avoid overseas fund transfer fees.

-Low operating/management fees

«

»

I recognize that investment share portfolios can have short-term losses etc, but I'm looking for a long-term investment and profit.

Suggestions??

«


To OP:

Any interest higher than from a fixed bank deposit with the guarantee limit – that is fairly high now but will be lowed to 1 million baht – involves some kind of risk. Leaving the savings in safe fixed deposits the interest may hardly or just keep up with inflation rate, meaning you also have a relative risk of loosing “basic investment”. Some banks – if not all – offers special term fixed accounts with high interest that can be 3 to 3½ percent p.a. – especially worth considering for any cash amount needed in bank deposit for Visa extension.


Long term historically equity and/or stocks has been the best investment; however, if you need to sell out at a time with financial depression you may see your gain disappear or even a (smaller) loss in your basic investment. A possibility is to change some of the gain or portfolio from stocks to a bit more safe bonds, when you have a fair gain and get closer to the time you shall need some money in cash; the bonds may still gain the inflation rate and a little surplus. That don’t require much from you other than just following a tiny bit of what happens financially or checking the investment portfolios a couple of times a year; normally the banks send statement letter(s) by mail.


There are probably a lot of different opinions and advices from various posters, but if it can help you, I will tell what I have done with Thai savings – also having in mind that I plan to stay here for long time and use my savings in Thai baht, so having some investment here secure currency deviations. Furthermore I don’t find investing in Thailand more risky than other parts of the World, but I understand the stock-trade-system better in my homeland and therefore keep some funds there that I trade myself.


In Thailand I use the so-called Fund books that many banks offer. I began with small savings for my GF and our daughter some 8 years ago, and as they showed to be doing well, I’m beginning to expand with savings for myself also.


There are several portfolio possibilities for stocks, and some or a single for bonds. Furthermore there are some special Retirement Portfolios, but I don’t use them, as I find them difficult to understand – may have to de with tax benefits and assigned life insurance – and I also wished my GF and daughter, and myself, to have access to the savings whenever we want. I’m using Bangkok Bank, Siam Commercial Bank (SCB) and Kasikorn Bank – the latter seems to have the best information in English on their website (Kasikorn Asset Management) http://www.kasikornasset.com/en/Pages/Default.aspx


For stocks I’ve been using the so-called LTF (Long Term equity Fund) for my GF and daughter, as that gives tax benefits, if the initial investment stays 5 years or more in the portfolio; you can take out up to 500,000 baht a year without paying capital gain tax. LTF can be both with dividend (may not be every year) and accumulating without dividend payouts. You can choose between different stock portfolios and some LTFs are mixed with for example 70% equity and 30% bonds. So far our LTF investments has performed well over the past some 7-8 years with annual capital gains from around 10% to 20% and dividend payouts in the range of 2% to 5% (Disclaimer: that is no guarantee for the future).


For normal Equity Funds I’m using Kasikorn, not because they are the best (I don’t know), but because I can find the information I wish easily in English on their website. You may need to pay capital gain tax (15%) when selling; I’m not sure about how that works for foreigners.


For bonds I’ve been using all three before mentioned banks. The Fund Books with Bonds are accumulation (no dividend payouts), so you need to sell when you wish to take money out. The “interest” is slightly higher than a 12-month fixed deposit and there is no tax (fixed deposit you pay 15% withholding tax). I widely use Bond Fund Books for money I need to store temporary, for example three month or longer, as it pays better than a fixed deposit and I can cash out any time without interest loss. I also used it for the money I transferred to build my house and paying the contractor in installments; that made me a small, but handy, extra profit. When selling (before 3pm), the money is transferred to my bank account the following bank day.


There is a minimum investment of 5,000 baht for each Fund Book. In some banks it may be for opening only and a smaller limit for ongoing deposits, and some banks may charge a small commission when buying/selling, whilst others include the commission hidden in the trade value.


I hope that information can help you, OP, and wish you good luck with you Thai savings. smile.png

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Over the years i have invested in shares and have done okay enough. I have always re-invested the dividends back into more shares if that scheme is available so the shares do compound. As i approach retirement then i shall start to harvest the dividends. One thing i do is only invest in shares that have some social or environmental responsibility . Maybe i don't get the returns that some of the more ruthless companies return but over the years the ones that i have invested in have been safe and steady . It is a bit like putting two bob on a horse on Saturday arvo, look at it as fun way of making an investment. And by by buying shares you are contributing to the growth of business that will provide jobs and opportunities for others in the long term, something investing in real estate doesn't do.

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The key advice anybody can offer you is to talk to a professional. Just as you would see a doctor if you were ill, or a lawyer when going to court, you must talk to a professional investment and financial advisor.

My funds and I have been with Don Freeman for the past two years and he advises and manages my portfolio with excellent results.

Email him at [email protected]. He is based in Phuket and visits Chiang Mai regularly where he holds monthly meetings of the Money Club.

His rates are extremely reasonable and he will offer a free initial consultation.

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Rencently got the same question answered by a profitable investor , who is also my friend....He said: If you have no clue about stocks etc.. don't invest in them....Stick with something you know.

I happen to know real estate..and as a long term investment it is pretty safe. This does not mean it has to be in Thailand naturally.

Basic point i am trying to make and i agree with him in this...Stick with what you know. There are other ways to invest your money with a healthy return on your investment on the long term...

Wheter you decide to go with stocks or something else.

The main rule is the same with all of m....Do your homework , so you know Exactly what it is you put your savings in.

I would never put my money in , just on the words of another, without being able to confirm this myself

There is no easy money and you will need to spend many hours in just about everything, before you can lay back and cash out

GL

Edited by myluckythai
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Stocks risky right now with very high multiples. Bonds risky because QE is finished so rates will rise causing drop in capital value of bonds. Commodities been beat up and getting to the bottom of that trend so I'd be looking for something that can capitalize on the rise generally in commodities. But if you just ride the troughs and the waves together you come out rather flat. Better to swap from one asset class to another as they get overstretched on a longer term timescale.

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Bangkok Bank give fixed deposits from 2000 baht.

just deposit in a fixed 3 month fixed deposit.

it will roll over every three months

Eventually you will have saved enough to get 2% or more with the accumulated funds

Apparently the tax is refundable with a bit of mucking about.

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If you don't want to be pro-active in managing an investment then you have to abrogate that responsibility. Give it to a tried and tested fund management company. Aberdeen Asset Management were already mentioned here and i can thoroughly recommend them. Great track record. If it were me, I would place 50% equities (Asia and especially China), 10% gold, 10% property, 30% cash. leave it all for the long term.

However now is exactly the wrong time to be thinking about investing anywhere. Quantitative Easing (QE) has driven all markets up to an unsustainable high and a massive crash, possibly bigger than 2008, is just around the corner. Wait till the carnage subsides, then place your money as per the above.

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Basic point i am trying to make and i agree with him in this...Stick with what you know

Well, what I know is running small hotels. And that is where my money comes from each month. I could re-invest that money and build another small hotel (my 5th!), and generate more income, but then the same problem remains but increases - where to invest the business profits?

I suppose one idea could be to buy some freehold condos in this area, (which is growing rapidly in terms of tourists/expats etc), and then rent them out...

Decisions, decisions..

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