Where to invest for modest but relatively safe returns

[simon43]

Anything has got to be better than the low bank savings rate (which I don't think I'm eligible for anyway as I am not Thai, not a PR and currently don't live in Thailand).

 

My situation is that I'm working in Myanmar, and when I do a visa-run to Bangkok every 3 months, I can drop some of my hard-earned USD (after currency conversion) into my Bangkok Bank THB savings account, typically $6,000 on every trip.

 

Well, I can do that for the next X years ....

 

I have checked into different types of share investment, but meet obstacles at each turn - viz

- You must be a Thai national

- You must be a foreigner with PR

- You must be a foreigner with a Thai work permit

etc etc

 

If I use some overseas broker, then I'm hit with overseas fund transfer charges, high commission etc.  (If I could send funds to an overseas broker via Paypal, then that would ease the problem, but I've not yet found any low-commission broker who accepts inbound transfers via Paypal).

 

All I want to do is to make my modest savings work for me, perhaps making 5% return every year, and then I can let compound interest do its work over the years.

 

Any suggestions where I can invest to get these types of return, with medium, not high risk?

 

 

[lkn]

1 hour ago, simon43 said:

If I could send funds to an overseas broker via Paypal, then that would ease the problem, but I've not yet found any low-commission broker who accepts inbound transfers via Paypal

 

The broker would pay fees to receive money via PayPal.

 

However, I can withdraw to a U.S. bank from my non-U.S. PayPal account free of charge.

 

So the obstacle for you, if you want to pursue this, is to setup a U.S. bank account. As a non-U.S. citizen I incorporated an LLC in Delaware and opened a business account with Wells Fargo, but I did the latter in person, I think it might be a challenge to do this from abroad. I even had to go back to the U.S. to setup wire transfer, which back then was only allowed to be done over the phone (so I have to call the branch to initiate a wire transfer). Today Wells Fargo has an online option for wire transfers, but as I do not have a SSN, I have to show up at a branch to enroll…

 

Also, for an LLC I pay ~$40/year for a registered agent (i.e. a business address in the U.S.) and $300/year in “franchise tax” to the state of Delaware. Other states have other tax rules, but I’m sure that the states that are friendly to shell companies (like my own) want a cut :)

 

Additionally Wells Fargo charges $45 for international wire transfers. I think the cheapest banks in the U.S. charge $25. You can do domestic transfers via the ACH system free of charge (as that is equivalent to writing a check), so if you set up a U.S. brokerage account then you would save this fee.

 

But all in all it sounds like even with this solution, the fees make it not worthwhile. If you are a U.S. citizen though it would remove all the fees, or if somehow you are able to open a bank account as a non-resident alien.

[Oxx]

Can you wire money directly from Burma? (I presume you have a bank account there.) This would save on losses on forex going USD->THB->whatever currency you invest in.  If so, an overseas broker would definitely be the way to go.

 

No need to be so negative about offshore brokerages.  They're not the cheapest of the cheap - they simply don't have the scale of, say, the largest US brokerages (or, to fair, the competition) but are often very reasonable.

 

Forget Paypal.  Its high charges make it a rotten way of paying for anything.  It only exists because it provides convenience.

 

What nationality are you? It makes a big difference (particularly if American).

 

If, for example, you're British, still have a UK bank account with debit card, and are prepared to lie about your country of residence, you could open a brokerage account with the likes of Trustnet Direct where trades are GBP 10 each, and custody charges are capped at GBP 200/year.

 

As for investments, you are not going to be able to make 5%/year without taking on some risk to capital, not the way markets have been distorted by fiscal policy over the last few years.  However, you can reduce the risk through diversification:  bonds, equities, infrastructure, commercial property.  Of course, you can buy ready made diversification with investment trusts such as Ruffer and Personal Assets, and with passive investments such as the Vanguard LifeStrategy range.

[simon43]

Can you wire money directly from Burma?

 

Not yet.  International banking is still in its infancy.  Inbound remittance services are offered, but outbound do not exist in practice (meaning that they are offered by the banks, but are hugely restrictive (the main branch of one of the largest banks in Myanmar said that they would consider allowing me to send $50 to my wife in Thailand to pay a bill, if I could provide a marriage certificate LoL (I'm divorced anyway...)

 

How about investing in Thai gold and keeping it in a safe box at the Thai bank?  But when I check the historical charts for the price of Thai gold, it goes up... and then down ... and then up .... and then down ==> No overall profit to be made unless I'm doing regular trades (sell high, buy low).

 

If anyone knows how I could buy/sell Thai gold online, then please explain the process.

 

Any other suggestions?  (If I knew about gemstones, then I could probably make a good profit from buying up gems in the Myanmar gem markets)

 

 

[Oxx]

24 minutes ago, simon43 said:

How about investing in Thai gold and keeping it in a safe box at the Thai bank?  But when I check the historical charts for the price of Thai gold, it goes up... and then down ... and then up .... and then down ==> No overall profit to be made unless I'm doing regular trades (sell high, buy low).

 

Gold is a terrible investment.  Goes for decades without increasing in value (in fact losing value when inflation is taken into account).  Can rise dramatically in value, and then fall back just as quickly.  At least with proper investments such as equities and bonds, you can get a regular income.  As for trading, what makes you think you have the skills and experience to predict which way the gold price is going to move?

 

What currency are you paid in? Do you already have a Thai bank account? Do you have an address in Thailand you can use for account opening purposes?

[simon43]

@Oxx, thanks for the reply.  To answer your question, I get paid either in Kyat or USD (the latter is obviously more portable).

 

I have held a THB bank account with Bangkok Bank for about 15 years (I previously lived/worked in Phuket).  I usually travel to Bangkok every 70 days (visa-run) and hand carry about $5,000 USD each time, which then sits in my bank account (after currency conversion to THB), and earns zero interest....

[Oxx]

I think the following will work:

 

Open a USD account with Bangkok Bank to receive your pay.  Should be no problem to open since you already have an account with them.

 

Open a brokerage account, say with TD International.  Pay money in in USD by electronic transfer from Bangkok Bank.

 

Then, either buy USD denominated ETFs (so no FX costs), or buy investments denominated in other currencies using the broker's FX facility.

 

Note that it's going to be better for you from a tax point of view to buy USD denominated investments listed outside the United States, rather than those listed in the States.

[maewang99]

there's a nice benefit of being in Thailand for 180 days or more in any one year.  you are treated the same as a Thai, as long as you use a Thai bank or broker..... to hold Thai securities [Thai revenue law / residency].

because you get a refund of all the corporate tax paid ****ahead**** of any dividend you hold a Thai stock of when it goes XD.  so a 5% yield can be more like 7% or maybe even 8%... and because the local market is so market price sensitive, Thai retail oriented... Thai stocks don't fluctuate when they go XD so you can sometimes not hold the stock but get in ahead of the record date and get out later with a "free" dividend... as well as a tax refund at the start of each year you were in Thailand at least 180 days (does not have to be consecutive.. just like most tax residency rules... i.e. US tax rules).  and the folks at the local Revenue Office are very helpful in getting you your refund.

some yields are better than 5% so you could see a double digit yield.. and as Marc Faber (Chiangmai's US billionaire) said a few years ago (just after the Lehman bankruptcy)... "Thailand might not be the most dynamic economy... except maybe at night time (wink wink)... but it still moves". fertilizer TCCC, pig feed LEE, airbags LTX..... pay dividends are not so hard to follow as bigcaps.. but Thai big caps also pay very good dividends... and taxes that we can get refunds of! 

I've been doing this more than 10 years.. only problem is with US banks and brokers... they always use a nominee to hold Thai securities... and the local Revenue folks require the orange mailers from the TSD to be in our real names and home address. but when you use a Thai bank or broker.. no problem (of course).  
 

Edited December 25, 2016 by maewang99

[kaufman]

@Oxx from your various postings on this forum I see that you are fairly pro active fund management. Do you have any place in your portfolio for index trackers such as the S & P 500? Also given the current climate of government intervention through quantative easing don't you think bonds (both government and corporate) are too overpriced to be investing in right now? Am curious to know your thoughts. 

[Oxx]

7 hours ago, kaufman said:

@Oxx from your various postings on this forum I see that you are fairly pro active fund management. Do you have any place in your portfolio for index trackers such as the S & P 500? Also given the current climate of government intervention through quantative easing don't you think bonds (both government and corporate) are too overpriced to be investing in right now? Am curious to know your thoughts. 

 

 

I'm only in favour of active management in inefficient markets, such as emerging markets.  As for US large caps, the market's too efficient for active managers reliably to outperform.

 

I generally don't invest in conventional bonds:  the risk is asymmetrical, with limited upside and significant downside.  And given how distorted markets are at the moment, I doubly wouldn't invest in them.  I do, however, have a significant (roughly 5%) allocation to inflation linked bonds such as TIPS and other currency equivalents since I believe they provide decent protection against inflation, and I'm pretty convinced that inflation is going to have to rise globally as governments try to inflate their way out of the current economic mess.  Since bond markets are generally very efficient I invest via ETFs since I don't think a active management can consistently generate sufficient excess return to cover fees.

[Boycie]

Did you know that Myanmar banks are paying around 10% interest per year on a fixed deposit in Kyat.

 

Unsure on the Terms and Conditions. I was going to enquire next year but maybe you could save me the trip simon43 

[Srikcir]

Check out US Defense Stock - http://money.usnews.com/investing/articles/2016-11-22/wall-street-predictions-for-2017

US Republican-controlled congress and POTUS = unrestained defense spending.

http://www.forbes.com/forbes/welcome/?toURL=http://www.forbes.com/sites/genemarcial/2016/11/13/trump-victory-boosts-demand-for-defense-stocks/&refURL=https://www.google.co.th/&referrer=https://www.google.co.th/

http://www.mckinsey.com/industries/advanced-electronics/our-insights/defense-outlook-2017-a-global-survey-of-defense-industry-executives

[1FinickyOne]

Hi Simon - - maybe invest in a guesthouse in Phuket? - - ok, just kidding...

 

But isn't a safe 5% what everyone has been looking for the last many years. To get 5% this past year, a great year for investing, you would have been able to do it with a conservative investment account. An aggressive one would have yielded much more, but there are risks... I think to reach a 5% return, you are going to have to take some risks... up to you. Good luck. 

[louse1953]

14 hours ago, simon43 said:

@Oxx, thanks for the reply.  To answer your question, I get paid either in Kyat or USD (the latter is obviously more portable).

 

I have held a THB bank account with Bangkok Bank for about 15 years (I previously lived/worked in Phuket).  I usually travel to Bangkok every 70 days (visa-run) and hand carry about $5,000 USD each time, which then sits in my bank account (after currency conversion to THB), and earns zero interest....

It doesn't earn zero interest.If you get a fixed deposit you can earn around 2%,pitiful i know,but something.

[ThailandLOS]

20 hours ago, simon43 said:

How about investing in Thai gold and keeping it in a safe box at the Thai bank?  But when I check the historical charts for the price of Thai gold, it goes up... and then down ... and then up .... and then down ==> No overall profit to be made unless I'm doing regular trades (sell high, buy low).

 

It all depends on the timeline you are looking at. Gold always goes up vs fiat currency sooner or later, as it's not affected by inflation (and nobody should believe any of the BS inflation numbers coming out of various western governments, including US). In a diversified portfolio gold has it's place, maybe around 5-10%.

 

As for getting a safe deposit box in a Thai bank, nowadays most if not all Thai banks would ask you to lock in 10 MB for 4 months or more at very modest interest rate level, in order to let you rent one of their boxes.

 

 

 

[JacChang]

My favorite subject =)

Equities, bonds, gold, property funds, deposits, insurance. Just like a bazooka, long range rifle, pistol, and a dagger to a soldier. Every situation has it's own use and advantage. Would you use a bazooka at an enemy standing in front of you? =) A punch to the face works best.

 

Behold, we are in an economy of dying growth where companies struggle to make revenue growths while sacrificing net profit margin. Mind you, we are talking about the "majority" here, don't stick one company that is doing superbly well.

 

What do we do? Do not invest in equities with unpleasant financial statements. Which accounts for the majority of the companies at this time, if you do want to argue against this, please do name a company, I will look through the financial statements and revalue it and share with all.

 

Bank deposits? Consider them empty purpose holdings when you cut out inflation.

 

Gold? My final choice, when the world is destroyed and countries are printing money like crazy to solve the planet's financial instability problems. It works, everything has it's purpose. Once it's done with it's job, I sell them. It's not something to put in forever. Use it and throw it away.

 

Ideally, equities is my long term stance, it makes money, pays dividend, and the value goes up. Yes the value goes up, not down. The people who lose money to equities are those who hold companies with unpleasant financial statements or just leave it to the so called expert fund managers. They are just like robots buying 5% of the largest companies in so called countries. What does that mean? If PTT is doing very poorly this year, with decline in dividend and sales revenue, if that fund requires to invest in Thailand. Do you think the fund manager will sell PTT? No, it needs it. It's just a robot doing what it needs to do without care of your money. That's right. Welcome to the real world. The fund manager works by fulfilling his allocations. 60% US 20% Europe 20% Asia. He's done his job.

 

Where am I now? Currently hiding in my property and infrastructure funds around the world. As of today's prices of Thailand's property and infrastructure funds, we are getting 5-7.8%. Nothing fancy, just dividends every 3 months. Waiting for equities to be better or worse. No hope for either direction, as each weapon can be used for either scenario. Atleast you get to laugh when someone complains about poor internet service from True or 3bb while you are holding the infrastructure funds that pays you dividend from their pockets. =)

[khunPer]

Op asks:

Quote

Any suggestions where I can invest to get these types of return, with medium, not high risk?

Yes,

as a foreigner you can open both so-called Fund Books, which are mutual funds, in most Thai banks; and you can also open a trading account at SET (Stock Exchange of Thailand) through some of the Thai banks; but as foreign investor don't expect voting rights for the stocks you invest in.

 

Safe investment has low returns, but look at the inflation rate and compare with your yield; if you are over the inflation, you are gaining. At the moment the annual inflation is around 1 percent, so even a 12-month fixed deposit in Bangkok Bank at 1.5% minus 15% tax, i.e. 1.275% is slightly over the inflation.

 

Medium risk, typically risk factor number "4" in Thai funds, includes a risk of loosing some money, however not much. You can head for mutual funds with bonds, and staying away from foreign bonds, you minimize the risk by not including foreign currency exchange. There is no dividend, nor tax, your gain comes when selling the accumulating funds, which at the moment gain between 1% to 3% a year.

 

At SET you can select some long-term investment stocks, well established companies that pays regular dividend. Over short-term you have a risk of loosing some money, whilst looking long-term stocks has shown to be the best investment.

 

I'm a foreigner (staying in the Kingdom on retirement extension) and has been using Fund Books at Bangkok Bank, Kasikorn (K-Bank) and SCB for a number of years now. I'm also using the SCB on-line trading platform for SET. Many banks have home-pages with detailed information in English – I'm using the following:
Bangkok Bank

Kasikorn (K-Bank)

SCB (Siam Commercial Bank)

SCB On-line (SET trading platform) [click on "Get Free Trial" or "Open New Account"]

[FredNL]

Invest in wines. Don't buy any yourself in Thailand. 
There are new projects coming in Febuary 2017 with an expected 10 - 15 % margin on a 1 year term.

You can see it as a kind of crowdfunding project which are allowed. 

 

http://winetrading.club

http://wine-invest.club

Currently they are building a new website.

[samsensam]

2 minutes ago, FredNL said:

Invest in wines. Don't buy any yourself in Thailand. 
There are new projects coming in Febuary 2017 with an expected 10 - 15 % margin on a 1 year term.

You can see it as a kind of crowdfunding project which are allowed. 

 

http://winetrading.club

http://wine-invest.club

Currently they are building a new website.

 

agree. but make sure they are stored in a bonded warehouse in a reputable country as you need to guarantee authenticity

[FredNL]

16 minutes ago, samsensam said:

 

agree. but make sure they are stored in a bonded warehouse in a reputable country as you need to guarantee authenticity

 

It's done by some small wine importers here in Thailand for years. Only getting crème de la crème directly at the source (winery). Wines you don't see at any supermarket or Wine Connection (what is selling lousy shit) Been doing good business with them in the past. 

What I know is that they're starting new projects somewhere in February for another year or less than a year. Even premature drawings are possible as are selling the investment(s) to (an)other investor(s) on an open market that they have created. Low/minor investments starting at 50,000 THB, open for almost everyone. Projects aiming 4 million THB when starting.

Edited December 27, 2016 by FredNL

[YeahSiam]

On 12/25/2016 at 7:05 AM, Oxx said:

 

Gold is a terrible investment.  Goes for decades without increasing in value (in fact losing value when inflation is taken into account). 

 

Aaahahahahahahahahaaaaa

 

I've never heard so much drivel in a Thaivisa post.

[Bulldozer Dawn]

Simon

 

I sent you a PM.

 

It is entirely possible to set up a Thai brokerage account on a Thai tourist visa.  You can transfer baht in and out of your trading account online via your Thai bank account.

 

You can also access your Thai trading platform to manage your investments regardless of if you are located outside of Thailand.

 

You can buy and sell gold etfs or futures via your Thai brokerage account.

 

There are a number of safe investments on the SET that will yield more than 5%.

 

You can protect your capital using trailing stops:

 

How to Use Trailing Stops in Thailand

 

Be wary of incorrect information.  There is a  good deal already posted on this thread.  A reflection of  lack of knowledge.  For example khunPer posted:

 

   " but as foreign investor don't expect voting rights for the stocks you invest in."

 

That is entirely incorrect.  There are different types of securities made available to foreign investors.  The most commonly purchased type are NVDRs which give you the benefits of receiving dividends or stock issues etc. but no right to vote.  If voting is important...you can hold F type shares that give you voting rights. 

 

 

The attributes of the different types of Thai shares available to farangs are discussed in detail in the following article:

 

What are NVDR, (F) shares, and (L) shares

 

[Oxx]

On 27/12/2016 at 9:49 AM, YeahSiam said:

 

Aaahahahahahahahahaaaaa

 

I've never heard so much drivel in a Thaivisa post.

 

You're clearly utterly clueless then about the history of gold prices.

 

in 1792 the price was $19.39.  In 1822 it was again $19.39, only having risen above that value for 3 years, reaching the dizzying heights of $22.16 briefly (in 1815).

 

From 1879 to 1932 it traded at $20.67, flat.

 

So when I wrote "Goes for decades without increasing in value (in fact losing value when inflation is taken into account)" I was 100% spot on.  Absolutely factually accurate.

[khunPer]

1 hour ago, Oxx said:

 

You're clearly utterly clueless then about the history of gold prices.

 

in 1792 the price was $19.39.  In 1822 it was again $19.39, only having risen above that value for 3 years, reaching the dizzying heights of $22.16 briefly (in 1815).

 

From 1879 to 1932 it traded at $20.67, flat.

 

So when I wrote "Goes for decades without increasing in value (in fact losing value when inflation is taken into account)" I was 100% spot on.  Absolutely factually accurate.

Source: Goldprice.org 

[Oxx]

1 minute ago, khunPer said:

Source: Goldprice.org 

 

I presume you're trying to confirm my point with more recent data.   I appreciate it.  Using your graph, gold was $15 in 1980, and was still $15 in 2006 (roughly).  That's 26 years or so with the price going nowhere, and absolutely zero income, whilst losing value in real purchasing terms thanks to inflation.

 

Yes, indeed, gold is a terrible investment.

[simon43]

Did you know that Myanmar banks are paying around 10% interest per year on a fixed deposit in Kyat.

 

Yes, I'm aware of that.  But the local banks that I've asked say that these savings accounts are only available to Myanmar citizens.  My own investigations seem to suggest that this is true.

[edwarda909]

 Why don't you sign on to a VPN, which puts your location as being in America. Get a friend in America or family member to allow you to use their address as your initial Sign on land address, and then once you got your account with the brokerage fun just change so you receive all of your statements online. Should be no problem.

[YeahSiam]

12 hours ago, Oxx said:

 

You're clearly utterly clueless then about the history of gold prices.

 

in 1792 the price was $19.39.  In 1822 it was again $19.39, only having risen above that value for 3 years, reaching the dizzying heights of $22.16 briefly (in 1815).

 

From 1879 to 1932 it traded at $20.67, flat.

 

So when I wrote "Goes for decades without increasing in value (in fact losing value when inflation is taken into account)" I was 100% spot on.  Absolutely factually accurate.

 

But contextually, it's absolute drivel.

 

Who gives a stuff about the value of gold in18th and 19th centuries?

I bought gold at the equivalent of GBP350 an ounce in 2007.

After the Brexit vote, it was more than GBP1,000 an ounce.

Seems like pretty good protection against debasement/inflation to me.

[Oxx]

2 minutes ago, YeahSiam said:

 

But contextually, it's absolute drivel.

 

Who gives a stuff about the value of gold in18th and 19th centuries?

I bought gold at the equivalent of GBP350 an ounce in 2007.

After the Brexit vote, it was more than GBP1,000 an ounce.

Seems like pretty good protection against debasement/inflation to me.

 

Well, I "give a stuff".  It's important to understand the long term behaviour of an asset class, and not just look at recent history.  As a wise man once said, "“Those who cannot remember the past are condemned to repeat it".

 

But if you're not convinced by the date ranged I mentioned, how about my following post about the failure of the gold price to shift from $15 in 1980 until $15 in 2006? Is that recent enough for you?

 

Your logic, simply based upon recent price movements, is on a par someone in the 1930s thinking "share prices crashed in 1929, so I should never invest in equities".  Of course, since then equities have vastly outperformed both gold and bonds.

 

[gk10002000]

Since you mentioned you get paid in US Dollars, I will assume you are a US citizen.  I strongly suggest you open a ROTH IRA with a USA institution online.  There appears to be some challenges to doing that while overseas, so I defer to etrade, Scottrade, or Schwab or any other discount broker site for details.  ROTH monies are all tax free now and forever.  I say open a ROTH because at some point you will want to take money out and you will have needed the account to have been opened for 5 years before that is allowed.  Now, if you may want to access the money sooner, then I would suggest any tax free muni funds.  I happen to like PRTAX that is a Non Transaction Fee fund Etrade offers.  Earns about 3.6% tax free an AMT free.  There are higher yielding funds out there, NUW 4 %, NEA 5 %, that are also zero or very limited AMT liability.  Just my two cents.  You can choose to reinvest the monthly dividends into the fund or not and simply have the dividends available for your use