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[Abrak]

Penefattore, on 2009-10-24 14:10:35, said:

Abrak, on 2009-10-24 01:00:48, said:

Theoretically a convertible bond is ideal for you - they usually have a 5% yield to maturity with the ability to convert into the shares if they go up. You have to be a bit careful though as they often think the conversion is on their side to not pay you back.

Please show me a convertible bond yielding 5% to maturity in whatever market  

I guess it would be cheating if I chose all those bank ones because they may never mature or a convertible that is trading below par but there are still plenty about.

http://blogs.reuters...off-the-shelves

The average yield to maturity of Singapore convertibles in November 2008 was 12%.

[Abrak]

Penefattore,

While I understand your argument my 'feeling' is this. People make the best returns in what they understand best almost irrespective of market performance. It is much better to know your asset than to slightly know every asset. Say property really hasnt done much in Thailand but people have made money in property. Shares have risen 5% in baht terms over 15 years but I have done pretty well (and my property investments have been rubbish). I suspect people who understand and follow the bond market can say the same thing (I have never bought one.)

[hansnl]

1  Don't trust banks
2  Don't trust investment "specialists"
End

[CaptHaddock]

womble, on 2009-10-23 14:32:42, said:

So obviously I know Thai Visa isn't the best place for economic advice, but it looks like i've sold my business, so have around 25m baht to invest somehow.

Being relatively young, 32, i'd rather have modest income and a higher capitol growth.  I wish to stay in Thailand and already have several of my own ideas, but in these tricky economic times was just wondering what other members would do to achieve the goals i'm after with such a sum.

I do not wish to work, just invest it somehow that will bring in enough each month to live, maybe 100k or so, i'm mainly concerned with longterm growth of the original investment.

Congratulations on your early success.  You don't have enough money to retire at 32 and live off the interest.  You know about running a successful business.  You don't know about investing in stocks, bonds, property, etc.  The latter category would be a good way for you to lose your money.  It's pretty obvious that what you should do is start another business.  Maybe after you have done that a few times you will still be able to retire quite young.

[Abrak]

CaptHaddock, on 2009-10-24 19:29:54, said:

Congratulations on your early success.  You don't have enough money to retire at 32 and live off the interest.  You know about running a successful business.  You don't know about investing in stocks, bonds, property, etc.  The latter category would be a good way for you to lose your money.  It's pretty obvious that what you should do is start another business.  Maybe after you have done that a few times you will still be able to retire quite young.

Very Sound advice but running your own business is such a hassle and pretty difficult. I have had 2 proper ones in Thailand and they both did ok but just to make a 20% ROE is difficult enough. Investing in say equities is just so much inherently easier. Let me give you an example. A pulp and paper business is inherently cyclical perhaps averaging 15% ROE with losses some years and profits others. Owning that business is a hassle. Still if it is listed when it is losing money it will usually trade down to 0.5x BV and at peak cycle earnings trade at 2.5x BV (obviously you wont catch the top or the bottom). But it is just infinitely simpler, more profitable and less hassle to trade the equity of the company than to own it yourself. Or if you can by a company at BV making a 25% ROE what is the point of trying to do it yourself?

[Penefattore]

Abrak, on 2009-10-24 18:46:02, said:

The average yield to maturity of Singapore convertibles in November 2008 was 12%.

Please find me any convertible bond that has been traded at all in Singapore in all 2009.
I can see only warrants http://www.sgx.com/w...tures_loan_Stks

[Penefattore]

Abrak, on 2009-10-24 18:46:02, said:

I guess it would be cheating if I chose all those bank ones because they may never mature or a convertible that is trading below par but there are still plenty about.

Please feel free to cheat. Link me to whatever stock market site showing a whatever convertible bond actually traded with a 5% ytm.

Edited by Penefattore, 2009-10-24 21:35:25.

[Abrak]

Penefattore, on 2009-10-24 21:35:01, said:

Abrak, on 2009-10-24 18:46:02, said:

I guess it would be cheating if I chose all those bank ones because they may never mature or a convertible that is trading below par but there are still plenty about.

Please feel free to cheat. Link me to whatever stock market site showing a whatever convertible bond actually traded with a 5% ytm.

Ok here is a link....

http://www.scribd.co...Yield-Singapore

It is dated November 2008 so I imagine represents the bottom of the market but there is a list of about 25 convertible bonds all but one yielding between 9% and 23% YTM/YTP (One only yields 7.4%). They have probably all gone up a lot since but I think that is good enough. I mean if I am allowed to just choose Citibank issued an 11% convertible, Barclays a 14% convertible etc...

Then the next page contains another page of about 25 what Goldman calls investment grade convertible bonds all YTM/YTP between 6% to 13%....

There are another 50 or so conv bonds mentioned (maybe some repetition).

[womble]

Just wondering the liquidity of these Singaporean convertible bonds, convertible bonds outside the US often suffer from liquidity issues.......

[sokal]

womble, on 2009-10-23 14:32:42, said:

So obviously I know Thai Visa isn't the best place for economic advice, but it looks like i've sold my business, so have around 25m baht to invest somehow.

Being relatively young, 32, i'd rather have modest income and a higher capitol growth.  I wish to stay in Thailand and already have several of my own ideas, but in these tricky economic times was just wondering what other members would do to achieve the goals i'm after with such a sum.

I do not wish to work, just invest it somehow that will bring in enough each month to live, maybe 100k or so, i'm mainly concerned with longterm growth of the original investment.

I would just live off of dividends, preferably 5% and up. But this is a tricky time to start doing that. Who knows what will happen in the next couple years. That is why I am hiding in gold right now.

Edited by sokal, 2009-10-25 02:06:30.

[sokal]

pagallim, on 2009-10-23 15:35:41, said:

womble, on 2009-10-23 14:32:42, said:

So obviously I know Thai Visa isn't the best place for economic advice, but it looks like i've sold my business, so have around 25m baht to invest somehow.

Being relatively young, 32, i'd rather have modest income and a higher capitol growth.  I wish to stay in Thailand and already have several of my own ideas, but in these tricky economic times was just wondering what other members would do to achieve the goals i'm after with such a sum.

I do not wish to work, just invest it somehow that will bring in enough each month to live, maybe 100k or so, i'm mainly concerned with longterm growth of the original investment.

You don't say where you are from.   However, invest no more than 10m baht in residential property in an area such as London, New York, Sydney etc (I know, that's only going to get you either a studio or 1 bed apartment), where you should get 5% rental income and the real potential of capital growth.   Put another 10m into a longterm offshore investment account, and use the other 5m for living expenses (allowing for minimum % on a normal savings account, that should still see you through 5 years at your projected budget needs).

I am not going anywhere near real estate until interest rates and at least 5% in the US. Plus, I would rather take the lazy route and buy RIETs rather then my own properties.

[sokal]

Penefattore, on 2009-10-23 16:02:21, said:

womble, on 2009-10-23 15:35:50, said:

I was thinking maybe some type of emerging markets bond funds. ETF's etc.

I'm from UK, lived here 8 years, have no intention of leaving Thailand at the moment, although u never know what the future holds as i've recently had a baby. I also want to avoid as many taxes and management fees as possible.

If you have a baby (and therefore I guess also a lady) then forget living on your 25 millions and look for a job asap ! Hope the missus is not aware of the money you have

Are you insane ? I would never look for a job if I had that cash.

[Naam]

sokal, on 2009-10-25 02:11:50, said:

Penefattore, on 2009-10-23 16:02:21, said:

womble, on 2009-10-23 15:35:50, said:

I was thinking maybe some type of emerging markets bond funds. ETF's etc.
I'm from UK, lived here 8 years, have no intention of leaving Thailand at the moment, although u never know what the future holds as i've recently had a baby. I also want to avoid as many taxes and management fees as possible.

If you have a baby (and therefore I guess also a lady) then forget living on your 25 millions and look for a job asap ! Hope the missus is not aware of the money you have

Are you insane ? I would never look for a job if I had that cash.

owning half a million cash EURos, intending to draw € 24,000 p.a. (THB 100k p.m.) and looking for capital growth requires not necessarily a job but quite some work due to the present financial circumstances which offer either high yield combined with high risk or yields to weep over with low risk. what the OP desires is in my [not so] humble opinion out of his reach as he is obviously not an experienced investor. it's not rocket science to calculate that he has to net aminimum of 8.5% p.a. just to beat inflation and draw the required 100k Baht a month and that without a single penny of capital growth. living in Thailand and investing the money offshore his least concerns are taxes.

[wordchild]

Penefattore ,there maybe some confusion over semantics here but strictly speaking the term "yield to maturity" is meaningless in the context of convertible bonds. Yield to maturity is a bond market term for the calculation to show the yield available on bonds that have a fixed term date, (when the company repays the bonds) or first call date (when the company has the first option to repay).Straight corporate bonds trade in relation to the running yield available from the coupon and the date at which the capital will be repayed at par (the original issue price) . The yield to maturity is then calculated by adding (or subtracting if the bond trades above par) the additional capital return available if one held the bond through to maturity.
Convertible bonds almost never have a fixed maturity date , although there are a few "hybrid" bonds which do. Convertible bonds pay a fixed annual coupon as do straight bonds but instead of repayment at par they give the holder the option to convert into (usualy) ordinary shares and usualy at a premium to the ordinary share price when issued. In theory as the ordinary shares rise above the bond conversion price (and the yield falls) holders of the converts have an increasing incentive to convert to ordinary shares.Instead of a maturity date most converts have a clause which allows the company to force conversion once the ordinary once the share price is at a specific premium to the conversion price. some also contain clauses which allow the holders to "put" the bonds back to the compay in certain circumstances.
The value of a normal convertible is therefore made up of three components, 1) the value of the yield available as if it were a straight bond 2) the relationship between the yield available on the bond and the theoretical future yield (after dividend growth) available in the ordinary shares 3) the option value of the right to convert into the ordinary shares in the future. The relative importance of these factors vary over time and from bond to bond therfore a simple "yield to maturity" calculation is meaningless. Instead a variety of mathemtical models are used to value converts the most famous of which is the Black and Scholes.
there are hundreds of converts in all markets which have running yields of above 5% but looking at that on its own without taking into account the other factors is meaningless.

Edited by wordchild, 2009-10-25 08:57:23.

[sokal]

Naam, on 2009-10-25 07:12:17, said:

sokal, on 2009-10-25 02:11:50, said:

Penefattore, on 2009-10-23 16:02:21, said:

womble, on 2009-10-23 15:35:50, said:

I was thinking maybe some type of emerging markets bond funds. ETF's etc.
I'm from UK, lived here 8 years, have no intention of leaving Thailand at the moment, although u never know what the future holds as i've recently had a baby. I also want to avoid as many taxes and management fees as possible.

If you have a baby (and therefore I guess also a lady) then forget living on your 25 millions and look for a job asap ! Hope the missus is not aware of the money you have

Are you insane ? I would never look for a job if I had that cash.

owning half a million cash EURos, intending to draw € 24,000 p.a. (THB 100k p.m.) and looking for capital growth requires not necessarily a job but quite some work due to the present financial circumstances which offer either high yield combined with high risk or yields to weep over with low risk. what the OP desires is in my [not so] humble opinion out of his reach as he is obviously not an experienced investor. it's not rocket science to calculate that he has to net aminimum of 8.5% p.a. just to beat inflation and draw the required 100k Baht a month and that without a single penny of capital growth. living in Thailand and investing the money offshore his least concerns are taxes.

That could be true if the guy is a big spender. If he insists on spending 100k a month and he does not know anything about investing then he could be in trouble. I would never be spending 100k a month. You can live fine off of 60k.

[goatfarmer]

wordchild, on 2009-10-23 16:20:41, said:

I personaly would go for shares over property and def avoid any insurance based products or guaranteed return funds (these are designed to make money for the people who sell them not for you!).
While there are some good mutual funds, fees can be quite high 1.5% + and maybe also some front end charges on top , that would take quite a bite out of your income and you would be lucky to find an emerging market fund that offers much more than a 2% annual yield.ETF,s have a big cost advantage but you need to find one that is suitable remembering that they are passive and therefore not activly managed funds the onus will be much more on you they also tend to be structured for capital gain rather than income.
Much better value than mutual funds are investment trusts,these trade on the (uk)stock market and usualy trade at a discount to their net assets,costs are mostly much lower than mutual funds and you can find some that offer pretty good yields. However the prices of many of the better managed emerging market trusts have been bid up recently such that many now trade at a premium to NAV.
To answer your question more directly, in your position and if i were intending to stay in Thailand long-term, I would put together myself a portfolio of 5/6 good quality Thai (and other Asian) stocks with a good dividend paying and corporate governance record. Despite the fact that the Thai market is up strongly since March it is still one of the cheapest (political problems) markets in Asia. Many Thai companies have the added advantage of having generous dividend payout policies yields of 6% + are not hard to find, and in many cases you can also look forward to reasonable dividend growth . But you do need to do the work as there is also a lot of rubbish out there as well, but if you have the time that can be part of the fun.
BTW on taxation ,as you may know, in Thailand,whatever your income, there is no further tax to pay on company dividends after the 10% witholding tax which is deducted by the company prior to payout

I agree with much of this poster suggests. Dividend stocks are the way to go. Property can easily remain empty for months or longer and needs frequent maintenance. The problem with Thai dividend stocks is that dividend growth is rare. Most stocks have been paying the same dividend for the past 10 or 15 years. Without dividend growth you will find yourself progressively poorer in real terms. There are three or four Thai stocks with good yield and good dividend growth over the last few years, but a few stocks is not sufficient for a balanced portfolio.

Avoid mutual funds. Expenses will consume 20 to 30% of your gains in the long term.

Avoid solely bonds, they won't deliver real returns over the long term sufficient to keep up with inflation.

[BlackJack]

At 32 you can afford to gamble a bit

heres some choices

1. go to the high rollers lounge and put it all on roulette black  - then u have 50 million

2. invest in nano companies www.starpharma.com - 350% this year - to much to count

3. stop spending 100K a month as this appears to much and maybe life threatening

[womble]

My monthly rent is 25k, electric, water, internet etc another 5k.  So thats 30k already.  I guess i'll have to limit my spending for a while, perhaps I could survive on 70k.  Anyway it's looking like the 25m will infact be 30m, So perhaps 30m baht invested and an income of 70k + growth is just about possible.

Working is not an option, I don't feel like risking the capital in my own business at the moment, I feel like a break after working my ass off 16hr + days the last 7 years.  With a new baby I feel like enjoying some of the time watching her grow up.  Besides the mrs was also working in the business, infact still is working from home doing the figures with a new born, so she can't wait till business is sold.

[Penefattore]

sokal, on 2009-10-25 02:11:50, said:

Penefattore, on 2009-10-23 16:02:21, said:

womble, on 2009-10-23 15:35:50, said:

I was thinking maybe some type of emerging markets bond funds. ETF's etc.

I'm from UK, lived here 8 years, have no intention of leaving Thailand at the moment, although u never know what the future holds as i've recently had a baby. I also want to avoid as many taxes and management fees as possible.

If you have a baby (and therefore I guess also a lady) then forget living on your 25 millions and look for a job asap ! Hope the missus is not aware of the money you have

Are you insane ? I would never look for a job if I had that cash.

Neither would I , if I were single.
If you are single, you can easily adapt your expenses to your portfolio performance, and here in Thailand you can survive on a few hundred baht a day without starving if you own your place.
The point is, he is not single and that means he cannot manage his expenses. The missus will want to live in a large condo, to drive a car, to dine in expensive restaurants and will have no qualms in using the baby as leverage to justify every sort of expenses ...have you an idea of how much does a private school cost in Thai ?

[Penefattore]

Abrak, on 2009-10-24 23:10:29, said:

Penefattore, on 2009-10-24 21:35:01, said:

Abrak, on 2009-10-24 18:46:02, said:

I guess it would be cheating if I chose all those bank ones because they may never mature or a convertible that is trading below par but there are still plenty about.

Please feel free to cheat. Link me to whatever stock market site showing a whatever convertible bond actually traded with a 5% ytm.

Ok here is a link....

http://www.scribd.co...Yield-Singapore

It is dated November 2008 so I imagine represents the bottom of the market but there is a list of about 25 convertible bonds all but one yielding between 9% and 23% YTM/YTP (One only yields 7.4%). They have probably all gone up a lot since but I think that is good enough. I mean if I am allowed to just choose Citibank issued an 11% convertible, Barclays a 14% convertible etc...

Then the next page contains another page of about 25 what Goldman calls investment grade convertible bonds all YTM/YTP between 6% to 13%....

There are another 50 or so conv bonds mentioned (maybe some repetition).

I don't know why that report mentions Singapore, but those bonds definitely aren't either quoted at Singapore nor issued by Singapore companies. Just look the first bond on pag.13 of the report, it's the Ford 4.25% convertible due 2036 . The big problem is that prices aren't provided by any stock market but by Goldman Sachs , no ISIN codes are provided so there's no transparency at all.

[BEENTHEREDONETHAT]

Womble
Whatever you do, save 10% of your earnings (add to principle) and never pay interest on anything. If you can't pay cash don't buy it. Minimize your taxes and by retirement age you will be very well off.

I retired 25 years ago and followed the above advise and know that it works. Starting out you may have to scrimp a bit but every year it gets easier. I envy anyone who can retire at 32, I had to wait until I was 50, but have never regretted it for a minute.


Good luck in whatever you do.

[flying]

womble, on 2009-10-24 19:10:18, said:

Working is not an option, I don't feel like risking the capital in my own business at the moment, I feel like a break after working my ass off 16hr + days the last 7 years.  With a new baby I feel like enjoying some of the time watching her grow up.  Besides the mrs was also working in the business, infact still is working from home doing the figures with a new born, so she can't wait till business is sold.

Smart man IMHO

Enjoy some of the fruits of your labors.
Being at home with a new baby for the first year or two is great for you & the baby.
Work to live not the other way round.
Hope you have a long life but there are no guarantees. I have had friends saving for the golden years die in their 40's
Before the pinchers jump on me I am not saying piss it all away but do smell the roses too please.

[thaibkk]

wow, only work 7 years and able to sell a business worth 25 million baht... that is 3.5 million baht per year worth...

what kind of business was it ?

why people here keep replying that 25 million baht is not enough to live here carefree the rest of your life ???

while thai average only earning 6000 baht per month ?


all old millionaires here on thaivisa or cashing in big fat pensions to spend on hookers and booze ?


my children are both thai and my nationality, but you must be a fool to put them in an internation school as that is only for expats who are here and get all expenses paid for....   my children go to private thai school and this is costing me 100.000 baht per child per year.... not per month !!!

Edited by thaibkk, 2009-10-25 14:19:13.

[Zeppo]

The best advice I can give your RIGHT NOW is to stay out of ANY stock market. Also I would stay out of US real estate as home values, except for a few cities, are still forecast to decline for at least the next 2 years. I would never buy real estate here & that includes BKK condos. No one knows what will happen after The King (Budda rest his soul) passes on.

The recent "world wide recession" has been just a minor hic-up compared to what will come in the next few years. When China stops buying US Treasuries, when the OPEC countries stop selling oil in dollars & worlds reserve currency becomes the Euro or the Yuan, the $ will collapse ( it has already imploded since 2001, see the US Dollar index chart) and then we will really have THE CRASH. When this will happen exactly, nobody knows, but when it does, and it will, only one thing will have real value & that is gold.

The good news is that you can buy bullion here, not just paper shares, which will most likely also be worthless. Buy the bars, 1 Bt, 2 Bt, 5 Bt & 10 Bt bars.

My suggestion would be to keep 50% to 70%  in cash & put the remaining funds into gold, about 50 Baht (weight) per month until the remaining money is converted to bars (or jewelry if you like the Mr. T or Fiddy Cent look). That will take about 14 to 18 months. I believe by the time month 6 rolls around, you will wish you had dumped it "all in" when you started. Don't pay too much attention to the price in Baht today. All you are doing is trading pieces of paper that have little to no future value for something that will have value until humans cease to walk the planet.

Just my 2 cents worth...

[Heng]

monty, on 2009-10-24 09:55:13, said:

They seem to be in fashion!
Never in my 16+ years in Pattaya I have seen so many built!
Frigging everywhere, especially East of Sukhumvit...

Shophouses, compared to actual houses is a walk in the park construction costs and build time/technique wise, the trick is owning land that will develop into commercial zones sometime (but hopefully not too far) down the road.

TheGoodDoctor, on 2009-10-24 10:15:41, said:

What is LK?

Google LK Pattaya.   Those are their showy projects, but their bread and butter has been building shophouses at a cost of 1.5-2.5,, and selling them for 3-5.5,,+, in 'strips/groups' of 5 to 50+ units.  They have a head start over a lot of Bangkok families land wise (in pretty good locations) in Pattaya because they have been here for quite awhile.