I'm 32 years old, with 25,000 baht in monthly income. I have 60,000 baht in savings, but I wish to have my first 1 million baht before I turn 40. Is that possible? I give my parents 5,000 baht a month.
ANSWERED BY... Tongchai Sirichanpant, CFP A monthly income of 25,000 baht equals a yearly income of 300,000 baht. Deduct social security of 7,200 baht and income tax of 5,280 baht. The rest comes to 287,520 baht. Also, the yearly payment to your parents is 60,000 baht. Your net income is 227,520 baht a year.
Assuming you use 70% or 159,264 baht a year for personal expenses, it leaves 68,256 baht in annual savings. You have eight years to make your 1 million baht. To do so, you have to put all savings into assets that generate a return of 12.3% a year. The best option to make your dream come true is to invest everything in the capital market.
However, high-risk, high-return is an old proverb that rings true. If you compare other types of investment, you must bear greater risk in the capital market. In any case, you need regular advice from an expert when investing in the stock market.
nnnI was unemployed for a month. I just got a new job with a monthly salary of 20,000 baht. After expenses, I am left with 8,000 baht a month. I have 30,000 baht in existing savings. My questions are:
(1) With the 30,000 baht in savings, what should I invest in?
(2) With the 8,000 baht each month, what type of deposit account will give me a good return? I thought about investing in the GSB lottery at 6,000 baht a month for five years, but I'd like to know what else I can do.
ANSWERED BY... Tongchai Sirichanpant, CFP First, you should set aside emergency savings of three times your monthly income, ensuring liquidity in the event of an unexpected expense. You already have 30,000 baht in savings, and you should save an additional 30,000 baht of your net monthly income. Once you achieve this, you can lock it up in a deposit account for emergencies, or you can invest in a fixed-income fund or short-term bonds.
If you want to bet on a little luck, invest in the Government Savings Bank (GSB) lottery as you planned. However, it is difficult to beat inflation by investing in the GSB lottery in the long run, and to win a prize is rare. If you want to save money for your own financial security, you should divide your monthly income into various types of investments that suit your risk appetite. Minimum return should at least equal the inflation rate, as inflation will keep eroding the value of your savings.
A basic investment portfolio for a 30-year-old person should be 70% in stocks and 30% in bonds. This ratio will help you beat long-term inflation.
Remember, each type of investment carries a different level of risk. You should first consider the level of risk you feel comfortable with. More importantly, you should track your investments regularly and adjust your portfolio at least once a year to keep it up to date with the market.
I'm 28. I can save 5,000 baht a month and hope to save more in the future. What I'm doing today is dollar cost averaging in equity funds at 3,000 baht a month. I also have 100,000 baht invested in stocks, plus some holdings in a trigger fund. I have been doing this for 10 years consistently and would like to know if it is a good idea. If I continue along this path, how much in savings will I have when I retire?
ANSWERED BY... Tongchai Sirichanpant, CFP At this age, you already invest in the stock market. Seemingly you are pretty good at coping with risk. You manage your risks by applying dollar cost averaging, a good tactic that can cut long-term costs while generating a higher return. But I would suggest you invest in other types of assets and not leave all your eggs in one basket.
If you want to retire at 55, you have 27 years (324 months) for your investment of 100,000 baht to grow plus 3,000 baht a month placed in equity funds. If your return is 10% a year, your retirement fund will be 6.4 million baht including the return from reinvesting prior returns and assuming you keep investing until you retire.
However, I don't think 6.4 million baht will be enough to cover your expenses after retirement. I suggest you estimate your essential post-retirement expenses, then save according to that estimation.
The Thai Financial Planners Association is the Certified Financial Planner (CFP) trademark licensing authority in Thailand. It is a self-regulated, non-profit group of financial advisers and experts from various organisations set up to give advice to investors. Questions can be submitted through firstname.lastname@example.org or the TFPA webboard, www.tfpa.or.th
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Writer: Thai Financial Planners Association