[quote=“TainanCowboy”]SB - quite honestly, its a matter of living within ones means.
Once you can do that, you just adjust accordingly. Life becomes OK…then heads towards good.
Good Luck to Ya.[/quote]
100% correct.
And this is one of the main reasons why there are so many border jumpers in good ol’ land of the free, home of the braves.
K-12 education:
Registration fee => $0
Tuition => $0
Property tax per year => .2% to 4%+ of the market value (depending on the state)
[quote=“bigduke6”]Not if you invest it properly in a retirement annuity/ pension/etc. You can invest half properly and retire no problem and live an easy life.
The problem is not waiting until you are 45 to start.[/quote]
Some people don’t wanna risk their money. How was your heart rate during 2008 through early 2009 (and how about these past few days)? I assume you’re doing what every financial advisors are touting: 50%+ in stocks an stock mutual funds before certain age, yadi-yadi-yada. Pensions? Annuity? Same thing…nothing more than a collection of stocks, bonds, etc.
Why not go further into CDS or CDO (some hedge funds are touting those vehicles)? Hey, Greek 2yr is currently yielding an astounding 34%. Hmm…imagine that: 34% interest rate per year!!! Wow…
I wouldn’t advise others on investments unless they know the risks associated with those investments.
One of the biggest problems in preparing for retirement while working abroad is that we (Americans at least) are not legally allowed to contribute to an IRA or Roth IRA. These programs offer tax shelters that amount to an enormous savings in the long run. The catch is that you have to be earning income in the US (or make more abroad than the Foreign Earned Income Exclusion limit which is more than triple my income in Taiwan). :raspberry: 401(k) is also out of the question.
As for the IRA programs, I would have NO PROBLEM putting in the annual maximum. It turns out to be about NT$12,000 per month (imagine seeing that grow tax-free for the 32 years until I turn 60). Pretty simple for a guy like me—single, living in Zhanghua, having just sworn off all my vices. So for us it means paying capital gains tax and then getting taxed when we make withdraws in retirement. This is one sacrifice that is not often discussed among expatriates.
I would welcome the opportunity to discuss this with folks in a similar position. So far, I’ve found no alternative to putting my retirement fund in a fully taxable account.
I am not an American, but do the same in my country. You got the right idea. Putting your money in the bank and you are actually losing money with inflation and crap interest rates.
As I’m 45 and in my 18th year in Taiwan, this thread stood out for me.
In a nutshell, I fell into teaching and I have been doing it ever since. My wife (16 years) also works in the same field. Over the years we have built up a considerable network: We currently have more than 35 different sources of income each month. We live well within our means, but our expenses are a staggering 160K per month. Mainly due to having three kids.
We are not very frugal but we do account for each dollar - budgeting can be fun! Our expenses include investments and savings. Be sure to consider them as “expenses” going out.
Generally, you should be earning more through your forties, but you don’t want to be living in a hole - so expenses will go up accordingly.
I don’t pretend to know the answers though and could always do with an extra zero on the end - But at the same time I’m often reminded about the parable of the birds in Matthew
[quote=“Hamletintaiwan”]There won’t be a retirement for baby boomers.
Either you are rich or you will have to work till you drop dead.
Legalized lethal injection will be another option of course.
The 30,000 NT$ saved every month now will be worth half in 10 and a quarter in 20 years.
You will have to work at the age of 67.[/quote]
I’m going to have to call BS on your mathematical assumptions there. The Rule of 69, 70, 72 ([wikipedia]http://en.wikipedia.org/wiki/Rule_of_72[/wikipedia]) or whatever you want to use would say that you’d be talking about a 7% inflation rate in Taiwan over the next twenty years. Over the past ten years it has been about 1.6%, unless the government has seriously been fiddling with the numbers.* You’re also assuming zero growth on the 30,000NTD saved/invested every month between now and 2031. At the very least, it shouldn’t be too hard to match inflation. I’m a pessimist, but let’s not get away from ourselves!
I believe I’ve written enough recently in other threads for people to have an idea about how I do and don’t handle money, and what my financial objectives are. I’m planning on being out of full time teaching work within ten years, though that may not happen. As for working, I’m a qualified teacher and I work in a government school. I’m also married to a local. I’m 35, but there are plenty of people in my programme who are older than me. I’m probably about the median in terms of age in my programme here in Taidong. However, as I’ve written before, if someone is planning on becoming a teacher, then it doesn’t make sense to leave Taiwan to do so and then return unless that person has a particular attachment to Taiwan. There are more lucrative financial options as a qualified teacher than teaching in Taiwan.
I don’t plan to retire in the West. I wouldn’t mind retiring in Taiwan, and I think in ten or twenty years, it’s going to be a much nicer place to live. My major concern on that front is unification with China. That could be a deal breaker and I’d have to look at moving elsewhere.
*I actually believe the Australian government is seriously fiddling the numbers. The inflation rate there is supposedly somewhere around 3%, yet housing (which is probably the single largest expense for most households and accounts for between 1/4 and 1/3 of outgoings) has what, doubled, tripled, or even quadrupled in the past decade! (Whatever the case, it’s increased well beyond 3% each year!) I can’t see how inflation can possibly really be about 3% with that in mind. It means everything else, in total, would have had to increase by significantly less than 3%. Yet other things, just off the top of my head, such as petrol, utlities, and other non-discretionary spending, have doubled or more in many cases over the past decade. The government is lying through its teeth.
Whatever way we look at it, Western governments are going to have to inflate away a large parts of their debts. At the same time, economic growth and demand for commodities should pare back somewhat especially as Chinese growth momentum finally sputters. It’s a hard one to predict. Taiwan has had little inflation over the past 10 years overall, but if you included property in the mix it has had a lot.
What’s worse, it’s wrong! Economies are not cyclical.
Our economy has been in cycle of boom and bust for many years, which is what you mean by cyclical. This is a result of a mismanaged economy due to economic theory and economic policies that fail.
Properly understood, properly regulated economies function without boom and bust.
Which economies do you mean?
If you’re spending 160k a month, you’d better have more than a few sources of income, but 35?! Somehow I don’t think you’re teaching English at 35 different schools.
I’m guessing that he has 35 students that he and his wife teach out of their home.
Can 35 students generate that kind of money? I’m guessing he runs his own school and has a few properties that he rents out to people.
The repeated cycle of boom and bust are symptomatic of a mismanaged economy. Politically, it is one that encourages short term gains for the few over long term stability and prosperity for all. An economy that has rid itself of systematic malfunction will function without boom and bust. I am not aware that this has actually happened anywhere since the development of political economy as an intellectual discipline… vested interests still rule.
I know this is an old post I’m commenting on, but I have a few questions. First, if your home country is South Africa, doesn’t inflation ( running in the 6% - 7% range), erode the greatest part of those double digit gains you spoke about elsewhere? Therefore, even though you get a nice double digit return on your annuities (doubtful, but you said it), the real inflation adjusted return can’t possibly be more than a few hundred basis points, i.e. 2%-4%, if using a traditional life insurance company.
Also, sending money to South Africa to invest there monthly exposes you to significant currency risk for the next 17-18years before you retire, doesn’t it? Keep in mind that the ZAR went from R3.75 / USD in 1995 to R8.68 / USD today. That was in 17 years. If that pattern continues for the next 17 years, which it more than likely will, your investments and annuities will be worth less than half of what you expected when converted to hard currency (or even the TWD).
South Africa is NOT the most stable of countries and a great deal can change in 17-18 years, leaving the country’s currency vulnerable to significant depreciation and your future cash flows from annuities exposed to huge risk.
I commend your investment efforts, but even if you increase your TWD15,000 contributions at 10% per year, in the last year you’ll have to pay TWD76,000 , if the South African currency remains stable (which is unlikely), just to earn a small real return on your investment. If however the currency experiences a similar depreciation as the previous 17 years, your TWD annuity contributions will be less (significantly less), but your investment’s value will be less as well in terms of USD or TWD.
[quote=“SillyWilly”][quote=“bigduke6”]
I put money every month into retirement annuities back home. This probably is around NT 15 000, while I save another NT 30 000-50 000 on top of that. My wife also contributes to a fund here.
If my contributions to these annuites increases at 10% a year, I will have no problem retiring at 55 and leading a decent life back home, or here.
This is on top of savings invested in my home country.
[/quote]
I know this is an old post I’m commenting on, but I have a few questions. First, if your home country is South Africa, doesn’t inflation ( running in the 6% - 7% range), erode the greatest part of those double digit gains you spoke about elsewhere? Therefore, even though you get a nice double digit return on your annuities (doubtful, but you said it), the real inflation adjusted return can’t possibly be more than a few hundred basis points, i.e. 2%-4%, if using a traditional life insurance company.
Also, sending money to South Africa to invest there monthly exposes you to significant currency risk for the next 17-18years before you retire, doesn’t it? Keep in mind that the ZAR went from R3.75 / USD in 1995 to R8.68 / USD today. That was in 17 years. If that pattern continues for the next 17 years, which it more than likely will, your investments and annuities will be worth less than half of what you expected when converted to hard currency (or even the TWD).
South Africa is NOT the most stable of countries and a great deal can change in 17-18 years, leaving the country’s currency vulnerable to significant depreciation and your future cash flows from annuities exposed to huge risk.
I commend your investment efforts, but even if you increase your TWD15,000 contributions at 10% per year, in the last year you’ll have to pay TWD76,000 , if the South African currency remains stable (which is unlikely), just to earn a small real return on your investment. If however the currency experiences a similar depreciation as the previous 17 years, your TWD annuity contributions will be less (significantly less), but your investment’s value will be less as well in terms of USD or TWD.[/quote]
I more or less agree with your assessment. I pulled all my money out of SA in 2004 as I have very little trust in their economy in the long run, especially in the next 20-30 years. Also from about 2004 their banking policies became more draconian (although, admittedly, that was an attempt at making illegal activities by Nigerians etc more difficult) and more difficult to take large sums of money out of the country. IMO you would be better off buying USD, because even if it does fall flat on it’s ass in the next 2-5 years, over the long run it will pick up again.
But I was watching a financial program about a possible bigger economic crash in the US over the next 2-3 years and the economist bloke was advising investors to buy precious metals. I can see how that is a good option, but not sure what the gains will be long term as precious metals like gold are already pretty pricey.
Don’t put all your eggs in one basket. For you Bismarck buying that house for 3 million NTD would seem like a good plan. We all need a place to live.
I have colleagues who have probably made a lot of money in S African real estate, particularly Cape Town, but its not the most stable of countries, that’s for sure. Inflation has been pretty severe there.
Well Willy, I am not sure what your experience is in the South African financial markets are? Maybe you should let me know your qualifications before you accuse me of lying about my returns.
Anyway on top of the traditional annuities, I have a decent sized nest egg stashed away which gets good returns, as well as one property paid for that collects rent. This rental will increase by a standard ten percent each month. I am also currently trying to work a deal on another property.
The financial markets in South Africa are extremely well regulated. In fact are on par, and in many cases better than those in many so called first world countries. They have always been so.
I also plan to go back to SA eventually, and am setting up for that. With returns from properties and other investments, I should do fine.
[quote=“bigduke6”]Well Willy, I am not sure what your experience is in the South African financial markets are? Maybe you should let me know your qualifications before you accuse me of lying about my returns.
Anyway on top of the traditional annuities, I have a decent sized nest egg stashed away which gets good returns, as well as one property paid for that collects rent. This rental will increase by a standard ten percent each month. I am also currently trying to work a deal on another property.
The financial markets in South Africa are extremely well regulated. In fact are on par, and in many cases better than those in many so called first world countries. They have always been so.
I also plan to go back to SA eventually, and am setting up for that. With returns from properties and other investments, I should do fine.[/quote]
Annuity are based on projections and not actual set-in-stone returns. The reason I doubt the veracity of your returns is because life insurance companies are notorious for using “inflated” projections to attract clients, just to slash those expected returns the closer you get to retirement.Also, over the course of 17 years a lot of things can change: recessions, depressions, social unrest, regime changes, etc. All of these factors will ultimately lead to lower actual returns.
I studied international economics and read about the South African financial system extensively. Well regulated, sure.
The fact that you’re planning to retire in South Africa does eliminate your currency risk to a certain extent. Your inflation risk remains a problem. Nominal returns on all your investments seem very high, but in real terms, they’re only yielding about 250 basis points more than CPI inflation (based on SA 10-yr bond yield). If you are promised more than 8.5% return on your annuities, finding the additional yield comes with much higher risk.
Your real estate cash flows sound fantastic, but if you continue to increase your rent by 10% per year (as you stated above), your tenants will have to pay 100% more in rent in 7 years. That hardly seems sustainable. Also, income growth hardly keeps up with inflation in SA, let alone your rent increases. It sounds a little like a bug in search of a windshield.
Actually, he’s increasing rent by ten percent each month. My abacus says that in seven years he’ll be rakin’ in millions a year, and in 20 years he’ll be a billionaire. :lick: