Split the thread from here: [url=What's the Point of Staying in Taiwan? - #98 by ChewDawg the Point of Staying in Taiwan?[/url]
Yep. That’s why I’m not in Australia and don’t have my money there. Call me a rat deserting a sinking ship. Australians have a massive love affair with socialism, and that’s not going to change any time soon. It’s only going to get worse. Currently, it’s masked by good times and living off the good old days, but the veil will be lifted soon enough.
[quote=“Cornpone Hercules”]
I think you are being overly pessimistic here. If they tighten laws, it will be in European countries where the retirement ages are set too low. There might be some tightening up of the formulas for defined pensions but I question your statement on Western countries not having reasonable systems. With a combination of public, private and employer based schemes, any responsible person in Western countries with half a brain should be ok.
First of all, the pensions systems of some Western countries are not in bad shape (e.g., Canada’s) thanks to prudent planning from centre-right governance (I count Liberal Paul Martin’s policies as Finance Minister in the 90s and the current Conservative government in this description). Secondly, there are usually formulas for old age pension systems that require some level of residency in the home country. For example, in Canada, when you turn 65 you are eligible for Old Age Security ($500-600 per month). However, you have to live in Canada for something like 20 years overall between the ages of 18 and 65 to qualify. Some left wing parties in Canada have tried to extend OAS to new immigrants who have not qualified for those 20 years, but there has been little support and rightly so. You want to qualify for the pension? You need to spent time within that country paying into the system.
There is also another pension plan (i.e. CPP) workers pay in through payroll deductions. In retirement, this works out to $1200 or so per month if you have contributed for the maximum time. There is yet a further plan where you can deduct tax every year by putting money into a registered plan. Most employers also have a plan for their employees as well, which is usually a defined plan when you work in government or a quality private sector employer.
So let’s look at a hypothetical 65 year old in Canada:
Total=$5800 per month or around $70,000/year. He owns his own house in a big city (approx $550,000), paid it off, and now has that equity with a retirement income almost as high as his working years.
That’s why when people take expat packages overseas, they should be ensuring that the pay is far above what they would get back home or that the taxation systems are far lower than in their home country (which allows them to save and pay lower or no capital gains). You backpack and drift for too long, you’re going to start to panic in your 50s.
You combine all of these together over many years, and it’s a nice nest egg for living in a developed country, not to say a fortune for moving to a nice Asian country with retirement visa programs (e.g. Indonesia or Malaysia).
No unravelling of the middle class at all for people that know how to plan and that are responsible.[/quote]
I think you’re being overly optimistic here. #1, #2 and #4 account for most of his income and he is entirely dependent on another entity having enough money to pay those pensions. And this is what GiT is pointing out. The gov’t and businesses probably aren’t going to be able to fully fund those accounts. I simply hope that there is at least partial funding available. One of the biggest issues with funding these accounts is that they are a fixed payment where # yrs living in retirement was underestimated. The other reason is the ponzi-ish part of the equation. The workforce is not expanding and the worker to retiree ratio is going in the wrong direction. In addition to that older workers (but younger than the 65-70 retirement age) are being pushed out of the workforce in favor of younger, cheaper workers. So they’ll be dipping into their savings earlier before the payouts begin. In the end I’m not nearly as pessimistic as GiT but it’s likely that the pension (or similar) payouts are substantially less than your figures above. And unfortunately a lot of people aren’t responsible enough to have a house paid off or a large personal savings.
What’s the outlook for foreigners in Taiwan? Even worse since most of them are relatively poor English teachers that have a hard time saving money. And they’ll be at the lowest end of the spectrum for any of the pension (or similar) payouts. I definitely do not plan on being here long-term.
Abacus: I think being an English teacher in Taiwan can, under the right circumstances, be a good option. A person needs to have a very long term plan in mind, but basically, if someone wants to stay here for at least 20 years and teach (rather than open a business), the way to go is to become a certified teacher. Of course, as I’ve argued before, if you’re going to become a certified teacher, there are more lucrative places to teach. However, if a person really has his or her heart set on Taiwan, then it’s a decent option, provided they do actually take personal responsibility for saving and investing. A foreigner by himself should be able to save at least 1,000USD/month quite easily here. With a local wife and kids, it should be probably 1,500USD/month easily. Two foreigners here should be able to save at least 2,000USD/month here, easily. Invested over 20-30 years, and coupled with the very low cost of living, that money should set a foreigner up quite easily here. The trouble is that a lot of foreigners throw the money around while they are young here and remain in crappy buxiban jobs. There’s absolutely no reason to be a poor foreign English teacher in this country when a lot of locals manage on much less.
I agree about being a certified teacher but this isn’t really an easy step to take for most. It means going back home for several years and acquiring new debt. I also agree that many spend frivolously but this is true whether they are here or at home.
But only under the right circumstances can someone save up enough money (only working as a teacher) to take care of their retirement imo. The problem is that it’s going to be difficult to find work in your 50’s and most aren’t going to have 40 yrs of savings by then. And you don’t have a lot of options at that point in Taiwan or at home because you have 20 yrs of ESL experience on your resume. Especially if they are supporting a family and potentially assisting with college expenses. and I would contend that most foreigners can’t save 1000USD/mo easily. Most foreigners are in shitty jobs because it’s a shitty job market. And most make <2000 USD/mo. I’m about as cheap as they get and I managed to save 4000 USD last year. And that was spent during a long job hunt. Finally I’m in a good situation and I’ll be able to save a lot. But I’m lucky. Most aren’t.
Are you serious?
When I was single, living in Taoyuan, I was earning about 65,000NTD/month and spending 25,000NTD/month. Later, after I got married (and my wife was only working part time and making about 8,000NTD/month) I was also doing private group classes on the side. At that point I was earning about 82,000NTD/month (so combined, we were bringing in 90,000NTD/month) and spending about 27,000NTD/month.
In 2009, I managed to pay for a wedding and a honeymoon to Iceland and Denmark. We had enough saved up to travel the following year and generally bum around. I finished my contract right at the end of 2009 (it was a calendar year contract, oddly). I didn’t work again until late August of 2010 (we were travelling in Asia). Since then, I’ve saved/invested more than 20,000USD (some of which was left over from 2009), as well as contributed to life insurance. We spend about 27,000-30,000NTD/month, my wife doesn’t work, I do only one private group (worth about 5,000-6,000NTD/month) and I earn about 73,000NTD/month (after health and labour insurance). It’s going to go down next year once I start paying tax and we’re going to have to move to another place and probably spend a little more on rent. We’re also looking to have kids in the next year or so.
You’re seriously telling me people here can’t save 30,000NTD/month? You saved 4,000USD last year? Holy shit. That’s 10,000NTD/month. How little are people earning or what are they spending it on? Do you live in Taipei? If so, get out. Move to Taoyuan, as shitty as that place is, where the cost of living is much lower but there are still wealthy people who can afford to send their kids to buxibans.
The debt of becoming a certified teacher is probably worth taking on if Taiwan is the long term plan because the other alternative (working at a buxiban, i.e. not having a plan) is terrible. Even if a person doesn’t intend to stay in Taiwan, they can still take their teaching certification elsewhere. If the long term plan isn’t to be in Taiwan, then it’s best to get out as soon as possible. Every extra year is a wasted year.
Taiwan Luthiers: I’d agree, in general. My thing is investing on the side. Businesses often have very large set up costs, and the buxiban industry is a doomed industry. Pouring money into that would be a bad move in my opinion. It’s had its day. Most people (including me) don’t have enough experience in anything else though. I really would say that for most people, it should be about becoming a certified teacher (even if that involves going back to the West and getting in debt, though the better option would be to become a certified teacher and then go somewhere with a better package than Taiwan) or leave Taiwan and don’t come back. Remaining in the buxiban industry past about 28 with no other plan is fucking insane.
GIT, there is one major problem with this strategy unless you have a local wife. There is no guarantee that you will be allowed to continue to work as an English teacher in Taiwan for 20 years.
Furthermore, what happens if you stop working. We have no idea of knowing if one would be forced to leave Taiwan after retiring from teaching in Taiwan. No one has any idea about the rules regarding a visa 5,10, 15, or 20 years from now.
So in other words, expand them. Take away more individual choice from people, tax them further and ruin competitiveness, and put such plans into the hands of unaccountable bureaucrats? :loco: I would say just the opposite. Trim them and keep the bare minimum. I’m supportive of having some public option–basically enough for a retiree to afford basic rent and basic food. In Canada, I think the public plan you pay into (CPP) and the one you’re entitled to (OAS) provide around $1800 per month in retirement to people that have lived and worked in the country.
Any more than that, it’s up to the individual’s savings and the plans his workplace provided. I think most Western countries provide some sort of basic program. Given the fiscal situation so many countries are in, expanding such programs would be very stupid.
[/quote]
I never mentioned expand them. I simply said fund them properly.
The question is, how much do you realistically need to retire if you are an expat who will not be getting a pension / social security / etc.?
Saving $1000 a month is nowhere near enough IMO, even for a single person with no spouse / kids. Not unless one is planning to save this amount for at least 30 years and well past retirement age.
[quote=“Indiana”]The question is, how much do you realistically need to retire if you are an expat who will not be getting a pension / social security / etc.?
Saving $1000 a month is nowhere near enough IMO, even for a single person with no spouse / kids. Not unless one is planning to save this amount for at least 30 years and well past retirement age.[/quote]
Well, they key is to start as early as possible and invest. Keeping that $ 1000 in a savings account and you are actually losing money. The main problem, in my non expert opinion, is that people often only realize too late that they will need to start saving for retirement. Realize this in your mid thirties or at forty and there might be a problem.
Taiwan Luthiers: Is there enough demand for that to be able to make a decent income? Sounds like it’s great for you if there is.
steelersman: Of course, not having a local wife could make things very difficult for people, but this just feeds back into the question of whether it’s worth staying here or not. If there’s a huge question mark over one’s ability to stay here, let alone earn enough money, then that should mean that a person either has a very good Plan B, or gets out of here now while the getting out is reasonably good and possible.
Abacus: I really don’t think it’s worth being here for the kind of money you were making. If you’re not saving any money, why not not save any money in the West where the quality of life is better for poor people and where there’s at least the prospect of a social safety net? Being poor in Asia would suck big time. Of course, people say work kindy here, but I think if it’s a matter of having to engage in something illegal (and risk being deported), then that’s a silly option and working here really isn’t a good option then. I used to know a guy who was here completely illegally. If he’s still here, it means he’s been here for 4.5 years now and never had an ARC. He got paid entirely in cash and made a lot of money, but at any time, he could have been booted out of the country. He didn’t mind that to some extent because he was always ready to move on to the next country (he loved to travel, though he also spent a king’s ransom on it and probably has very little to show for the hundreds of thousands of dollars he’s made here – he could actually have been setting himself up for a very early retirement), but it’s hardly a stable life.
Indiana: Well, let’s say that someone wanted to retire here on 50,000NTD/month, which is a pretty decent amount of money to live off in Taiwan. If, after taxes and fees (and this is where you have to be clever to minimise these two things) their investments were beating inflation by 5% and they took out 4% of that (so their investments would still be growing by 1%, i.e. they’d be able to live indefinitely and never run out of money), they’d need about 15 million NTD in assets.
If they started with a principal of 0 NTD, saved 30,000NTD/month, every month, and invested that and beat inflation by 5%, they’d need 22-23 years to accumulate 15 million NTD in assets in today’s money. It’s quite possible, even if they started at 30 or 35. That’s why I think that as a place to retire, Taiwan is much better than many Western nations that will tax the shit out of you and provide shitty services in return. If someone had double that amount of money (30 million NTD), then they could live like a king here.
There are a few retirees, near retirees or semi-retirees working in my programme and they must be doing very well. Their jobs are fairly slack (and usually one partner is a teacher and the other does a little bit of tutoring or editing), they have access to a very good (and good value for money) health care system, there’s low crime, they’re set up with a reasonable apartment, car, etc., and they get out and about and cruise around Taiwan on weekends. There are a few that will probably be able to get a PARC within a couple of years also. It beats the hell out of working a grinding job in the West or sitting at home eating dogfood and being unable to turn on the heater or air-conditioner because it’s too expensive, as in many places in the West. I think they probably do their jobs more as a means of keeping themselves occupied than anything else because they probably have wealth from the U.S. already.
I have to respectfully disagree with you here. Yes, one may be able to retire on 50,000 a month, but with inflation in about 30 years, 50,000 would be worth more like 15,000. I’m assuming you were not talking about 50,000 in today’s money because that would require far more savings (unless you were getting a sterling interest rate consistently over a period of decades).
I also think that assuming that one can beat inflation by 5% for the duration of their saving years is a bit too ambitious. Beating inflation by 5% would assume that you are making about 8-10% consistently, on average, over a period of decades…wouldn’t it? I suppose it is possible, but in today’s economic climate it’s hard to remember that. 
When I plug the numbers in, my calculations show that if my husband and I had $2,000,000 saved about 25 years from now and used that amount to live off of for 30 years, in today’s money that would only give us about $30,000 a year. And that’s assuming we are getting 3% interest from this investment after retirement.
[quote=“Indiana”][quote=“GuyInTaiwan”]Indiana: Well, let’s say that someone wanted to retire here on 50,000NTD/month, which is a pretty decent amount of money to live off in Taiwan. If, after taxes and fees (and this is where you have to be clever to minimise these two things) [color=#FF0000]their investments were beating inflation[/color] by 5% and they took out 4% of that (so their investments would still be growing by 1%, i.e. they’d be able to live indefinitely and never run out of money), they’d need about 15 million NTD in assets.
If they started with a principal of 0 NTD, saved 30,000NTD/month, every month, and invested that and [color=#FF0000]beat inflation by 5%[/color], they’d need 22-23 years to accumulate 15 million NTD in assets in today’s money. It’s quite possible, even if they started at 30 or 35. That’s why I think that as a place to retire, Taiwan is much better than many Western nations that will tax the shit out of you and provide shitty services in return. If someone had double that amount of money (30 million NTD), then they could live like a king here.
[/quote]
I have to respectfully disagree with you here. Yes, one may be able to retire on 50,000 a month, but with inflation in about 30 years, 50,000 would be worth more like 15,000. I’m assuming you were not talking about 50,000 in today’s money because that would require far more savings (unless you were getting a sterling interest rate consistently over a period of decades).[/quote]
I’ve highlighted in red the parts in my original post that refer to this.
It’s more than possible. Two companies I own shares in, both of which have exceeded 20% returns per year for a number of decades:
Berkshire Hathaway
en.wikipedia.org/wiki/Berkshire_Hathaway
Fairfax Financial Holdings Limited
en.wikipedia.org/wiki/Fairfax_Fi … gs_Limited
There are others (or private funds) of a similar nature, though obviously with any of these you need to know what you’re doing/looking at or have someone who is capable do that for you.
There’s the problem. You’ll be lucky if you match inflation with that.
Thanks, GuyInTaiwan. I wish I could buy you a few beers and pick your brains for more info! 
Indiana: I think one of my few talents in life is frugality and personal finance, though I’m not even sure this is something that can be learnt (as an adult). I seem to have an almost natural ability in this area that I remember going right back into my youth, and I also picked up a whole lot of things from my parents. Still, I would highly recommend reading The Richest Man in Babylon.
A very important mathematical concept everyone should know is the Rule of 72 (and its related rules).
[wikipedia]http://en.wikipedia.org/wiki/Rule_of_72[/wikipedia]
Another thing (that I think comes from Robert Kiyosaki – someone I would generally recommend against reading, but in this instance is brilliant) is part of the Cashflow Quadrant concept. Basically, imagine a square divided into four smaller squares. The top left is income, the top right is expenses. The bottom left is assets, the bottom right liabilities. Basically, the idea goes that everyone has income. The poor predominantly have expenses. That is, all of their money comes and goes from top left to top right. The middle class have liabilities. The rich have assets.
The distinction between poor and middle class is pretty obvious – the middle class have more stuff than the poor. However, the distinction between the middle class and the rich is what trips most people up. The middle class spend all of their money on the accumulation of things that they consider to be assets, but are in fact liabilities. The middle class spend all their time acquiring things that cost them money on a continuous basis and/or depreciate in value, such as houses (that they live in, as opposed to rent), cars, etc. So, for the middle class, some money goes from top left to top right, and the rest goes from top left to bottom right to top right. The rich, on the other hand, try to accumulate things (assets) that will make more money for them. They also have some money that follows the routes of the other two groups, but their money predominantly flows from top left to bottom left and back into top left again (only there’s more of it each time).
Another difference is that many people in the poor and middle classes are obsessed with increasing their income through active means (i.e. getting a better job) rather than passive means (i.e. acquiring assets). There’s no compounding or scaling effect with active income.
Related to that is the concept (you can call it a rule if you like) of 75:20:5. Basically, once you’re in middle age and beyond (because for young people, it’s practically impossible to achieve this), you should be looking at having at least 75% of your net worth in assets. No more than 20% should be tied up in a home (because it is a liability) and no more than 5% should be tied up in everything else, including cars. Cars are a massive liability for most people, and yet people spend enormous amounts of money on them both through depreciation and buying them with finance. Houses are a big issue too because people end up buying much bigger houses than they can really afford (once mortgage repayments, repairs, insurance, heating/cooling, cleaning, etc. are factored in). Also, having too much stuff also requires a larger house to accommodate the stuff.
Anyway, I think these are some really basic concepts that anyone can actually understand. It’s being able to really stick to them that is going to be the issue for most people, but more on that later.
In terms of investing, I would recommend reading all of Buffet’s letters to the shareholders of Berkshire Hathaway, not for the nitty gritty of the financial statements per se, but for the philosophy behind what he did. Because they’re over such a long time, you can also see how certain decisions turned out and his own reflections on those decisions. I’d also recommend reading The Intelligent Investor by his mentor, Benjamin Graham. Graham wrote some other stuff too, but it’s pretty hard to get through. Graham’s concept of “Mr Market” is pretty easy to understand and is really important, as are his other central concepts.
I’m a torrent of emotions in most areas of my life, and I have absolutely no ability to interact with people successfully in the main. However, I also think this is probably my greatest strength in life. I really don’t give a shit what anyone thinks of me in most cases. I’m not concerned with outward displays of status and I haven’t committed to a middle class lifestyle or set of mores. Once someone does that, they’re always going to be the victim of money, never the master of it, because money is always going to be seen through the lens of how it allows people to keep up with the Joneses and the attendant rollercoaster ride of greed and fear. I have absolutely no desire to play that game. I have absolutely no desire to have a (good, respectable, high-paying) career. I have absolutely no desire to have stuff. The accumulation of wealth for me is merely a vehicle towards a kind of spiritual (for lack of a better term), intellectual and moral freedom. Put simply, I don’t want to be a teacher forever because I realise I’m really not suited to it or good at it, but the panacea to my woes is neither through seeking a better job within this profession or another, nor in busying myself with distractions such as shiny, new toys. I think about money in very different terms to most people.
There’s a lot I could tell you, and I’d be willing to do so if you were ever in Taiwan, but there’s a difference between getting it and getting it that not everyone necessarily gets. I’ve spoken to lots of people who are much smarter than I am about this and it’s fallen on deaf ears, or they’ve agreed emphatically with me and then gone right on doing what they were previously doing.
I think that’s another thing too. Although I may be extremely arrogant in some ways, I actually realise I’m a huge dumb arse, so I am constantly plagued by self-doubt, especially with regard to financial decisions. Again though, that has also been a strength in that it’s led me to ask what seem like pretty obvious questions to me (but apparently aren’t to a lot of other people) about investing (whether in an individual stock or via some sort of fund manager). For instance:
It’s all just a matter of different incentives and perspectives, I guess.
That’s a wall-of-text man… :eh:
Well, I’d suggest that if you can’t get through that and the ten minutes or less it takes to read, then there’s probably no point tackling The Intelligent Investor in all its 640 pages, or even The Richest Man in Babylon in its 208 pages.
Let me guess. Product of a Western education system?
Thanks for that, GIT. I’m really good at saving, just not very clued up on investing. My father advises me a bit, but because I live overseas, I don’t utilize his knowledge as much as I should. My husband and I tend to hold on to lots of cash as we don’t have the stomach to invest a lot into the markets in the present climate and we frequently talk about property investments but are wary of that in a lot of ways too (because we are overseas). I have been looking into investing with Fidelity (in the United States), but I have more research to do when it comes to tax filing / paying taxes with any gains I make and if it is a good idea or not. I started investing with an investment company that deals with funds in the Isle of Man, but stopped that pretty early as the money I was being charged by the investment company and my bank for transfers (costs I was not told about) meant that I was losing 5.5% on whatever money I was sending into the fund…that defeats the whole purpose!!!
I’m hijacking this thread on an unrelated topic…sorry! 
Mods: Could we perhaps split this off into another thread?
Indiana: Well, rather than offering further ideas about your post just yet, let me ask you some basic questions then.
I left the Navy (100% medical, pension contributions - private and government - government housing subsidy and loans etc etc) to come here and teach ESL/EFL at 27 with no teaching certificate. Sure, I only planned on being here a year or two (and then heading back to do something else, possibly teaching), but it’s been 9 years already. You’re right. It was absolutely insane. It’s only been a recent development that I’ve started to save aggressively (I was one of the young guys with no plan, throwing away money on my “second childhood” chasing skirt and boozing), mostly because of what you guys have written here, and my current lady friend (she’s almost a female Taiwanese version of you re financial thinking etc). I’ve done the calculations and I’ve basically pissed away 5 million NT since I started working in 1996. I still can’t believe it. I mourn for my fiscal idiocy as a young man, and fear for how the hell I’m going to make it up in years to come (if I can, at all).
I am going the teacher certification route next year (UNISA and certification in SA), but I’m not sure that’s going to be even barely enough to see me through to 60 (a theoretic extra 23/24 years of work). If I could do it all again I’d do it very differently, but such is hindsight. Now I just need to do and plan as best I can moving forward, and the prospects are scary. I really feel that although a better job as a certified teacher will be leagues better than what I’m doing now, it just won’t be enough. I truly feel I need to do more, but I don’t know what to do.
Edit:
[quote=“bigduke6”]Getting your schedule right is often the difficult part. Jobs are available, but often there are scheduling conflicts.
[/quote]
That’s been my problem for about four years, and why I only make between 40-50k a month depending (sometimes as low as 38k).
[quote=“GuyInTaiwan”]Mods: Could we perhaps split this off into another thread?
Indiana: Well, rather than offering further ideas about your post just yet, let me ask you some basic questions then.
It really boils down to what is happening in Europe right now. I feel like I should wait a few more months to throw some money in, but am not quite sure if this is the right decision. I know that investing while the markets are suffering can be a good thing as they will only improve, but I’m nervous about the impact that Europe will have in the immediate future.