I am currently in the position where I can regularly save around $NT40,000 per month. I have recently been putting this money into 1 month fixed rate bonds at the Taiwanese bank where I get 0.93% interest per annum. This is pitifully low and doesn’t even manage to match the current rate of inflation in Taiwan (currently 2.93% according to herehttp://www.dgbas.gov.tw/public/data/dgbas03/bs3/inquire/cpispl.xls).
What other options do I have so that I am not consistently losing money every month? I could transfer the money into my Australian Dollar savings account where I can get 4.66% easy access however there is then the risk of the Aussie Dollar devaluing which seems more than likely considering its current high.
I could also send my money back to the UK where I could put it in a savings account and get around 2%. However I am really worried about the current quantitative easing situation in the UK and am worried about my money becoming worthless there as well.
I do have a stocks and shares brokerage account in the UK where I could invest the money in stocks and funds however I was hoping to find a more local (Taiwanese) option. Investing in the Taiwanese stock market is out – my Chinese is no way nearly good enough to do that.
Any suggestions or insight into your own personal savings/ investment strategies would be appreciated.
HSBC Direct might be an option. I think it’s 3 or 4% interest if left in the account, but you can also easily send money into a variety of index funds etc around the world. You only need $10K to start.
This is a really difficult situation nowadays. Interest rates are so low and as for myself, I don’t have the stomach (or the know-how) for the markets.
My husband and I are sitting on quite a bit of money and are watching it sit in a bank account making less than 1%. We have finally made the decision to start buying property as an investment, but for years now our money has been doing virtually nothing.
[quote=“Indiana”]This is a really difficult situation nowadays. Interest rates are so low and as for myself, I don’t have the stomach (or the know-how) for the markets.
My husband and I are sitting on quite a bit of money and are watching it sit in a bank account making less than 1%. We have finally made the decision to start buying property as an investment, but for years now our money has been doing virtually nothing.[/quote]
Property is a pain in the butt, don’t underestimate the amount of work and time you’ll need to put in. I can personally attest that one can get burned out of massive amounts if equity and end up in debt one day even though they had a really nice nest egg the day before.
Personally I’m buying land. Property (as in houses) is indeed a pain in the ass, and unless you get lucky you won’t make much profit. Land doesn’t go anywhere, doesn’t incur taxes (usually), doesn’t fall down, and doesn’t need the roof replaced or the drains fixing. But I’m doing that because I want some land. If you’re looking at it as just a safe place to put your money, it might not be so attractive.
Give it all to tommy, I will take good care of it (and maybe even give some of it back to ya)
Oh wait thats the IRS that does that.
But seriously depends on how much you have ? I think diversification of your assets are prudent.
Property can be good. A place that can be easily rented and rerented if there is an issue with a tenant can be worthwhile. The rent is paying for most of the mortgage.
Eventually your rental income is all income when the house is paid off.
Land values takes a long time to appreciate. You may be old and grey (or dead) before any benefits come to you.
Stock market is generally the worst, most high risk, except for putting a “betting” amount on blue chips.
Govt bonds? Even banks buy govt bonds. Look at China. They are fully invested in Uncle Sam’s bonds.
its all about you have and how much of a return you want. HIgh return = generally high and unsecured risk.
[quote=“skoster”][quote=“Indiana”]This is a really difficult situation nowadays. Interest rates are so low and as for myself, I don’t have the stomach (or the know-how) for the markets.
My husband and I are sitting on quite a bit of money and are watching it sit in a bank account making less than 1%. We have finally made the decision to start buying property as an investment, but for years now our money has been doing virtually nothing.[/quote]
Property is a pain in the butt, don’t underestimate the amount of work and time you’ll need to put in. I can personally attest that one can get burned out of massive amounts if equity and end up in debt one day even though they had a really nice nest egg the day before.[/quote]
It’s tricky and we have been back and forth as to where we should buy, but have pretty much decided on London at this point. Small spaces, lower maintenance costs because places are smaller in size, high rents and the fact that property values in London don’t tend to drop much (even during a recession). Plus, we won’t be mortgaging, so that will save quite a bit.
it’s sort of a bind these days. with low interest, borrowers are blessed and savers are penalised. along with relatively high inflation, basically, the best bet is actually to buy stuff.
house (if you have enough and can borrow and market is ok for you)
some ppl even buy taxi licenses to rent to others (but buyer beware of course)
assets (just regular stuff like a car even though it’s depreciating)
you could try index funds or even hi-dividend yield funds if you do some research
I am with HSBC…interest rates are so low…it seemed worth considering something else…too worried to invest in property here at the current values (although buying off plan and reselling before completion,seems to work with the right development here)
Maybe use your own field of expertise to invest in what you know…My life has revolved around Motorsport and I have seen the value of certain iconic race and rally cars go through the roof…as they are rare and cost more to replicate than buy,i am confident in long term values. You just have to know which cars and what price. To give you an idea I have sold rallycars for $50,000 which 10 years later are worth $600,000 (audi Quattro S1 works car) Hindsight is a wonderful thing!
I do like property for it’s long term income(albeit a small return) and its better than the bank rate as long as there are no huge maintenance costs.plus the chance of capital appreciation.
However my investment can be used for fun also …I don’t want to die rich
Yup, right up until you get a 40K (USD) bill because your tenant (who, by the way, stopped paying rent for 6 months and then sued you frivolously after finally being evicted) installed an illegal dishwasher and manged to stuff a bunch of towels and other crap into the pipes while installing it resulting in destroying your septic system.
Don’t forget the banks playing fast and loose with the mortgage industry resulting in an overnight loss of 200K+ of equity and now you’re 100K+ upside down in a mortgage you’ve been paying on for 15 years (including extra payments every year to bring down the principal more quickly.
It certainly doesn’t sting to pay taxes the next year and know that a good amount of your money is going right into the pockets of those bankers since they were “too big to fail” and another chunk of your money is going into the pockets of the tenant you finally got rid of because she’s gaming the welfare system just as much as she gamed you (it was a great sob story, though expensive).
Apparently I’m exactly the right size to fail as far as the US government is concerned.
Right ! So just keep your 40,000nt/ month safe in a nice bank that is not likely to go bellyup and get as high an interest as possible. Then when you have enough. Buy yourself a place to live where you plan to live for quite some time. IT could be a good downpayment.
IF you are sure you wont touch your savings, put into one year CDs.
3 year CD often pay just a wee bit more interest and 3 years is a long time to tie up your money. As you may find a different use for it in the meantime. But one year goes by pretty fast.
Similar situation here. I ended up giving my house away rather than chuck money down the toilet fighting endless legal battles. Property can make a (very modest) profit, but I’ve heard so many instances of massive loss I’d say it’s not worth the risk.
As HH said: diversify. Losing my house hurt, but it wasn’t a huge deal because it represented a smallish part of my life’s savings.
Here’s my advice. Build a nest egg of local currency to support you and your family comfortably for two years. I recommend budgeting in an additioanl 20% per year to deal with unexpected contigencies. The standard wisdom is a 6-month nest egg, but that’s not enough for my own peace of mind.
Once you’ve established your savings, then it’s time to invest new surpluses. I think the best strategy is to invest primarily in broad-based stock market index funds, and a smaller amount in bond index funds. I follow the 80/20 rule in terms of stock/bond indexes. I don’t invest in individual companies, as I have no idea which companies will succeed in the long term. But I do know the stock market’s value will increase in the long term. That’s the value of index funds.
Nobody really knows which companies will succeed over a period of decades. Warren Buffett and the few people like him are statistical outliers. Many brilliant investors have failed miserably, and many once successful companies have gone belly up. Even within our own lifetimes, many so-called “blue chips” have fallen in value or gone under entirely. No amount of education can teach anybody to predict which specific companies will do well. Dozens of long-term academic studies have confirmed again and again that Wall Street fund managers, considered as a group, fail to outperform the overall market in the long run.
Personally, I feel much more comfortable investing in the total stock market via index funds than I do attempting to predict whether a specific house on a specific lot in a specific neighborhood in a specific city will be worth more in 30 years than it is today. You don’t have the stomach for the stock market, but you do for that?
Real estate markets are unpredictable, and buying individual properties is extremely risky, not to mention time-consuming. Houses are made of materials that fade over time. Even stones and bricks crack in the frost and become weathered in the summer. Piping, wiring, roofs, flooring, walls…absolutely everything wears out. When my wife and I bought a house several years ago, we insisted on finding a new house. A new house, with new materials, up to the current building codes, is by far the more attractive option than an old building a bunch of other people used to live in. But it’s not an investment; it’s the place we live.
Lots of people make money in real estate, but a hell of a lot more lose. It’s basically a very risky gamble from an investment point of view.
Similar situation here. I ended up giving my house away rather than chuck money down the toilet fighting endless legal battles. Property can make a (very modest) profit, but I’ve heard so many instances of massive loss I’d say it’s not worth the risk.
As HH said: diversify. Losing my house hurt, but it wasn’t a huge deal because it represented a smallish part of my life’s savings.[/quote]
I’m in the midst of the process now. Unfortunately I spent my twenties and early thirties playing around instead of saving or investing, so most of what I have is tied up in property (the one I’m losing as well as one I bought for my brother who’s disabled and one I helped my mother get when health issues about bankrupted her… My credit is shot but my family is safe, easily a good tradeoff as far as I’m concerned).
Part of the problem, as I see it, is that property gives a visceral feeling of safety. One can touch it and see it. Most investments feel nebulous, regardless of their actual risk compared to property. This, along with some very deep cultural feelings of property ownership being intrinsic to the American Dream, really impacts how people view property ownership here.
Go with HSBC or another competent international bank and use their MIP - monthly investment plan. Like Gao Bohan says: split between equities and bonds.
I would add one note of caution: dollar cost averaging will not significantly reduce risk in purchasing stock in any particular company. Basically the idea is that you regularly invest, regardless of the cost of the investment, so that you are not betting all of your money at once at too high a price. Instead, you buy at whatever price, so that the purchase price of the investment is “averaged” over time. But if you’re focusing on a single company or a small set of companies, it doesn’t mean they’re going to succeed in the long run.
We’ve had this debate before, dollar cost averaging works wonders in a generally rising market like the last few years. Not all stock makets are the same. You hear this ‘stock markets rise over time’ used as a maxim. It’s not really true.
Maybe the Dow has risen over time, helped by massive financial engineering and big inflows of foreign investment, the Taiex and Chinese market certainly hasn’t.
Most places you look things seem over valued right now, especially property except where busts have already occurred a few years ago.
Here’s a story about not being able to see the future. A few years ago I worked for an over the counter traded medical company in Taipei. We got options on shares and I bought just 200,000 NTD shares as the finance manager said it was a good deal. Then sold them at a loss a few months later in disgust feeling like they took advantage of the employees to raise capital in a sagging market.
That company’s shares are now worth over ten times what I bought them for and the biggest riser in Taiwan last year! Nobody could have predicted this, even the management, nobody could know that Taiwanese investors would suddenly go mad about biotech stocks. They are going to get burned badly though.
It’s funny how it works, to make big money you have to buy the dogs of the market.
(and maybe even give some of it back to ya)