I'm 38 now. My income is not consistent, as it depends on how much I want to work, but I can earn monthly income if I don't take a break. My income is in a range between 500,000 and 650,000 baht annually. I also have combined annual income from dividends and interest of around 1.4 million baht. I'm free of debt, with only monthly parental expenses of 25,000 baht. They are quite old, so I think the medical expenses are my main challenge.
My personal expenses do not exceed 15,000 baht per month. I have health insurance covering 100% of expenses for myself and 50% for my parents. I have around 22 million baht in cash, stocks worth around 18 million, and 1.1 million baht in a property fund that invests in leasehold properties. I don't have any insurance policy in my portfolio.
I have planned to retire as early as 45, so mostly I'm focusing on investing in stocks as much as possible. I expect dividend income only, not capital gains. My target is to gain a return of around 5-7% per year by rolling over the dividend income to reinvest in good stocks to get more dividend income. I intend to do not touch the initial capital if not necessary; by doing so, I won't worry about whether the share prices rise or dive.
I'm only focusing on more investments in stocks, more dividend income, more reinvestment, and I aim to invest even further by using cash I have now if there is another economic crisis.
I want to spend some time travelling abroad once or twice a year until I get too old to travel. So, the only committed responsibility I will have in the long term is my parents, and a sister who is 54 now. I may never get married. I haven't thought about a plan for when I'm old yet.
How is my plan? Is there anything I should adjust?
_ Chang
ANSWERED BY... Vorapoj Katearam, CFP
Looking at your income, your salary is 500,000 to 650,000 baht per year and you have dividend income and interest from savings of 1.4 million, so your monthly income is around 160,000 baht average.
Expenses: Personal expenses are 15,000 baht monthly, parental expenses 25,000, total expenses around 40,000 baht per month.
Assets: Cash 22 million baht, stocks 18 million, property fund 1.1 million, for a total of 39.1 million baht.
You are clear of debt. You can save around 120,000 baht per month or around 1.44 million baht a year, so if you want to retire in the next seven years you will have more savings of around 10 million baht.
At 45, you will have around 50 million, if the assets can generate a return of 5% per year or an income of 2.5 million baht, and given your current expenses, I don't think you have anything to worry about. With this amount of money, I believe that you can travel and take care of your family.
One suggestion that I think you should consider is a health insurance policy for everyone in your family, because medical expenses are something you can't underestimate, especially private hospital charges which can be really expensive _ even a minor operation can cost you at least 100,000 baht.
I agree with you on investment in equities since you know quite well that it would increase your wealth along with the rising pace of inflation and could help sustain your wealth in long-term. But if you don't really understand stocks, I suggest you invest in equity funds; let the expert make the stock choices for you.
If in the future you are going to stay single, you may be concerned about who is going to take care of you when you get old. I don't think it is a really big concern. Currently there are a lot privately run seniors' nursing homes that provide good service. In any case it is not the time for you to worry about that yet, and you might get married next year, who knows?
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 wealthcare@bangkokpost.co.th or the TFPA webboard, www.tfpa.or.th