Pay cuts and nest eggs, Investing offshore, Estate fights

I would appreciate it if you could answer a few questions. I've been earning a hefty salary (30% tax bracket) for many years, but will soon leave my full-time job for an uncertain future, perhaps supported by a few lower-paid temporary jobs. I've been investing regularly every year in RMFs, LTFs, and tax-deductible insurance (100,000 baht) as well as an annuity (200,000 baht).

With my income dipping this year, which of these products should I reduce investment in for tax purposes? I suspect RMF & LTF contributions could be cut, but should I continue to contribute the full amount for the insurance products (100,000 and 200,000 baht, respectively)? Thanks in advance for your feedback.

_ A

ANSWERED BY... Teera Phutrakul, CFP, Chairman, TFPA Coming off the gravy train is never easy, so the key benchmark to watch out for is 55 years of age. By law, if you retire before 55, your employer cannot grant you early retirement status and your provident fund and RMF lump sum shall not be tax-exempt. Contributions into RMFs and LTFs are tax deductible up to a maximum of 15% of gross income or 500,000 baht, whichever is lower.

Depending on your revised cash flow, I would continue to utilise the tax benefits of both these funds at the level you find affordable until 55, when you can withdraw the whole lump sum without paying any taxes. The minimum investment in these funds can be as low as 5,000 baht per year.

As for your insurance and annuity premiums, you need to look at the cash value and the terms and conditions in the policies carefully to see whether you can reduce the premium payments to a level you can afford.

It is also worth remembering that the biggest mistake of early retirees is to invest too conservatively too soon. Many people feel they must get rid of their stocks once they retire. But quite to the contrary, an aggressive portfolio mix will deliver the best returns over time. Over 30 years, the difference between a 7% annual return typical from a bond fund and the 10% rate of return that might be expected from a stock fund is significant.

A 400,000-baht investment in a bond fund producing 7% average annual returns would grow to 3 million over 30 years, or from age 55 to 85. But an equity fund with a 10% average annual return would leave the investor with 7 million baht.

I have a couple of questions. I am a US citizen with an account here in Thailand and would like to invest in US index funds or exchange-traded funds (ETFs) with the Vanguard group. How can I do that and which Thai broker should I use? Also, can I buy individual US stocks? Thanks.

_ Ted Honghirun

ANSWERED BY... Teera Phutrakul, CFP, Chairman, TFPA Many local brokers now offer offshore execution capabilities. There are 12 in all if I remember correctly; AIRA, Phillip and UOB are just a few. They can execute trades for both individual stocks and ETFs listed on major stock exchanges around the world. But being a US citizen you are still subject to US taxes.

Personally, I like ETFs too. They are cheap and cheerful with liquidity to boot. They have many investment applications. ETFs on broad-based indices can serve as diversified core holdings, while style and sector ETFs can be used to fill in parts of a portfolio or for tactical strategies.

Although most ETFs are passively managed portfolios designed to provide relatively low-cost investments in broad-based or proprietary indices, for those investors who would like a more active approach, a core-satellite investment strategy may be appropriate.

Core holdings can help ensure a portfolio's performance does not deviate widely from established benchmarks, while satellite ETF investments such as sectors, styles, industries, regions or countries constitute active plays in an effort to increase returns. Nowadays there is a wide range of ETFs that can serve as the building blocks to gain exposure to underrepresented sectors in a portfolio.

Last month, my sister passed away at age 36. She was a civil servant and single. She invested in many funds and keeping track of them looked complicated to us, so we decided to have an attorney take care of this by appointing my father the executor for her estate.

My father sent a document to request her provident fund monies from her office. However, the comptroller rejected my father's letter, saying her estate must be divided among her two heirs' accounts: her father and mother. But my mother is not in any condition to go out anywhere.

My question is, why was a court-approved executor's letter rejected? I tried to explain the situation to the comptroller's office, but they insisted my father is not allowed to access the money alone, even though our family all agreed to have him as the executor.

_ Natthapol

ANSWERED BY... Teera Phutrakul, CFP, Chairman, TFPA I think the Comptroller General's Department must have its reasons. This is something only it can answer. As a court-appointed executor of your sister's estate, your father must have already gone through the whole probate process and I'm assuming no one came forward to contest it. I am surprised the department is willing to go against a court order. As a last resort you could always sue the department, but consult with your lawyer first on whether it is a wise move.

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 to them through or posted at the TFPA web board at

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Writer: Thai Financial Planners Association