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Be on the lookout for dubious investments

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PHUKET: Many readers responded to the recent article “Retirement is all about safety first” (story here). Many could relate to the common pitfalls that expats have discovered in Thailand. While investing in a bar or restaurant is typically a losing proposition, at least the foreigner would still have a place to eat and drink.

Where things take a really ugly turn is when retirees get burned on insurance-linked investment sales products and bad investments. Last week a reader reported the latest scandal involving the LM First Mortgage Income Fund and the LM Managed Performance Fund. Investors were told their investments were secure and backed by mortgages on Australian real estate. Investors got returns that were slightly above market rates and appealed to retirees looking for a steady income in retirement.

Now LM Investment Management has collapsed. What’s most alarming is that the agents who sold these investments have earned their commissions and moved on. Those who invested in the fund are left wondering what to do. What was pitched as a safe investment has turned into a nightmare. One caller said that the unit-linked life assurance company (Friends Provident), which was involved in selling the fraudulent fund, is still charging him 1.5% on his original investment, which is now worth nothing.

What happened was that the sales agents for LM Investment Management were paid up front commissions to get clients – typically 5-9% of the amount invested. There was quite a bit of incentive to tell clients whatever they needed to hear to get them to invest. And what was pitched is what investors all want to hear – steady appreciation, safety, regular payouts and so on.

As a matter of fact, no one can guarantee that. There is no guaranteed investment. The stock market goes up and down. The best an investor can do is diversify and buy quality stocks and Exchange-Traded Funds (ETFs) that trade on the US New York Stock Exchange (NYSE) or Nasdaq; that are regulated by the Securities and Exchange Commission; and that have a long-term outlook.

One good recommendation is Vanguard. Vanguard is the world’s largest fund company, with about US$2.4 trillion invested in the US across more than 170 different funds.

One Vanguard fund of particular note is the Vanguard REIT ETF. This fund invests in US real estate investment trusts that own office buildings, hotels and other properties.

The Vanguard REIT ETF was formed in 2004 and today has US$44.1 billion (1.4 trillion baht) in assets. If US$10k (319k baht) were invested at inception in 2004, you would have US$23,978 (765,857 baht) today – that’s an annual return of 9.29% over the past 10 years. Currently, this fund pays a dividend of 3.7%. At the time this article went to print, no Vanguard fund in the past 10 years had gone bust.

Vanguard has 123 mutual funds and 52 diversified ETFs as of August 2014. All their funds trade on the NYSE or Nasdaq and the mutual funds are open-ended regulated by the US Investment Act of 1940.

The only risk to investing in Vanguard is normal market fluctuations. Can an investment lose value? Of course it can. Back in 2008 during the financial crisis, US$10k invested in 2004 was down to US$6,114.07 (195,283 baht). Had an investor ridden the downturn and held on, the stock would be worth almost US$24k (766,560 baht) today. That’s the nature of capitalism and markets.

The key is to invest money not needed tomorrow. Investors need to have seven to 10 years to invest appropriately in the stock market. If an investor does not have this length of time to commit to an investment, then the stock market probably isn’t for him.

Don Freeman is president of Freeman Capital Management, a Registered Investment Adviser with the US Securities Exchange Commission (SEC), based in Thailand. He has over 15 years experience and provides personal financial planning and wealth management to expatriates. Specializing in UK and US pension transfers. Call 089-970 5795 or email: freemancapital@gmail.com.

— Don Freeman

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Archiving articles from the Phuket Gazette circa 1998 - 2017. View the Phuket Gazette online archive and Digital Gazette PDF Prints.

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Governments & old media versus social media – who will win? | VIDEO

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Governments & old media versus social media – who will win? | VIDEO | The Thaiger

We look at the recent changes made by the Australian and Indian governments to except control over the world’s biggest social media platforms. India has issued strict new rules for Facebook, Twitter and other social media platforms just weeks after the Indian government attempted to pressure Twitter to take down social media accounts it deemed, well, anti social. There is now an open battle between the rise of social media platforms and the governments and ‘old’ media that have been able to maintain a certain level of control over the ‘message’ for the last century. Who will win?

The rules require any social media company to create three roles within India… a “compliance officer” who ensures they follow local laws; a “grievance officer” who addresses complaints from Indian social media users; and a “contact person” who can actually be contacted by lawyers and other aggrieved Indian parties… 24/7.

The democratisation of the news model, with social media as its catalyst, will continue to baffle traditional media and governments who used to enjoy a level of control over what stories get told. The battles of Google and Facebook, with the governments of India and Australia will be followed in plenty of other countries as well.

At the root of all discussions will be the difference between what governments THINK social media is all about and the reality about how quickly the media landscape has changed. You’ll get to read about it first, on a social media platform… probably on the screen you’re watching this news story right now.

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The social media giants in battle with ‘old’ media and world governments | VIDEO

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The social media giants in battle with ‘old’ media and world governments | VIDEO | The Thaiger

“The rules signal greater willingness by countries around the world to rein in big tech firms such as Google, Facebook and Twitter that the governments fear have become too powerful with little accountability.”

India has issued strict new rules for Facebook, Twitter and other social media platforms just weeks after the Indian government attempted to pressure Twitter to take down social media accounts it deemed, well, anti social.

The rules require any social media company to create three roles within India… a “compliance officer” who ensures they follow local laws; a “grievance officer” who addresses complaints from Indian social media users; and a “contact person” who can actually be contacted by lawyers and other aggrieved Indian parties… 24/7.

The companies are also being made to publish a compliance report each month with details about how many complaints they’ve received and the action they took.

They’ll also be required to remove ‘some’ types of content including “full or partial nudity,” any “sexual act” or “impersonations including morphed images”

The democratisation of the news model, with social media as its catalyst, will continue to baffle traditional media and governments who used to enjoy a level of control over what stories get told.

The battles of Google and Facebook, with the governments of India and Australia will be followed in plenty of other countries as well.

At the root of all discussions will be the difference between what governments THINK social media is all about and the reality about how quickly the media landscape has changed. You’ll get to read about it first, on a social media platform… probably on the screen you’re watching this news story right now.

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Turbulence ahead for Thailand’s aviation industry | VIDEO

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Turbulence ahead for Thailand’s aviation industry | VIDEO | The Thaiger

When the airlines, in particular, were asking the government to put their hands in their pockets for some relief funding in August last year, it was genuinely thought that international tourists would be coming back for the high season in December and January. At the very least local tourists and expats would head back to the skies over the traditional holiday break. And surely the Chinese would be back for Chinese New Year?

As we know now, none of that happened. A resurge in cases started just south of Bangkok on December 20 last year, just before Christmas, kicking off another round of restrictions, pretty much killing off any possibility of a high season ‘bump’ for the tourist industry. Airlines slashed flights from their schedule, and hotels, which had dusted off their reception desks for the surge of tourists, shut their doors again.

Domestically, the hotel business saw 6 million room nights in the government’s latest stimulus campaign fully redeemed. But the air ticket quota of 2 million seats still has over 1.3 million seats unused. Local tourists mostly skipped flights and opted for destinations within driving distance of their homes.

As for international tourism… well that still seems months or years away, even now.

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