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Finance: Cashing in on retirement

Legacy Phuket Gazette

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Finance: Cashing in on retirement | The Thaiger

PHUKET: Generating an income in retirement beyond any pension or government-sponsored retirement plan has become much harder in today’s low-interest-rate environment. The income from defined pensions and even retirement benefits from government-sponsored plans are no longer a sure thing.

However, there are strategies that help to maximize income during retirement:

Dividend-paying stocks or exchange-traded funds (ETFs)

Dividend paying stocks are the best way to generate income in retirement, but picking the right stocks can be tricky. It is ideal to avoid those with the highest yields or any stock with uncertain cash flows or profits. Instead, look for well-managed, profitable companies in stable industries that also have good balance sheets and are seeing at least modest or steady growth.

With that in mind, there should be no shortage of consumer stocks, utilities, real-estate investment trusts (REITs) and master limited partnerships – usually oil or gas pipelines – with reasonable yields from 2% to 5%, but be sure to check payout ratios, as anything over 100% is not going to be sustainable in the long term. If the risk associated with picking and owning individual stocks is a turnoff, then ETFs that invest in sectors where dividends tend to be high can be a good alternative.

Fixed-income investments

Individual bonds held to maturity are a good way to receive a guaranteed stream of income – unless the bond issuer goes bankrupt. For that reason, avoid so-called ‘junk bonds’ with high yields, and be careful about investing in individual municipal bonds as municipalities and cities can, and do go, bankrupt (think Detroit).

Just remember that when interest rates rise, bond values fall, but bond values rise when rates fall.
In addition, and when investing in individual bonds, be sure to ‘ladder’ the maturities: for example – six months, one year, two years, five years, 10 years and so on – so that everything does not come due at once when interest rates are super low, like right now. Also, investing in low-cost bond ETFs can limit the risks associated with owning individual bonds.

Cash in term deposits or money market accounts

Setting aside a couple years worth of cash in CDs or term deposits and money market accounts is always a good idea. While the funds themselves will not generate much interest right now, money can still be drawn to supplement income from other sources as needed, and can be used in case of an emergency or to invest when interest rates start rising again.

As with individual bonds, try to ladder the maturities of CDs/term deposits to avoid all deposits coming due at the same time.

Annuities

Generally, annuities are a bad idea for most investors and retirees because they often come with unnecessarily high annual expenses that reward Wall Street, and high commissions that reward the financial adviser who sells them to you.

That said, having an annuity generating some guaranteed income to cover fixed expenses during retirement could make sense in some situations – but be sure to read the fine print and fully understand what is being offered.

Limit-investment expenses

A good indirect way to earn additional income in retirement is to limit the investment fees paid in the form of high commissions or annual expenses on fund products by choosing individual stocks, individual bonds and/or ETFs with low expenses and commissions.

Cut back on expenses and debt

Another indirect way to boost retirement income is to simply spend less money during retirement. Also, it is prudent to pay off any debt before entering retirement and to not take on any new debt so that interest payments will not take a bite out of income or savings.

In other words, take a reality check about the life to be lived in retirement and decide what is essential and what is not affordable.

Don Freeman is president of Freeman Capital Management, a Registered Investment Advisor with the US Securities Exchange Commission (SEC), based in Phuket, Thailand. He has more than 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.

Keep in contact with The Thaiger by following our Facebook page.

Never miss out on future posts by following The Thaiger.

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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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