Connect with us

Business

Investment strategies for large sums of cash

Legacy Phuket Gazette

Published 

 on 

Investment strategies for large sums of cash | The Thaiger
  • follow us in feedly

PHUKET: Consider the following investing dilemma: You have recently received a large sum of money (from a pension payout, inheritance, the sale of property or a business) and you want to put this money to work for you. However, interest rates and returns on what are considered to be the safest investments (for example US and European bank deposits and government bonds) remain extremely low while the stock market is well into a bull market with many investments having already seen large gains. What should your investing strategy with this lump sum be?

Obviously, you would be afraid of investing all of the money into the stock market just before a 2008 style market meltdown or bear market. However, there are ways to manage both your fears and your money.

To begin with, you need to consider how big this lump sum is compared to the amount of money you have in the form of cash or other investments. A good rule of thumb is if the lump sum is less than 20 per cent of the value of your total cash and investment portfolio, you should likely invest the entire amount into your existing asset allocation as it won’t impact it that much.

If the lump sum is more than 20 per cent of this value, you will need to consider one of the following investing strategies:

1) Pick a long-term asset allocation and put the entire lump sum to work immediately. This makes the most sense from a historical and statistical prospective as over time, stock markets eventually recover from bear runs and move higher. However, you may not sleep well at night if you are an overly conservative investor. Likewise, this strategy may be better suited if you are a younger investor who plans to continue working for a number of years, than if you are an investor who is already retired and living on a fixed income.

2) Dollar cost average (DCA) a small amount periodically over a set period of time. The benefit of taking a DCA approach is that it can be easily automated. For example, you have received $250,000 and you invest $10,000 a month spread over the next 25 months. The DCA approach does tend to be more effective than a lump sum approach in a volatile market where prices are moving up and down. On the other hand, the slow and steady DCA approach in a raging bull market will have you missing out on large stock market returns.

3) Value averaging (VA). A variation on the DCA approach, a VA strategy involves investing more money when the stock market is down and less when it’s up. Studies have shown the VA approach to be more effective than the DCA approach over time. The big problem with this strategy is that you will need to be very disciplined and hands-on as it’s difficult to automate and it won’t work in a strong bull market where the market keeps heading higher.

4) Staggered lump sum investing. This would be another variation on the DCA approach, but only with a much larger sum. For example: Let’s say you have received $400,000. For the next four years, you decide to invest 25% of the original lump sum into the stock market at the end of every year with the next tranche being in CDs or bonds that come due right before its time to invest in the stock market again. Had you done this at the end of 2007, 2008, 2009 and 2010, the first tranche would have gotten hit hard by the financial meltdown, but the next two tranches would have been invested at very good prices.

Investing a lump sum may appear to be a daunting task, but it can be done with peace of mind that will help you sleep at night. The global markets are currently experiencing a correction or transition to a bear (down-trending) market. This is normal after the strong advance from the 2008 lows in the US market and six years of gains. Corrections and bear markets eventually run their course and turn into bull (up-trending) markets giving great buying opportunities. Now is the time to prepare a watch-list of leading stocks and sectors to buy once the new uptrend begins.

Don Freeman, BSME is president of Freeman Capital Management, a Registered Investment Advisor with the US Securities Exchange Commission (SEC), based in Phuket. He has over 15 years’ experience working with expatriates, specializing in portfolio management, US tax preparation, financial planning and UK pension transfers. Call for a free portfolio review. Don can be reached at 089-970-5795 or email: freemancapital@gmail.com.

— Don Freeman

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

Never miss out on future posts by following The Thaiger.

Click to comment

Leave a Reply

Your email address will not be published. Required fields are marked *

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

Business

Turbulence ahead for Thailand’s aviation industry | VIDEO

The Thaiger

Published

on

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.

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

Never miss out on future posts by following The Thaiger.

Continue Reading

Business

Domestic air passenger numbers double those of January

Maya Taylor

Published

on

Domestic air passenger numbers double those of January | The Thaiger
PHOTO: Vietjet

Passenger numbers on domestic flights within Thailand have doubled within a month, rising from 4,000 in January to over 10,000 this month. Having nearly recovered to pre-pandemic levels, domestic travel plummeted once more when Covid-19 resurfaced late last year.

Apirat Chaiwongnoi from the Department of Airports says 15 of Thailand’s 29 airports are now operating domestic flights, with more expected to follow. He believes the aviation sector will continue to recover further in the coming 6 months, bolstered by the national vaccine rollout.

Around 120 domestic flights a day are now operating, which is twice the number that were operating at the lowest point in the crisis. Prior to the resurgence of the virus in December, domestic passenger numbers had recovered to 30,000 – 40,000 a day, around 80% of pre-pandemic numbers.

The DoA says airports must continue to adhere to the Covid-19 hygiene measures put in place by the Health Ministry and the Civil Aviation Authority of Thailand.

SOURCE: Bangkok Post

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

Never miss out on future posts by following The Thaiger.

Continue Reading

Coronavirus (Covid-19)

Samut Sakhon’s shrimp market to remain closed until February 15

Avatar

Published

on

Samut Sakhon’s shrimp market to remain closed until February 15 | The Thaiger
PHOTO: Kom Chad Luek

Samut Sakhon’s Central Shrimp Market, the epicentre of Thailand’s recent wave of Covid-19, will remain closed until February 15. The market can reopen once the overall hygiene situation at the market and surrounding area has improved, according to the province’s disease control committee.

Local officials say the shrimp market needs to remain closed until the market structure and nearby residential facilities are inspected. People who violate the order face up to a year in prison and a fine up to 100,000 baht.

More than 12,000 people in the province have tested positive for Covid-19. The increasing number of infections is a result from the active case finding to contain the spread of the virus.

SOURCE: Thai PBS World | Thairath Online

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

Never miss out on future posts by following The Thaiger.

Continue Reading
Phuket Thai food treats you need to try | VIDEO | The Thaiger
Tourism3 days ago

Phuket Thai food treats you need to try | VIDEO

Thailand News Today | Bars, pubs and restaurants ‘sort of’ back to normal | Feb 23 | The Thaiger
Thailand3 days ago

Thailand News Today | Bars, pubs and restaurants ‘sort of’ back to normal | Feb 23

In search of Cat & Dog Cafés in Phuket Town | VIDEO | The Thaiger
Tourism3 days ago

In search of Cat & Dog Cafés in Phuket Town | VIDEO

Thailand News Today | Gambling crackdown, Seafood market to reopen, Vlogger challenge | Jan 21 | The Thaiger
Thailand1 month ago

Thailand News Today | Gambling crackdown, Seafood market to reopen, Vlogger challenge | Jan 21

Thailand News Today | Covid testing for visas, Business impact, Vaccine approval | January 19 | The Thaiger
Thailand1 month ago

Thailand News Today | Covid testing for visas, Business impact, Vaccine approval | January 19

Thailand News Today | Weekend Bangkok bombs, Thailand fires, Covid update | January 18 | The Thaiger
Thailand1 month ago

Thailand News Today | Weekend Bangkok bombs, Thailand fires, Covid update | January 18

Thailand News Today | Stray car on runway, Indonesian quake, 300 baht tourist fee | January 15 | The Thaiger
Thailand1 month ago

Thailand News Today | Stray car on runway, Indonesian quake, 300 baht tourist fee | January 15

Thailand News Today | Governor off respirator, sex-trafficking arrest, condo prices falling | January 14 | The Thaiger
Thailand1 month ago

Thailand News Today | Governor off respirator, sex-trafficking arrest, condo prices falling | January 14

Thailand News Today | Chinese vaccine, Thailand ‘drug hub’, Covid update | January 13 | The Thaiger
Thailand1 month ago

Thailand News Today | Chinese vaccine, Thailand ‘drug hub’, Covid update | January 13

Thailand News Today | Bangkok may ease restrictions, Phuket bar curfew, Vaccine roll out | January 12 | The Thaiger
Thailand1 month ago

Thailand News Today | Bangkok may ease restrictions, Phuket bar curfew, Vaccine roll out | January 12

Thailand News Today | Covid latest, Cockfights closed down, Bryde’s Whale beached | January 11 | The Thaiger
Thailand2 months ago

Thailand News Today | Covid latest, Cockfights closed down, Bryde’s Whale beached | January 11

Thailand News Today | Southern floods, Face mask fines, Thai Air Asia woes | January 8 | The Thaiger
Thailand2 months ago

Thailand News Today | Southern floods, Face mask fines, Thai Air Asia woes | January 8

Thailand News Today | 305 infections, No happy ending for massages, Phuket quarantine mooted | Jan 7 | The Thaiger
Thailand2 months ago

Thailand News Today | 305 infections, No happy ending for massages, Phuket quarantine mooted | Jan 7

Thailand News Today | 10,000 schools closed, 900 new migrant infections, Gambling crackdown | January 6 | The Thaiger
Thailand2 months ago

Thailand News Today | 10,000 schools closed, 900 new migrant infections, Gambling crackdown | January 6

Thailand News Today | PM reverses lockdown, Southern P.D.A. crackdown, Covid update | Jan 5 | The Thaiger
Thailand2 months ago

Thailand News Today | PM reverses lockdown, Southern P.D.A. crackdown, Covid update | Jan 5

Follow The Thaiger by email:

Trending