Tag Archives: personal finance

Eight Percent of Zero

With Chiang Mai’s beautiful but very short “winter” now behind us, it means temperatures begin climbing, skies get hazy due to inversion layers that occur during the hot and dry season and many expats begin their annual bitchfest known as “The Burning Season” all over social media. For us it means the end of day tripping and a short break before a one week beach vacation at a moderately priced Koh Lanta resort. After that we return home for a week and then hit the road for four weeks for a month-long escape from the bad air. Given Thailand’s low-cost of living, we’re running about $3,500 under our annual fiscal year budget so it’s affordable to overlap monthly rent if we stay away from the more popular Andaman Sea beach destinations where everyone else goes. Searching for a more low-key area still far enough south to escape the haze, we found a three bedroom house for rent on Airbnb at a ridiculously low rate of about $21 USD per day in a sleepy beach community half way between Hua HIn and the gateway town of Chumphon. Planning on driving, we’ll be able to cart more stuff than flying and see a bit of the country as well.

So for now, let’s talk finances. Depending on your situation, some of you may have noticed the one and only positive aspect of the  Trump Disaster is a rather fast rise of the stock market. Simply put, Wall Street loves billionaires and while very few of his moron supporters will ever see one penny since they’re mostly financially ignorant, underemployed and too stupid to understand why trickle down economics always fails miserably, those of us in the “sweet spot” (invested properly but not wealthy) are doing well. Finally seeing an enormous albeit very short correction that brought the markets down to earth last week, I thought I’d post a follow-up to my recent financial comments.

Having received an unexpected amount of positive feedback when I briefly touched on asset allocation and diversification, let’s get the disclaimers out-of-the-way. Most importantly, I am not a licensed professional and nothing I say should be taken as a solicitation or endorsement of any financial products. But I did spend 32 years working in various administrative and support roles for some very well-respected financial institutions in New York City and San Francisco. Not intending to make this an economics lesson or online college class, I’ll keep the teaching down and include an educational link when I use financial terminology. With lots of great blogs focusing on how to retire early, not that many focus on what to do once you’re there so I’ll give it a shot. While never wanting to manage anyone else’s money, I’ve been a “self-directed investor” for over 20 years and that’s enough time to analyze all the graphs and after almost three years of early retirement, I can say we’re ahead of the curve so if you don’t mind some boring graphs to make my points, read on. Please also note that since we’re both American citizens, some strategies I discuss only apply to U.S. residents but the concepts are universal and can be applied from almost anywhere.

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Risky Business

Deciding not work anymore sounds great to many people, especially when you’re fifteen years away from the “standard” retirement age. But as the saying goes “it’s all fun and games until someone loses an eye”. Never before in modern economic times has it been riskier to end your income stream and that weighs on me every day. Having been extremely lucky twice, Diane and I bought and sold two houses in totally different markets and came out ahead in both cases. Allowing us to put a large down payment on our California house at a time when nobody was buying, we sold our Canadian house four months before the market peaked and then negotiated a purchase price one year later well below asking price in 2008 when sellers were desperate. Amazingly, after a 30% decline in our home’s value, Bay Area home prices rebounded quickly allowing us to sell last year at a 12.5% premium over asking price. Fast forward 14 months and here we are living mostly from that sale for as many years as it lasts.

ringgetBut all good things come to an end and although timing is everything in life, sometimes life throws you a curveball when you’re expecting a slider. With North American interest rates at all time lows and not expected to rebound to anything meaningful in my lifetime thanks to 40 years of horrible government policies worldwide, it’s been comforting seeing our MM2H Fixed Deposit accruing interest at 3.3% annually. For those unfamiliar with the program, the ministry requires participants of the Malaysia My Second Home Program (MM2H) to place a fixed deposit of 150,000 Ringgit in a Malaysian bank and maintain it while on the program. Most banks issue two separate deposits of 100,000 and 50,000 each with one year maturities and interest can be either paid as a cash dividend to a local checking account or reinvested as part of the principal. Unfortunately, the ministry prefers (decrees, actually) that fixed deposits must be set up with twelve month maturities and renewed at prevailing interest rates. Unexpectedly, Bank Negara (Malaysia’s central bank) recently cut nominal interest rates despite never ending claims about having the strongest economy in Southeast Asia and the move adversely affects interest starved citizens of western nations.

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