Retiring in Thailand (part 1)

For most people their first visit to Thailand is usually quickly followed by their second. Increasingly it is the retirement destination of choice for those of even modest means because of the quality of life Thailand affords. In the first of two articles on the subject, I would like to set out some thoughts on issues that should be considered to ensure a "shock-free" stay. Next month I will develop this with a detailed look at providing income from investments and protecting against the inflationary risk.
HEALTH
Contrary to popular belief the private healthcare available in Thailand is as good as that in most developed economies. It is essential though to keep in force good private medical insurance (PMI) such as that provided by BUPA Thailand so that the right care and treatment is available when needed without worry In addition to PMI which meets the cost of medical bills many clients also maintain critical illness insurance (CIC) This type of insurance will pay a lump sum on diagnosis of a range of illnesses and is often called "living insurance" because you do not have to die to get the payout. On diagnosis of cancer, stroke or a heart attack and many other major illnesses, where a long period of recuperation is envisaged the payout can alleviate financial problems and ensure the best possible aftercare. Some clients will choose to self insure and have the resources do this.
Property
For many ex-pats the key question is whether to commit to purchasing a property rather than rent. I personally have bought mainly because I hate investing in a bottomless pit like rent with no possible return. Even buying during the financial crisis in Thailand I turned a profit of 20% on the sale of my first property. Luckily every body has a different view but please consult a good local lawyer if you decide to buy.
MONEY
The most burning issue facing anyone in retirement is cash. When you choose to retire abroad though this becomes more complex because of the currency miss-match between income and expenditure. Most of my clients are reluctant to commit significant funds to a Thai bank because of the perceived risk and past experience. The currency devaluation in 1997 would have notionally cost US$ investors some 40% although this would have been offset to some extent by high interest rates at the time (14-15%). It is certainly a difficult question for an advisor whose training is centered around reducing risk, not increasing exposure by recommending investing in one currency whilst a client is spending in another. The answer of course is that a balanced portfolio is the right approach with sufficient assets held in Baht to meet immediate income needs over several months without recourse to offshore investments when the exchange rate may be unfavourable. One of the difficult decisions remains, which non Thai currency do you use for these investments? This decision will be influenced by many factors such as the asset class to be held, (cash, bonds or equities) or the investor protection afforded by the regulatory regime where investments are domiciled Usually the choice is myriad and as I said we will consider this question in more detail next month.
TAXATION
Taxation could of course be an issue although the impact can be negligible if investments are structured correctly in the first instance. Remember you may want to return to your original country five years down the line so it is vital to structure your portfolio with this possibility in mind and to minimize your tax liability in your home country on return.
In any event the "tax-tail" should never wag the "Investment dog"; too many clients in the past have held securities they should have sold just to avoid capital taxes in their country of domicile.