Workshop participants are invited to form groups to imagine leaving Singapore for greener pastures. As part of the exercise, each group of students will elect a target country. Students will then try to dig out economic data on the target country, make broad estimates on how much it would cost to live in that country and estimate how large a Singapore portfolio should be to generate passive income required to retire there. They will subjectively assess which part of the market cycle the country is in and then they will do some research on what kind of instruments in SGX will allow some proxy bets on that economy. Finally, they will also have to defend an asset allocation in the target economy should they wish to invest in that local market.
After populating the spreadsheet with figures they collected. I asked the class to vote for which country they would like to emigrate to the most after this discussion.
For this batch of students, Thailand won by a huge margin.
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| Melbourne | Thailand | Malaysia | Beijing | |
| Median Income | $6,666/month | $378/month | $720/month | $1106/month |
| Median Expense | $2,800/month | $306/month | $679/month | $858/month |
| Portfolio size to retire | $850,000 | $92,000 | $203,700 | $257,400 |
| GDP Growth | 3.40% | 4.60% | 4.20% | 6.70% |
| Inflation | 2.10% | 1.62% | 3.17% | 2.30% |
| Unemployment | 5.20% | 1% | 3.42% | 3.83% |
| Business Cycle | Peak/Contraction | Expansion/Peak | Peak | Contraction |
| 20 year Bond Earnings Yield | 3.00% | 3.32% | 4.70% | N/A |
| Market Earnings Yield | 2.87% | 5.76% | 6.23% | N/A |
| P/E Approach | 17 | 17.36111111 | 16.06 | 13 |
| Asset Allocation Plan (E/B/Cash/ Com) | 60/20/10/10 | 60/20/10/10 | 30/60/0/10 | 80/20 |
| Proxy Stocks in SGX | Singtel, | Thai Beverage, King Wan, Keppel Land | Dairy Farm, Silverlake, Top Glove | CMT, Mapletree North Asia. |
| Proxy ETF | Philip AP Div ETF | Thai Index UCITS | Malaysia ETF | CSI 300 |
| Votes | 6 | 12 | 9 | 1 |
I guess I will never really understand why the class still went ahead with choosing Thailand.
I warned them that national figures may not truly reflect how much a Singaporean Expat would need to live in a place like Bangkok and there are issues like law and order that need to be factored into when choosing to live in a new country.
Nevertheless this was the choice of the students after a lively discussion on whether the numbers made any sense. China, surprising, was found to be unattractive by my students.
Perhaps they found a Communist regime stifling.
If you were given these four choices, which country would you go to ?
In Thailand the average wage is much higher than that, around 14,000 Baht/month or about $600.
ReplyDeletehttps://tradingeconomics.com/thailand/wages
Attempting to live on the monthly expenses you state would be essentially subsisting in a windowless rabbit hutch room, living on noodle soup.
At least $1,000 / month is necessary to have a decent standard of living for a single person, rising to $1,500 for a couple.
Thanks for the input.
ReplyDeleteWe did accept that the numbers dont seem right when we fetched it from the web.