Another meandering tale, some of which is based on real events, hopefully of use to some.
Several years ago I chose to try and work in tier 1 and 2 IS rather than join my former classmates working for an oil or pharma company. Part of my decision was that I thought I had a realistic model where teaching in IS worked out more lucrative overall than a career in engineering.
How an IS teacher can ‘earn’ 300K (US) a year:
So this is a 12 year plan based on gaining better conditions (with experience) in international schools, purchasing three buy to let (rental) properties and including free tuition and increase in asset values as ‘earnings’ to reach the headline figure. I am assuming any financial crisis during the next 12 years would eventually be countered by some form of quantitative easing (i.e. printing money) as happened after 2007/2008 which would mean house prices (or stock markets) are re-inflated.
Years 1-5 – developing saving habits and purchasing your first buy to let (rental) investment
In your first year as an IS teacher you need to (i) begin to develop good saving habits and (ii) make sure you have a credit card back home (in the UK/USA etc) which you use and pay off regularly. Many (though not all) popular IS destinations offer far better saving potential than back home. One key saving is not running a car, I strongly recommend you don’t unless you really need to. Also try eating in with friends or eating at local restaurants for most meals outside of school. If you want western food have McDonalds every now and then and keep fancy western restaurants and cocktails as a treat. Apart from the annual trip home to see family you should travel regionally (i.e. China to the Phillipines) and book your flights and hotel well in advance. Torrent sites mean you can download most movies, TV shows and ebooks for free (the FBI are not going to chase you to China), just buy the occasional book or movie ticket.
Your aim is to save US $20 000 a year, though this plan should still work as long as you consistently save US $15 000. Once you have a savings habit you should find it doesn’t hinder you quality of life, you may even feel more content at the end of each month with more money in the bank.
By year 5 you should have saved US $100 000 (or at least US $80 000), this is the deposit for your first buy to let (rental) investment. As long as you have been regularly using and paying off your credit card from back home (and maintained a general bank account back home as well) then your Experian.com credit score should comfortably be good enough to get financing. There are multiple specialist agencies and lenders that offer expat mortgages and you CAN get financing. Your buy to let (rental) investment should be one that will rent easily (near a working population of 20 000 or more, close to local amenities, good transport connections, 2 or 3 bedrooms) and with a deposit of US $100 000 you should be able to buy a property worth US $400 000. It’s a fair amount of paperwork but very much worth your time. If you like the 80/20 model then your time spent managing savings and buying a property definitely falls in the 20% section.
Note: While property prices can be volatile rental rates are fairly consistent and usually creep up around 4-5% a year. So as long as you are using the rent to cover the mortgage with some positive cash flow then you don’t need to worry too much about short term fluctuations in the property value.
Years 6-9: Better conditions, second income stream and second property purchase.
By the start of your sixth year you should be earning a bit more due to extra experience, better paying school and/or perhaps a promotion of some sort. Also if you have five years IS experience, are in your second (or third) year at your current IS and you are well on top of your classes you may be able to develop a second income stream. One straightforward and above board approach is to become an IB Examiner, which will top up your savings a bit. Another potentially more lucrative area is tutoring. I began tutoring in my fifth year in international education and earned/saved an extra US $15 000 a year for three years. I gave it up in my eighth year as it means working more evenings and weekends and I had got what was needed from it.
Your aim is to save another US $80 000 to US $100 000 (in today’s money) and purchase another buy to let property valued at US $350 000 to US $400 000. Again regular saving needn’t feel like a huge sacrifice because many IS offer very good saving potential through some fairly simple lifestyle choices. You should be an accomplished saver by now and your self discipline in this area may help in other areas. Having already purchased one investment property then you should find getting financing and buying the second one somewhat easier. You should be able to use the same lender and the paperwork requirement will be the same or lower then the first purchase.
Years 10-12: top level conditions and third (and final) buy to let/rental property.
Going into your tenth year at an IS if you have done your job well and not been unluckly with line managers you should find your pay and conditions again somewhat improved with a good benefits package that covers a spouse and 2 dependents.
The final push is to keep saving US $20 000 (in today’s money) and get ready to buy your third investment property. For this one you only need to save half a deposit because the other half should come from remortgaging the first property which has now appreciated somewhat over 7-8 years. The 30 year and 99 year UK/USA average for property increase is around 5-6% so if the first property was brought for US $350 000 then 7 years later it should be worth US $500 000. So you can remortgage it and release significant equity. Also if the initial rent was US $1500 a month it should now be around US $2 000 a month – so some of the rental income can go towards your third (and final) deposit.
Where you stand after 12 years:
Teaching Package (step 10-12 plus one management allowance)
Base Salary+Bonus: US $55 000 gross = US $38 000 net.
Accommodation Allowance: US $15 000 / yr net.
Free Tuition for 2 dependents: Value of US $ 40 000 /yr net.
Other Benefits combined (Flights/Insurance/Allowances): US $12 000 (net)
Total net ‘equivalent income’: US $105 000.
Your 3 investment Properties worth $400 000 each (in today’s money) give you property investments worth US $1 200 000 (of which you own around 350 000 and the bank 850 000) these collectively should appreciate by about US $70 000 a year gross or US $50 000 net once you have paid capital gains tax (if/when you sell). Your rental ‘income’ should also be around $70 000 a year gross or US $55 000 a year net. So your total net gain in assets and rental income is US $105 000 a year.
Total net ‘income’ from package (105 000) and investments (105 000) is then 210 000. Any online salary calculator should tell you that a US$300 000 gross package gives you around US$210 000 net.
Once you reach this point, hopefully after a 12 year global adventure following some basic lifestyle guidelines, then you probably can scale back on savings and enjoy the fruits of your labor. A fourth investment property would, in the UK, push you into the 40% tax bracket on your rental income.
Mini FAQ:
The model is flawed as you assume 5-6% house price increase and 4-5% rental increase
Every year centre left and centre right governments print lots of money, inflation is really just another form of tax and in life taxes are certain. Centre right governments also have additional policies which are friendly towards stock market prices and house prices. Centre left governments print even more money to invest in schools and hospitals which in the long run causes more inflation. Governments tend to want house prices to slowly rise due to the ‘wealth affect’ and do not want large falls in house values. Young people unable to buy a home (or use their parents money to buy) are only 10-15% of the electorate. Also both centre left and centre right think tanks accept that immigration is a net benefit to an economy. So as long as young people from around the world want to go to college (or work) in the UK or USA and some of them stay then there will be a steady increase in population.
You can’t count free tuition, increase in house prices and rent as ‘income’.
If your kids can go to a very good school which would normally charge US $20 000 (or more) a year from your net income then you could consider that a benefit of equivalent value. Businesses certainly do when advertising a 'package. If you own a house that increases 50 000 then if you sell it you can pocket 40 000. If someone else is paying US $1500 a month towards a mortgage of a property in your name then that is US$1500 that you don’t have to pay. The UK government last year changed it’s stance to consider rent to landlords as personal income.
It’s all a bit ‘evil’ – guardian readers wont’ like it.
If you can’t beat’em join’em. Also by increasing your worth you are going to pay significantly more tax, some of which will be used for good causes. Money you send home from abroad will ‘flow’ around your home country, so each US$100 you send home is worth US$400-$500 to the local economy. Being financially independent will mean you pay into the system not take money from it and may mean you don’t have to teach rich kids for the rest of your career. Later on you could teach in an inner city school or a school for children with learning disabilities, giving it your best shot knowing you don’t really need the money. Alternately if you are a manager you can try to take a positive approach again knowing that you don’t really need the extra money.
You can’t work abroad and buy a property back home.
Yes you can.
Managing savings and buying properties sounds like quite a lot of work and 12 years feels like a long time away – is there a plan B?
Yes –marry another IS teacher.
Definitely not a plan B – signing up for a plan with an international expat pension or life assurance provider which gives you a glossy brochure showing middle aged or retired people on a boat or beach is definitely NOT a good idea. These guys chop 1-2% a year off your hard earned savings which devastates the long term value of your savings/retirement fund.
What about Index funds – I am coming at this from a UK/personal perspective and have gone down the route of buy to let (rental) investments. Index funds in a low cost low tax scheme may also work.
What about money in high interest accounts – Getting 5% from a cash account means 4% after tax which means your savings are only matching inflation.
This is really a general investment plan, not specific to IS teachers.
IS teachers regularly are able to save US$15 000 – US$ 20 000 a year. People working back home regularly are able to save US $ 0 a year (though they usually do get a pension).
Have you followed this plan yourself?
No – I didn’t really save the first 4 years but then matured/wised up a bit and in my 13th year teaching am in year 10 of this plan. What’s above is a best case scenario.
What about age?
The younger you start the better – this cannot be overstated. However a 12 year plan should still be achievable starting at age 50.
Any further reading?
You could try Rich Dad Poor Dad (the poor dad is ironically a teacher), The Barefoot Investor or similar books . The millionair next door is also worth a look. You should also read up on tax law in your home country.
Should I take financial advice from forum posts?
Probably not – but you could use it as a starting point for further reading.
2nd tale - How IS teachers can earn 300K a year.
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mathphyschap
- Posts: 17
- Joined: Wed Oct 28, 2015 3:58 am
Response
Your model is just a property/real estate pitch with IE. Take out the IE and its the same for DE, or take out education altogether and its the same pitch in any industry. Save money from your daily grind job and by real estate, then rent it.
1) Yeah you really are making a huge assumption in the value of real estate, its nothing you dont hear at weekend seminars on "getting rich". They work great as long as property valuations keep rising and there is a high demand in the rental market, but commercial builders have diversification of large portfolios of property to protect them. The casual renter doesnt, unless their property is in a high end vacation spot (like Hawaii), there are tons of time share purchasing companies that will happily give you top dollar if your in one of those regions. The reality is that bubbles form and burst and the only people who do well are the flippers who can buy low, renovate, and sell high, amplifying the value of construction. 4%-6% is just speculation, its no better than a "system" at the casino, or a hot tip on a horse.
2) You cant count tuition, most ITs would enroll their children in free public education. They may get a benefit in having a better (debatable) education for their children but its not realized cash value.
3) All warm feelings aside I could care less about stimulating my regional or local economy back home. You can donate the same USD$100 or GBP£100 to a charity and feel good about yourself as well, and not pay the cost of the bank wire or other cost.
4) I agree you can buy a property from abroad.
5) Marrying another IT is a very good plan, your more competitive and you have realizations of saving potential, at least until you have kids.
6) Yes there are pension and retirement plans and portfolios with high fees that only make bankers richer. There is no need to pay 2% or even 1% there are plenty of no fee/no load retirement plans that are based on large portfolios/indexs of stocks/bonds. Vanguard offers several depending on your risk profile.
7) I dont know of any high interest accounts that are earning 5%, maybe 4%, sure its less its a lot less risky and high maintenance than managing rental properties or going into the real estate business.
8) SOME ITs can save USD$15K-USD$20K, thats not everyone and its not even most. There are a lot of ITs in regions like LCSA that have salaries that are at your earning potential. They would have to save everything. There are also a lot of ISs in WE that are getting by but they dont save that kind of coin, the same is true in Asia, etc.
If you want a decent return on your investment create an investment portfolio of currency, bonds, and stocks, and you dont have to worry about renters, upkeep, damage, etc. Your plan is basically live like a poor hermit for 12 years, you can do better or just as well staying in DE at home and do the same thing. Whats the joy in going to a foreign country just to work and go home, so that you can rent property. If you want to get rich go to the ME and work for Aramco or BAE or a company IS, where all you can do is work and go home.
If someone REALLY wanted to use IE as a means of getting rich than
1) Marry another IT, make current spouse an IT.
2) Go to work in the ME, seriously cant be stated enough. Aramco/BAE/Swiss you can make 6 figures as a couple without much effort in a region with few temptations and really generous OSH packages.
3) Buy property BUT dont rent it, thats kids play. Buy your property somewhere youd really like to live.
4) Convert the property into an ES/CS (English School/Cram School). Hire some native English speakers with appropriate degrees as LHs and someone with some teaching/managing experience to manage it.
You amplify your revenue streams the higher up the business complexity you go.
1) Yeah you really are making a huge assumption in the value of real estate, its nothing you dont hear at weekend seminars on "getting rich". They work great as long as property valuations keep rising and there is a high demand in the rental market, but commercial builders have diversification of large portfolios of property to protect them. The casual renter doesnt, unless their property is in a high end vacation spot (like Hawaii), there are tons of time share purchasing companies that will happily give you top dollar if your in one of those regions. The reality is that bubbles form and burst and the only people who do well are the flippers who can buy low, renovate, and sell high, amplifying the value of construction. 4%-6% is just speculation, its no better than a "system" at the casino, or a hot tip on a horse.
2) You cant count tuition, most ITs would enroll their children in free public education. They may get a benefit in having a better (debatable) education for their children but its not realized cash value.
3) All warm feelings aside I could care less about stimulating my regional or local economy back home. You can donate the same USD$100 or GBP£100 to a charity and feel good about yourself as well, and not pay the cost of the bank wire or other cost.
4) I agree you can buy a property from abroad.
5) Marrying another IT is a very good plan, your more competitive and you have realizations of saving potential, at least until you have kids.
6) Yes there are pension and retirement plans and portfolios with high fees that only make bankers richer. There is no need to pay 2% or even 1% there are plenty of no fee/no load retirement plans that are based on large portfolios/indexs of stocks/bonds. Vanguard offers several depending on your risk profile.
7) I dont know of any high interest accounts that are earning 5%, maybe 4%, sure its less its a lot less risky and high maintenance than managing rental properties or going into the real estate business.
8) SOME ITs can save USD$15K-USD$20K, thats not everyone and its not even most. There are a lot of ITs in regions like LCSA that have salaries that are at your earning potential. They would have to save everything. There are also a lot of ISs in WE that are getting by but they dont save that kind of coin, the same is true in Asia, etc.
If you want a decent return on your investment create an investment portfolio of currency, bonds, and stocks, and you dont have to worry about renters, upkeep, damage, etc. Your plan is basically live like a poor hermit for 12 years, you can do better or just as well staying in DE at home and do the same thing. Whats the joy in going to a foreign country just to work and go home, so that you can rent property. If you want to get rich go to the ME and work for Aramco or BAE or a company IS, where all you can do is work and go home.
If someone REALLY wanted to use IE as a means of getting rich than
1) Marry another IT, make current spouse an IT.
2) Go to work in the ME, seriously cant be stated enough. Aramco/BAE/Swiss you can make 6 figures as a couple without much effort in a region with few temptations and really generous OSH packages.
3) Buy property BUT dont rent it, thats kids play. Buy your property somewhere youd really like to live.
4) Convert the property into an ES/CS (English School/Cram School). Hire some native English speakers with appropriate degrees as LHs and someone with some teaching/managing experience to manage it.
You amplify your revenue streams the higher up the business complexity you go.
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mathphyschap
- Posts: 17
- Joined: Wed Oct 28, 2015 3:58 am
Re: 2nd tale - How IS teachers can earn 300K a year.
Ok so it's terrible to somehow find yourself watching a 1990s north american infomercial on real estate investment. As you watch some orange faced, pearly toothed host use his local DJ voice to talk about 5% a year increase and inevitable long term rise you might think - Why me? How did this happen? Where did the remote control vanish too? Why is it so far from the sofa to the TV?
But what happened to those that bought an investment property in 1995? or even 2005? Unless it was in Fukishima or some other extreme case it probably went up a significant amount, even if like me you brought a property just before the 2007/2008 crash.
http://www.census.gov/const/uspriceann.pdf
http://www.ons.gov.uk/economy/inflation ... 2015-09-15
Even in the unlikely event that house prices don't go up over 12 years rent prices almost certainly will.
I would stand by the main messege of my first post, prices will rise in the long run. Living beneath your means and investing for the long run is like eating 8 vegetable and 1 fruit serving a day, or not smoking. All mainstream evidence says that it works but a lot of people don't do it.
I would say while saving I lived like a postgraduate student who took one trip to Europe and another to a beach in SE Asia every year, rather than living like a hermit. Watching Pineapple Express with friends in the relaxed environment of an apartment while eating homemade pizza and drinking cheap cold beer can be as much fun as spending lots more at an expat bar.
Saving US $15 000 to 20 000 is something teachers might want to prioritise in their early years in IE.
Opening a training centre can also work well. I had two friends open an IELTS training centre in Beijing. I told them it wouldn't work (they would get closed down for licensing reasons) but they got lots of students and staffed it with lots of attractive local teachers. I guess there is always someone to tell you something won't work.
But what happened to those that bought an investment property in 1995? or even 2005? Unless it was in Fukishima or some other extreme case it probably went up a significant amount, even if like me you brought a property just before the 2007/2008 crash.
http://www.census.gov/const/uspriceann.pdf
http://www.ons.gov.uk/economy/inflation ... 2015-09-15
Even in the unlikely event that house prices don't go up over 12 years rent prices almost certainly will.
I would stand by the main messege of my first post, prices will rise in the long run. Living beneath your means and investing for the long run is like eating 8 vegetable and 1 fruit serving a day, or not smoking. All mainstream evidence says that it works but a lot of people don't do it.
I would say while saving I lived like a postgraduate student who took one trip to Europe and another to a beach in SE Asia every year, rather than living like a hermit. Watching Pineapple Express with friends in the relaxed environment of an apartment while eating homemade pizza and drinking cheap cold beer can be as much fun as spending lots more at an expat bar.
Saving US $15 000 to 20 000 is something teachers might want to prioritise in their early years in IE.
Opening a training centre can also work well. I had two friends open an IELTS training centre in Beijing. I told them it wouldn't work (they would get closed down for licensing reasons) but they got lots of students and staffed it with lots of attractive local teachers. I guess there is always someone to tell you something won't work.
Reply
@mathphyschap
"As you watch some orange faced, pearly toothed host use his local DJ voice to talk about 5% a year increase and inevitable long term rise you might think..."
or your watching a presidential debate, scary.
Sure rent goes up, so does the cost of living, along with everything else. Want to really invest in long term gains, sponsor immortality research, buy StarWars toys wait 150 years and youll still be alive to sell them on 'emind' for huge prices.
No long term investing is not like eating 8 vegetables a day and one fruit, one is strongly supported by nutritional science, long term investing has no relationship to diet or nutrition, its a false -. Bathing in battery acid is like eating 8 vegetables a day, rolling around in dog feces is like eating 8 vegetables a day, none of those are true simply because one proceeds from the other.
I love a home movie night as much as anyone, but I dont want to do it every night, and those other things cost coin. No one likes cheap beer, they like not paying expensive coin for good beer.
Yeah they might, they might want to also prioritize the weekend out theyre planing to the beach as well. They might want to prioritize figuring out how to order a pizza.Ive yet to find an IT who thinks they are being paid too much.
Nice idea using my idea to show how your idea could work, except your idea is:
1) 12 years long
2) Requires living like a hermit for 12 years (already did that, was called university).
3) Is hugely speculative.
4) Has a lot of risk
5) Is still nothing more than a real estate scheme (get coin, buy property, flip/rent property).
"As you watch some orange faced, pearly toothed host use his local DJ voice to talk about 5% a year increase and inevitable long term rise you might think..."
or your watching a presidential debate, scary.
Sure rent goes up, so does the cost of living, along with everything else. Want to really invest in long term gains, sponsor immortality research, buy StarWars toys wait 150 years and youll still be alive to sell them on 'emind' for huge prices.
No long term investing is not like eating 8 vegetables a day and one fruit, one is strongly supported by nutritional science, long term investing has no relationship to diet or nutrition, its a false -. Bathing in battery acid is like eating 8 vegetables a day, rolling around in dog feces is like eating 8 vegetables a day, none of those are true simply because one proceeds from the other.
I love a home movie night as much as anyone, but I dont want to do it every night, and those other things cost coin. No one likes cheap beer, they like not paying expensive coin for good beer.
Yeah they might, they might want to also prioritize the weekend out theyre planing to the beach as well. They might want to prioritize figuring out how to order a pizza.Ive yet to find an IT who thinks they are being paid too much.
Nice idea using my idea to show how your idea could work, except your idea is:
1) 12 years long
2) Requires living like a hermit for 12 years (already did that, was called university).
3) Is hugely speculative.
4) Has a lot of risk
5) Is still nothing more than a real estate scheme (get coin, buy property, flip/rent property).
Re: 2nd tale - How IS teachers can earn 300K a year.
This seems quite risky and complicated. (Though I suppose no risk = no reward). I'm intrigued the concept on a smaller scale though. Has anyone had experience (positive or negative) with putting their housing allowance toward a mortgage on a property near their school and then renting it (with any luck to incoming ITs) after leaving the country? That's more or less what you're recommending, right? It's the classic concept buying property rather than "throwing away money on rent."
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Snowbeavers
- Posts: 72
- Joined: Fri Jul 17, 2009 11:56 pm
Re: 2nd tale - How IS teachers can earn 300K a year.
Personally, I would never take this route for these reasons:
-The idea of cutting expenses so drastically that you succumb yourself to McDonald and fast food? Really? That alone should kill you in 12 years. I can easily save 25k/year without this (over 50k/year with my wife) and we live a very comfortable lifestyle
-There is a lot of risk and you aren't diversified (all in housing). What happens if you buy and the housing market collapses? What happens if you can't find someone to rent out your house? You need enough income to be able to pay off the mortgage?
-I'm not so sure you can assume a 4-5% increase in housing
-The headache of managing property (or paying someone else to manage it) isn't worth the return on investment
-Taxes, repair and renovation will eat away of your profits
If you do want the income and shares in the housing market, I would put a portion of your portfolio in REITs (ie. VNQ), you still get a higher dividend return (4-5%) while still "owning" shares in the housing market without having to deal with the headaches above.
I would instead diversify your 20k per year in low cost index funds of stocks and bonds(Vanguard)..12 years later you should have 300-400k. Keep it for another 10-12 years and you should have 1 million. Done. This helps reduce your risk and diversify your portfolio.
-The idea of cutting expenses so drastically that you succumb yourself to McDonald and fast food? Really? That alone should kill you in 12 years. I can easily save 25k/year without this (over 50k/year with my wife) and we live a very comfortable lifestyle
-There is a lot of risk and you aren't diversified (all in housing). What happens if you buy and the housing market collapses? What happens if you can't find someone to rent out your house? You need enough income to be able to pay off the mortgage?
-I'm not so sure you can assume a 4-5% increase in housing
-The headache of managing property (or paying someone else to manage it) isn't worth the return on investment
-Taxes, repair and renovation will eat away of your profits
If you do want the income and shares in the housing market, I would put a portion of your portfolio in REITs (ie. VNQ), you still get a higher dividend return (4-5%) while still "owning" shares in the housing market without having to deal with the headaches above.
I would instead diversify your 20k per year in low cost index funds of stocks and bonds(Vanguard)..12 years later you should have 300-400k. Keep it for another 10-12 years and you should have 1 million. Done. This helps reduce your risk and diversify your portfolio.
Re: 2nd tale - How IS teachers can earn 300K a year.
I think snow beaver is correct. For intl teachers real estate investments will lag behind self managed index fund strategies. The main disadvantage is that international teachers cannot self manage their own properties when they are gone. Finding new tenants, fixing broken doors, etc, all need to be managed by a mgmt company. These all take away from the bottom line.
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mathphyschap
- Posts: 17
- Joined: Wed Oct 28, 2015 3:58 am
Re: 2nd tale - How IS teachers can earn 300K a year.
I think I could maybe simplify the topic and first message to
- How can IS teachers do well financially?
(i) Find a setup where you can save US $15 000 or more a year for a more than 5 years.
(ii) Invest it in something that will give you a decent return.
Either a self managed/tracker fund or buy to let (rental) investment will work. But remember stay away from glossy brochures showing happy middle aged or retired people on a boat or beach - the guys selling you these expat life assurance or pension packages are trying to take you for a muppet. They take fees upfront (ie. from the first 12-36 months payments- read the small print) and then invest in tracker funds (which you can do yourself easily) and then they charge you another 1-2% a year
Buy to let (rental) is perhaps more of default investment in the UK while our cousins across the water prefer the stock market. I agree you should use an agent to manage a rental property as you should be looking to make money while you sleep without getting phone calls in your sleep about broken toilets. Buy to let has worked for me so far even though I invested either side of the last crash. I have never seen rent prices go down. If your property is near a working population of 20 000 or more, is close to a variety of local amenities, has good transport connections and 2-3 bedrooms then it should rent within a month.
Diversification is generally a good idea, though if you Google 'Warren Buffett quotes diversification' you might be surprised at what you get.
To add something new:
Why you shouldn't put your hard earned money in cash accounts
If you put US $50 000 away and get 4% (3% after tax) for 5, 10 or 20 years then you will end up with far less money than if you invest the same amount and can get 6-9%. Basically you will only match inflation. Banks love people putting money in cash accounts as they can take that money and quite easily get a better return investing in something related to stocks or property. Also if you are walking around knowing you have US $50 000, 100 000 or more in the bank account then at some point the right or subconscious side of your brain will override your earlier pledges not to touch it and you WILL take a chunk out of it. Then you are on the way back to square one.
- How can IS teachers do well financially?
(i) Find a setup where you can save US $15 000 or more a year for a more than 5 years.
(ii) Invest it in something that will give you a decent return.
Either a self managed/tracker fund or buy to let (rental) investment will work. But remember stay away from glossy brochures showing happy middle aged or retired people on a boat or beach - the guys selling you these expat life assurance or pension packages are trying to take you for a muppet. They take fees upfront (ie. from the first 12-36 months payments- read the small print) and then invest in tracker funds (which you can do yourself easily) and then they charge you another 1-2% a year
Buy to let (rental) is perhaps more of default investment in the UK while our cousins across the water prefer the stock market. I agree you should use an agent to manage a rental property as you should be looking to make money while you sleep without getting phone calls in your sleep about broken toilets. Buy to let has worked for me so far even though I invested either side of the last crash. I have never seen rent prices go down. If your property is near a working population of 20 000 or more, is close to a variety of local amenities, has good transport connections and 2-3 bedrooms then it should rent within a month.
Diversification is generally a good idea, though if you Google 'Warren Buffett quotes diversification' you might be surprised at what you get.
To add something new:
Why you shouldn't put your hard earned money in cash accounts
If you put US $50 000 away and get 4% (3% after tax) for 5, 10 or 20 years then you will end up with far less money than if you invest the same amount and can get 6-9%. Basically you will only match inflation. Banks love people putting money in cash accounts as they can take that money and quite easily get a better return investing in something related to stocks or property. Also if you are walking around knowing you have US $50 000, 100 000 or more in the bank account then at some point the right or subconscious side of your brain will override your earlier pledges not to touch it and you WILL take a chunk out of it. Then you are on the way back to square one.
Reply
@mathphyschap
Yeah, well that plan save coin, invest in something is still just an investment scheme.
Yes those glossy managed portfolios make bankers rich not the investors.
Real Estate is no more or less popular than it is in the UK or EU.
Yeah well Warren Buffet is Warren Buffet, diversification as far as investment types is generally strong advice. Its not the only option buy a bunch of Apple and Coke stock and you wont be diversified but youll be pretty safe.
Cash is a good part of a strong portfolio, and I dont mean just a high yield savings account but instruments such as treasury certificates, etc. Sure they dont earn a lot and they keep up with inflation, but they also carry far far less risk. Your talking about 6%-9% as if its a sure and easy thing, its neither.
While some ITs may not be tempted to withdraw some of their saving for consumerism, thats hardly an absolute or even a probability. There are some ITs that cant save and some that can.
My issue is that your strategy is still a real estate scheme, and its not an investment its a business. A business thats relatively easy, but its a business you have to treat like a job you either do the work or hire someone else to (such as a management company). Its no different than the export ebay/amazon store. Your overseas, you buy some local items or products and then sell them on line. I know several trailing spouses who do this in JP, BKK, etc.
Yeah, well that plan save coin, invest in something is still just an investment scheme.
Yes those glossy managed portfolios make bankers rich not the investors.
Real Estate is no more or less popular than it is in the UK or EU.
Yeah well Warren Buffet is Warren Buffet, diversification as far as investment types is generally strong advice. Its not the only option buy a bunch of Apple and Coke stock and you wont be diversified but youll be pretty safe.
Cash is a good part of a strong portfolio, and I dont mean just a high yield savings account but instruments such as treasury certificates, etc. Sure they dont earn a lot and they keep up with inflation, but they also carry far far less risk. Your talking about 6%-9% as if its a sure and easy thing, its neither.
While some ITs may not be tempted to withdraw some of their saving for consumerism, thats hardly an absolute or even a probability. There are some ITs that cant save and some that can.
My issue is that your strategy is still a real estate scheme, and its not an investment its a business. A business thats relatively easy, but its a business you have to treat like a job you either do the work or hire someone else to (such as a management company). Its no different than the export ebay/amazon store. Your overseas, you buy some local items or products and then sell them on line. I know several trailing spouses who do this in JP, BKK, etc.