Plan to invest in foreign stocks to fight against the 'foreign stock tax'.

Happy New Year 2567, Marong Boekfa. May it be a good year for everyone. Start a new day. It is considered a good time for all. First day of the year The Thai stock market has returned to positive in the past 2 months. Stock markets around the world seem to be equally refreshed.

Of course, anyone who invests in both domestic and foreign stocks Your mind will be cheerful when your portfolio's returns look positive. Because you have previously arranged a portfolio to diversify investment risk. Emphasize that Investing in foreign stock markets is as important as the Thai stock market. It all depends on the appropriate proportion of portfolio distribution for each person.

Let me give you an example of my portfolio that diversifies risk by investing in both Thai stocks and foreign stocks by continually adding money to compound. You will see the returns grow and grow every year. The more years the market goes in a positive direction, the more cheerful it will be. But in any year when the monsoon hits, it will have an impact. But it wasn't very bad. Because I'm already investing for the long term.

However, some people may say that your portfolio is not beautiful. That may be because the cost and investment period of each person are not the same. But I believe If you diversify your investments abroad for a long period of time. There should be at least 1-2 markets that give positive returns to your portfolio.

I want to reiterate the principle of 'diversification ' in investing across multiple markets. Investment statistics from the past 10 years show that the Thai stock market has yielded negative returns of over 10%, while the US stock market, the S&P index, has generated positive returns of 48%. The US stock market is a large market that many people choose to invest in. And believe it or not, investment flows into foreign markets have increased rapidly, from 30 billion baht 10 years ago to 100 billion baht in the past year – a three-fold increase! And I believe it will continue to grow.

For this year, it is still the year that VI investors still have to have adventures and move forward along the way of investing for financial freedom in life. Don't give up or give up just yet. Every journey has obstacles. But if you set out to travel consciously and firmly adhere to investment principles. And always do your homework to manage your own risks. You will reach your dream goal.

Year of the Dragon begins taxing foreign stocks Is it worth it to continue investing in foreign stocks?

Ask: What new things will we encounter this year? Are there any new arrivals? I would like to answer like this.

If talking about uncontrollable factors that affect There are definitely factors outside the country and within the country, whether it be the economy, finance, or geopolitics that are happening all over the world, including Thailand. Because the world is always spinning, especially in the AI ​​era, things come too quickly. And for sure, this year the world is entering a turning point in interest rate policy in both the United States and Europe, where interest rates are stable from high to the point of falling. The recession is expected to be a soft landing, but there are some countries where interest rates are turning up, like Japan. Elections in many countries, of course the United States. It is one of them and many others. What will these stories look like? I probably wouldn't be able to predict it in advance.

Every moment has the potential for various events to occur. Unexpected things can always happen along the way, both from old issues. that has erupted into new conflicts Or is it a new issue? that is about to happen It is a risk that affects investor confidence. Therefore, it is yet another year for investors to have adventures with unexpected risk factors.

Thailand itself has a new issue that emerged at the beginning of 2567 that will affect investment, and it's a major one at that: 'The Revenue Department will begin collecting income tax from foreign nationals, effective January 1, 2567. ' This is considered a 'regulatory risk' for the country, even though the Revenue Department justifies this tax collection by promoting greater fairness.

First of all, I would like to briefly summarize the criteria for collecting income tax from abroad in the Revenue Department Orders No. P. 161 and P. 162, which are the stipulations for collecting personal income tax from foreign income sources. (It also covers investment in foreign stocks) for assessable income of natural persons from 1 January 2567 onwards and that person must be in Thailand for 180 days or more. The said tax collection will cover both individuals who have profits from Selling assets abroad, such as foreign stocks Foreign real estate and Thai people, both those with work duties abroad or those who are employees in foreign companies

Both of these groups must pay taxes when transferring money back into Thailand. or if taxes have already been paid in the country of origin It can be stored. It can be a tax credit in our country.

The issue of "foreign income tax" is a significant matter for investment because if you are a direct investor in foreign markets, you will have increased investment costs, which will definitely affect your profits. In other words, "tax costs" will hinder your portfolio's returns. Whether it's worthwhile to continue investing abroad depends on the level of return you are achieving.

In this regard, in the period before 2567, the Revenue Department has exempted from taxes. If the income generated has not been transferred back to Thailand within the year in which the income was earned Previously, most investors who invested in foreign stocks When there is profit, it will be carried over the year. Then transfer the money back to Thailand. In order not to pay taxes.

Asked: What about the tax implications for people who buy outside shares? How much or how little? There are many levels of impact, depending on 1. Each person's tax base. Because some people have regular income If combined with income from abroad This will cause the progressive income tax rate to increase. 2. The size of money invested abroad. Because some people have been investing abroad for a long time. Either the cost is low or there is profit that has not yet been sold. Where else will there be dividends? Make the port grow bigger On this issue, each person will have a different status depending on the size of their portfolio. 3. Each person's confidence in foreign stocks. and the choice of investment formats available Each person has their own abilities and investment methods. Perspective on the stock market Some people who have invested abroad have found that It can be done much better than investing only in the Thai stock market in the present situation and in the future maybe 10 years from now. Therefore, there is probably no single design that is the same for everyone. Because each person is in a very different state.

But one thing I want to point out is the issue that people are concerned about. Private funds will be more affected than foreign stock investment funds (FIFs) that do not pay taxes (because FIF funds are registered in Thailand). In fact, I think that if we calculate the costs of managing mutual funds, we are careless. It will be higher than private funds.

With this assumption, I came to try calculating the costs and returns for fun. And I found the interesting thing about this is that actually we may not have to care about the costs that must be paid in the form of taxes at all.

Let me tell you first that in this calculation I experimented with Jitta Wealth's private fund, which charges a fund management fee of only 0.5%, and this is an important variable. Because if we invest abroad for the long term with lower fund fees Even with a 15% foreign investment tax, the result is still better returns.

By assumption

Investments start at 1,000,000 baht at a return of 8% between mutual funds that do not have to pay foreign investment tax of 15%, but after deducting the 2% fee, over a period of 30 years, the portfolio will grow to 5,743,491 baht.

But if investing abroad starts at 1,000,000 baht and gets the same 8% return, deducting the 0.5% fee, over a period of 30 years, the portfolio will grow to 8,754,955, and after deducting the 15% foreign investment tax, the total is 1,163,243. The total portfolio will grow to 7,591,712.

Do you see it like I do? Fund fees have quite an important effect on long-term investing. Even if you have to pay taxes, it's still more worthwhile. Invest a lot in mutual funds.

Therefore, people who invest directly abroad Whether small or large or through personal funds. Even if you encounter taxes, it doesn't mean that you have to completely stop or stop going abroad. If you still have a goal that you want to choose to invest in foreign stocks yourself. Because they believe in their skills and have the potential to plan investments. and manage risks that occur Ready to be diligent in doing homework regularly Adhering to firm investment principles, I believe that private funds can still answer the question well. And you will definitely decide to continue investing abroad and create worthwhile returns in the future.

Coping with tax costs How to continue generating returns

Actually, I don't see the issue of "foreign income tax" as something new for investors worldwide. It's just that it's relatively new for Thailand, having only started collecting it this year. What I'm about to tell you can offer a solution to unlock that potential. But if you're still unsure whether to continue or stop, consider the fees again.

For Grandpa Warrant Buffett, there is a way to unlock the capital gains tax burden that applies to Berkshire Hathaway funds: he invests compounding. Unrealized profits continue To delay paying taxes for as long as possible. Even though all taxes must be paid in the end But it might pay off in the next several decades. during which time Money or value that remains in the company. It will create continually increasing returns. This is one of the least expensive and slowest ways to manage tax payments.

As for Dr. Nives Hemvachiravarakorn, a true value investor who adheres to the principle of 'investing for life,' he has weathered many storms in the Thai stock market and has pioneered investments abroad for almost 10 years. Currently, his overseas portfolio accounts for approximately 30% of his total wealth. He believes that, "At this time, we cannot invest solely in Thailand. Investing abroad is just as important to me as investing in Thailand, and it may be even more important in the future. Therefore, we must invest overseas as well."

Secondly, continuous investment is required, and the money cannot be withdrawn immediately because it will be taxed, significantly reducing the return. Therefore, compounding the investment over time offers a high probability of the portfolio growing steadily until a day when you may need the funds. At that point, you can find ways to use them with the least or no tax, such as using them abroad without having to repatriate the money to Thailand first.

Another approach is Agreeing to pay taxes on income from dividends and profits from investing in foreign stocks. But use the method of tax management to pay the least amount and pay as slowly as possible, such as not selling stocks often or selling stocks at a loss to compensate for profits if possible each year, etc.

You will see that Dr. Niwet is following the advice of Grandpa Warrant Buffett, that is, rolling over unrealized profits over time. To delay paying taxes for as long as possible. Along the way, it will create more and more returns.

For investors who go abroad, most hope to receive good returns. In addition to just investing in the Thai stock market Everyone expects that the money they put out will be invested in the long term. All have investment goals. 'For retirement'

As for people who haven't really invested abroad yet but are thinking about going. Because I began to realize that Investment only in Thailand It may not be enough for the investment to generate returns. or wealth or financial stability Even if your investment starts from a small lump sum. Nowadays, there are many investment channels. For example, Jitta Wealth's personal funds allow you to access investing very easily, conveniently, and open to investment options covering the stock market. global bonds that is ready to create returns for long-term investors, most importantly, the fee is as low as 0.5% only.

Please believe that If you invest according to the right principles There is risk distribution. Have investment discipline through DCA or regular investment averages. You will see the money circulating. It's a way for you to move your financial position. Even though you may have to pay taxes in the end But the rewards are still worth it. At least look at the S&P index over the past 10 years, giving a high return of 48% if you have to pay foreign income taxes. It is still considered profitable.

And you will definitely reach your investment life goals. You can have financial freedom for a happy retirement in the future.