There's no such thing as a free lunch...Or is there?

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It's official. The next president of Indonesia is former army general Prabowo Subianto. Quite how the next five years will pan out is anyone's guess but hopefully the foreign pundits who always bring up his dodgy human rights record will be proven wrong. Nonetheless, on policy making, Prabowo's popularist move to literally offer the poor 'a free lunch' every day of the week does not augur well for the future. Such a policy - if it ever came to fruition - would cost a phenomenal amount of money and likely lead to huge inefficiencies (food waste) and poor incentives (make people lazy). Another concern is Prabowo's strong nationalist bent. Thus, in the possible event that he finds himself with his back against the proverbial wall in the face of stern economic challenges, there is a big chance that he will simply scapegoat foreigners. But he will have to be careful. Construction of the new capital city, Nusantara, for example, is highly dependent on foreign in

How much money do you need to retire in Bali?

How much money do you need for retirement in Bali?Well how long is a piece of string? It all depends of course on your lifestyle and how much you will need to support that lifestyle. 

But however much money you need, the basic principle behind retirement is the same: build up a large enough nest egg that is invested securely and provides a steady stream of income. 

Easier said than done of course – as anyone who has invested in stocks will tell you after their savings had been heavily depleted as a result of the financial markets’ meltdown. 

And to live in Bali is not as cheap as many people make out. 

Sure a lot of things are cheaper here than in developed countries but there are plenty of expenses that can easily make the best planned retirement plans go awry. 

 So what is a reasonable sum that you could live on in Indonesia? 

 Well here are my estimates for living in Bali (per month for two people): 
 
Rental of a small but nice house (no swimming pool): Rp3 million 
Electricity: Rp500,000 (assumes 1 aircon) 
Telephone/internet: Rp300,000 
Food: Rp5 million 
Visa extensions: Rp1 million 
Petrol: Rp300,000 
Entertainment Rp1 million 
Miscellaneous expenses: Rp1 million
 
Grand total: Rp12.1 million/month or 12xRp12.1 million = Rp145.2 million for one year 

So how much would you have to have invested in a retirement fund to generate a perpetual income stream of that amount? Well, that’s a difficult question to answer precisely, but to be fairly conservative I reckon you could count on a fairly secure US dollar high yielding investment fund to give you a return of 5 percent – perhaps 7 percent if you were pushing it. 

That translates into an investment fund of between Rp2.1 billion (US$210,000) and Rp2.9 billion (US$290,000). A pretty sizable amount of money by any standards – and that’s just living simply. 

 Maybe Bali isn’t so cheap after all… 




Comments

  1. You have some great stories your welcome to post some on out travel site with link back to your blog

    http://101today.com/travel

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  2. it can be much cheaper than IDR 12,1 million/month

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  3. Yes you can live on less, but not so well.

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  4. well, I and my girlfriend lived on IDR 2,1 M for over 3 years and we could still be laughing at each other. As much as your analysis is true, but for me, it is more about how you determine to live with your money than how your money determine to live with you. As of now, we're living happily with IDR 6,4 M a month. :D

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  5. Dear Sir, Madam,
    I intend to retire in Bali within the next couple of years. I am going to Bali in February 2012 for visit, and I would like to have a look at some rental properties. I would like to rent a one bedroom airconditioned apartment with a swimming pool / furnished /.
    Please email me at pavelbatal@hotmail.com
    Thank you
    Pavel Batal

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  6. bali is poor country, you don't need 200k

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  7. anon: with a 200k investment fund, you will get monthly income of around Rp12 million in perpetuity. That's the point.

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  8. Hello! I am a researcher interested in what is 'pulling' people to retire in Bali; and what is 'pushing' them from their own home countries. I'd love to read your comments.

    ReplyDelete

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