whattodo wrote:Just discovered this forum today and like it. Looking for some good advice on my strategy and position. Feel free to comment anyway you want. No offence to anyone.
Age: 44. IT professional, Wife is homemaker. Kids 8, 6 and 4. NY state
165K base. 40K Bonus. Take home probably 7.5K/month after all deductions as below excluding bonus.
Max out 401k at 17K. HSA 5K per year.
After all these years (15 years in US) and probably living little bit expensively for the past 3 years, Now trying to save 2K/month(and with bonus) total potential of 50K total cash saving in a year.
Don't own. Rent 2600/month... ( Didn't buy but for reasons I will document later in the post)
Job is good but worry about future being in IT... amid cost cuts in corporations. Will get ~90K ( befor tax) package if lose job.
Zero commitment, loans
Very conservative investor. Dont want too much commitment/loans.
401K balance 155K. Retirement acct 28K. HSA balance 12K.
INDIA.... Major metropolitan city.
1. House and asset worth 500K ( inherited)
2. Plot worth 500K ( Funded through a 50K investment in 2003)
3. CASH 200K in FD. India inflation is high and Indian rupee is under pressure. All these is savings from my income.
4. Plot worth 180K ( inherited)
5. RE plot worth 200K ( original investment of 50K in 2006. By cancelling buying a house in US in 2006... Got lucky there)
6. Agricultural land worth 50K
7. Plot worth 25K
So looks like around total liquid CASH of around 250K. 180K retirement related asset and 1.4M of Real estate which it TOTALLY in India.... with ZERO RE portfolio in US. What concerns me is the imbalance in portfolio and asset risk in India. A country with political instability to some extent, troublesome neighbors, inflation, infrastructure and populations issues.. I might go back to India at some stage though but US is what my primary country is and what I love.
So couple of questions..
Do I have too much in foreign asset ??.
Am I heavily imbalanced in RE ??.
Is my strategy until now of not buying a house is bad ?.
Should I buy a house in US now to make a meaningful portfolio, ??
Am I wasting too much in rent ? If I do buy, I wont buy anything higher than 55K..
I do want to retire below 55 and sometimes think, I cant take all the corporate stress but kids are still young.. So this is not a typical post and feel free to comment on anything and on any advice. Im open to all.
Welcome to the forum! Great job accumulating what you have so far.
Are you planning to retire in India? If so, then this is (probably) all good given that Indian real estate has been appreciating like crazy.
If not, then I assume that you will use the money/income generated from your Indian Real Estate and other holdings to fund your retirement life in India.
-- You would definitely be taking some amount of currency risk.
-- If you sell your Indian real estate then you will have to pay Indian and US long term capital gains. I remember that India does not have step up basis on inheritances. However, the basis is adjusted for inflation.
-- About 20 years ago, it was very difficult to repatriate money from India to the US. Things have become liberalized and it is much easier these days, provided all relevant taxes have been paid in India.
1. I assume you are an non-resident Indian. If so, my understanding is that you cannot buy Indian farm land etc. If you had bought these prior to becoming an NRI then you can continue to hold them. Also if you inherit them as an NRI, then you have to sell. Please check on this.
2. Holding foreign banking assets directly does lead to some increased paperwork in the US. I assume that you have been filing the FBAR forms and keeping in touch with FATCA and FBAR regulations. Make sure you (and/or your accountant) keep up with the current state of taxation laws both in US and India.
3. Is the FD is an NRE account or an NRO? If it is an NRE, then there are no taxes due in India. Also keep in mind that Indian FDs are insured by the Indian Government and not by the US FDIC. However, the Indian insurance is quite low -- something equivalent to US $2K. If NRO, then Indian tax is deducted. You will have to file an Indian income tax return.
House: Are you planning to buy a house for $55K in the US? That seems terribly low given your income and the rent you are paying. Maybe I misunderstood. Perhaps you mean $550K?