Thanks for getting the ball rolling with your very insightful questions SandsofTime!
1. Do you have a paid off house? Do you parents have a paid off house? Yes (almost) and Yes. Almost, because it's just completed, and I have a small residual to pay before I take possession. And of course, then there's furnishing and other expenses to make it liveable - we're talking about Rs 2 to 2.5 million in total ( between 45-55 K US).
2. Are you living in Bangalore proper or in a smaller city nearby? In Bangalore at the moment, but depending on how things work out with some of the post FIRE options I'm exploring, might move to the outskirts of Mumbai - but that's not any cheaper...
3. What do you have in terms of assest?Besides the apartment above (I'm currently renting), I have about 650K US in savings, retirement accounts and investment accounts. Because I'm somewhat in transition, the cash part is larger than I acre for (about 25%), and the rest is almost equally split between Fixed Income (including some FDs) and stocks (mainly index and large cap funds, with a few individual stocks I hold out of vanity). I'm still working on an appropriate asset allocation (AA).
4. As I understand it, CD (FDs as they are called there) are paying about 8 to 9 % interest per year. Would it be fair to say that with you wife, child and you (along with a servant), you will need about Rs. 45,000 per month to live comfortably?That seems to be about right, but like I mentioned in my intro, I also need to support my parents. All in, I'd say about 20K US per year
5. Do you have any investments in real estate? What sort of appreciation are you expecting in such real estate investments? (Are you concerned that there might be a property bubble brewing in and around major Indian cities?) Other than the apartment mentioned above, none. I am extremely concerned that a property bubble is brewing, but then like my DW keeps reminding me, I've said that for as far as she can remember, and unless she had intervened, we'd be paying at least 35% higher for the apartment ( we signed up about 3 years ago)
6. How is your health and your parents' health? So far no major complications. But age, stress levels and a fairly unhealthy diet coupled with lack of physical activities, threaten to make that an issue in the future. But the last couple (or three) factors are all 'controllable' and happy to say, I'm making a start. My parents have (almost) no health insurance, and while my wife, kid and I are covered by our corporate plan, I am yet to decide on additional/private cover. Also toying with the idea of self-insurance, but haven't figured out a way of making a call - as yet.
7. Are you willing to downsize and move to a smaller town with a lower cost of living? Yes - but the answer to that depends on two things - where our kid goes to college ( yea we're having issues imagining an empty nest) and secondly, what I end up doing with the time on my hands.
8. Are you open to doing some part-time consulting etc? Yes, that's an option. But I'd rather do something more meaningful. Oops my slip is showing!
Thanks again SandsofTime - responding to your questions has made me start thinking - something I've been putting off for a while now.
Nash
I am not sure if the 20-25 lakh (2 to 2.5 million rupees) is the total cost of the residence or the balance of what is to be paid on it. It appears that if you were able to purchase the property for 20-25 lakh, then that sounds like a great price.
Regardless, here are my thoughts:
1. Essentially, you need a whole lifetime of income stream as you, along with your DW, will probably live another 40 years or so. Therefore, I feel that all your necessities need to be paid off and you must have minimal monthly outgo. Income is important but due to the passive nature of income in FIRE, the vagaries of the market or other circumstances outside of your control may (will) affect the "income". However, the "outgo" is fully calculable, and additionally, the uncertainties of future inflation (I do not expect outright deflation in India any time soon) can be minimized if not totally eliminated by having as many necessities of life paid off in full.
Therefore, building upon my previous line of questions, it appears that you are well positioned for a comfortable FIRE life in India, with certain caveats. $650K , which a handsome amount, is not so big an amount that you can be entirely carefree of the future.
Here is my humble suggestion on how to handle it:
1. Pay off your home in full;
2. Consider either some sort of part-time consulting in your field of expertise, or if you have some other calling, then engage in that calling.
3. Your monthly expenses should not be more than Rs. 45,000 per month, if you have a paid off home. Frankly, you ought to be able to live on a little less than Rs. 45,000. Perhaps the parents will need an additional Rs. 20,000 per month. Now, in dollars that about $1000 for you and an additional $500 for your parents. How can you most easily generate $1500 or about Rs. 60-65,000 per month without a lot of headache.
Well, seems to me that you may want to allocate about $ 200,000 into some FDs at 9%. This amount should be MORE than enough to generate the necessary monthly income for you, DW, as well as support your parents. At $200,000 you will earn about $18,000 per year, and that is about $1500 per month ($1000 for you, $500 to be used on parents). In fact, you probably won't use all of the money every month, and therefore, maybe able to put back some to hedge against inflation.
4. As for the remaining $450,000, I would consider diversifying the heck out of it. So, a little in stocks, a little in real estate (an apartment) or even some agricultural land, and yes, even precious metals (perhaps after a little pull back on gold). Botton line, as to the $450,000, diversify it a lot. The growth on that money should be more than enough to hedge against inflation.
Regarding the Child's Education: If you were previously in the US, and if you child has a green card or US Citizenship, then you may want to consider having the child get his/her education in the US. If the child is begin his/her college, then the child should be able to go to as state university (eg. a UC or a Cal State in California) and based on your situation, would probably get a lot of Pell Grants and Cal Grants. With a little bit of part-time work, and maybe some minimal student loans, the child will be able to get a nice education here in the USA (I am assuming a lot here, as far as where you previously lived as well as green card etc)
In the alternative, you could have your child attend one of many, private universities in India (eg. Manipal, or a host of other universities etc).
Now, as to what are you going to do with all that time? You are totally correct in saying that a decision to RTI (Return to India) is a very emotional one, are you perhaps in the "Swades" movie frame of mind? I do wish you the best in whatever path your spirit has compelled you to take.
As you know, Life is short. Do keep posting as you proceed forward in your journey.
