Retire in India and live off interest payments?

barodian

You can use your ATM card in India. You will get a small transaction fee for International withdrawal. Whoever owns the ATM will convert the money for you depending on the exchange rate. To make your life little easier Citibank has branches and ATM's in India. So, you avoid the fee from you American bank for ATM usage.

noflylist

I think CapitalOne does not charge transaction fees for ATM use overseas for some of their accounts.

barodian

CapitalOne may not charge a fee but Visa does! This was implemented about a year ago. By the way, CapitalOne cards are not good for your credit because they do not report your credit limit to the credit bureau.

Nick-H

If you have a legitamate Rupee account in India there are always ways to transfer money into it from foreign banks. I use ICICI's online facility, although it takes 7-10 days account to account it is free.

Foreign banks can and will transfer money to Indian banks, but it (at least for UK) is not free, and, as far as I know, one would have to be at the 'foreign' end personally to do the paperwork. Last year I asked the solicitors handling my mother's estate in UK about transferring the money to my Indian bank rather than my London bank --- it would have been no more expensive than the local transfer. Given what has happened to the exchange rate recently, I wish I had: could have been 10% better off .

My bank manager here tells me I can even draw a cheque on my London GBP account and pay it in --- but they will take 21 days to clear it.

Some of the harder realities of life in India have been brought home to me recently by hearing of a friend of my wife's. She has cancer and requires chemotherapy. The treatment is Rs20,000 each time. She is sick: how does she work to pay for her treatment? And, even as a professional (dentist), Rs20,000 is a huge amount of money.

Health insurers here don't seem interested in taking on people of my age (nearly 55). Running home to my UK NHS is hardly an option as I have nowhere to live there. A healthy balance in the bank just for medical contingencies suddenly seems important

many of you guys are obviously better at foresight and planning ahead than I ever was --- wouldn't be talking about early retirement if you weren't, I never planned for retirement at all . But some of things are hard to realise and plan for until one comes up against the realities.

Not a problem, perhaps, for those with decent capital and good pensions --- but those who want to live in India on the minimum should think long and hard about the possibilities.

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Just one member of the IndiaMike Mod Team

capt_mahajan

Nick,

I just called up my Insurance guy. He represents an all india government owned insurance company here.

He told me that there should not be a problem getting an insurance policy for you and your wife. Some medical tests would be required.

He recommended the Parivar (family) plan .


my comments:

-Govt insurance companies are better so far. Even though private insureres are all over the place and doing well, I treat them with a little suspicion.. what if they close down ten years later? Insurance is a long term commitment.

-In case some normal age related things show up in the medical reports, the max they will do is exclude those diseases.


Am posting this here for everybody's benefit, but PM me for more details if you want them. He was willing to do it here subject to some medical tests being available (he will benefit, I won't ) but I thought you would prefer something closer to home, even though the policy would be perfectly valid.

Once and if you do this, folks like TPAs etc will get involved, but thats another story for later. Btw, I have claimed against these policies many times, with few problems.

edit: This Mediclaim policy would be valid only in India. At my age, 48, I am paying about 16000 or 18k (forget which) annually for three of us, with a 'expense' limit of 5 lacs annually for me and my wife, 3 lacs annually for my daughter. Domicilary hospitalisation is also covered.

It will be higher for you (age).. 5 lacs may seem a lot, but what the hell. Go five star.

pantelis

the Indian prices will definitely be similar to the western ones.Don`t plan ahead my advice since the conditions change rapidly

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Sama

DUH! Thank you!

and yes, I do know you can use an ATM card in India...however, my bank is a local one, not a "national" bank (i.e, with branches all over the US) like a Citicorp or Bank of America, so I had trouble using my ATM even tho it was part of a national system of ATMs (Cirrus, Mastercard or whatever.) In other words, it was a royal pain in the butt!

obviously I would move my accounts to a "bigger" bank, like Citicorp, if I needed to in the future....

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My India, 2005-2008
BE THE REVOLUTION

barodian

You should be able to tell your bank that you are going out of state and give them your destination, so they won't block your ATM card and the debit side of your checkcard.

Nick, you are right on that part. It is hard to forsee the future. I believe, what happened in the past was for good, what is happening is for good and what will happen will be good too. People learn from their mistakes and they teach that to their offspring (children) and that is one of the best teaching one can give. Falling and getting back up is part of life that each individual must understand.

kmalik

YG - Several others have provided good answers to your questions already. I share my perspective here as the long turn depreciation of dollar and appreciate of Rupee is a concern of mine. Not unlike you, most of our assets and investment are dollar based. However, over the last several years - we have diversified up to about 20% of our assets into un-hedged diversified international equity baskets using EFTs (based upon global equity index components, such as MSCI). I believe that allows both currency and equity diversification - and also provides some hedge against inflation. I am not saying it is a panacea, but it is simply a strategy I am personally following...

barodian

Good suggestion kmalik but for people who are in reaching their retirment, I would not recommend gambling on high and high-moderate risk investments. For young people, it is good idea since they have long time for their money to recover if the market goes down.

noflylist

I agree.

That is the kicker for me.

edwardseco

Nick, the value of a currency is inverse to inflation. Don't invest in any Zimbabwe dollars. A rough measure is to subtract local inflation from local rates of return to get a real rate of return. This is what you should be looking at. This ignores potential devaluation of a currency due to inflation..

Nick-H

But...

Say

inflation in India = 6%

Interest on deposit in UK = 5%

Interest on deposit in India = 9%

Isn't the obvious answer to have Rupees on deposit in India, rather than pounds on deposit in UK? Inflation in UK may be only 2%, but doesn't that only count if I want to spend the money in the UK?

I really am rather dim at this sort of thing .

Anyway, I'm disinclined to bring much more of my small pile here until something happens to cheer up the exchange rate again...

capt_mahajan

Longer term, many foreign currencies are forecast to depreciate against the rupee. Particularly the USD, due to the huge deficit.

But, it makes sense to invest enough money in India to cover ones Indian expenses (out of the returns) because, typically, the interest scenario in any country is tied to inflation, besides other factors like credit policies, liquidity etc. And what CHina does with its currency. The general think is that the yuan is undervalued.

As Nick says, earning lower interest abroad and suffering high inflation at home will only deplete your capital.

Diversifying as much as possible, of course, as kmalik suggests.

Big factors that can derail a rupee appreciation: economic slowdown, high fuel prices (India imports much of its oil) and, short term, inflation (remember general elections are not too far away, and the govt would not like to go into those with high inflation). Also, longer term, the impact of global warming, which will hit poorer countries harder, but I for one am unable to see how one can factor that into ones plans.

kmalik

Nick - Agree with Captain Mahajan's post. One additional thing I'd add is that interest bearing accounts are not a good hedge against inflation. In fact, in a rising rate environment (which India is likely to be with yet uncontrolled inflation), you are better off with investments that provide a natural hedge against inflation. Normally, precious metals and real estate are two things that hedge against it. There are others one can think of. In the US market, there are some instruments that are directly indexed against inflation. In Indian market - little as I know about it - I'd keep my eye on the inflation rather than the interest rate.

The exchange rates are a hard nut to crack. I am not particularly knowledgeable about it. But my view is that exchange rate is a major omission in your simple example. Too many things go into it - including the central bank interventions. In general, I'd be hesitant to put all my eggs in Indian Rupee. While not likely, crashes in currency market are not unheard of...