Retire in India and live off interest payments?

dzibead

That may work as long as you don't have a gap in the tenancy - and don't mind being a long-distance landlord (will you be able to pay a local property manager to keep an eye on things? at least it seems that's what you plan to do, which is smart). I have a few horror stories about long-distance property ownership/renting, including one re: my friend who lives in Northern California who was renting out a house he owned in L.A. (only an hour plane-ride away). He suddenly stopped getting property tax bills and upon investigation came to find out that his tenants had forged deeds to themselves with the help of a crooked notary, and then had sold the house to someone else, who then moved into it! It was not cheap or easy to straighten this mess out!

capt_mahajan

I thought that kind of thing happens only in India.

dzibead

I think it happens wherever human beings live.

capt_mahajan

PS: Shashank, yes, and I know folks living on around that much, and struggling a bit, after taxes, medical insurance and stuff, to bring up two kids in Hyderabad.

Everything, as usual depends on how Zoltan wants to live. But I would guess, assuming no income tax and insurance expenses, that if he rents a smallish house, pays for utilities and internet, food and fuel, phone and transportation and minor replacement/repair costs, not extravagant entertainment- and assuming no booze and cigarettes (which can easily run upto a few thousand rupees a month)- after all these assumptions, I would think that he would have something left over as a little buffer for travel or whatever, but it won't be a huge amount.

machadinha

Oh, sub-letting your house while on the road and finding it back in whatever state would easily merit a thread of its own, I'm sure many here would have interesting tales on it. Although Dzi's story sure sounds like one to top them all!

Have been fairly lucky so far btw, <knock on wood>. Although I've lived in communal arrangements where "My house is your house" would sometimes be taken a little too literally (As in the classic "Your house is my house.")

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dzibead

I have another "classic" house story. Years ago, a prof in the English Department at UC Berkeley went to England on sabbatical and leased his house to some woman who answered the ad he'd put in the paper. When he returned a year later, he found the house completely empty. Completely. Empty. There wasn't a stick of furniture in the place, all the dishes, pots and pans, clothing, knickknacks ... everything ... was gone. Even the stove and refrigerator had been removed. For years afterwards, the professor used to haunt the used bookstores around campus, where he regularly found books from what had formerly been his library for sale. So poignant ...

The story was, that when the woman had come the Prof's house to sign the lease agreement before he left for England, she turned up in some kind of rabbit suit with holes cut where her boobs and "privates" were, because she had just been participating in some kind of spring fertility ritual/"be in" (this was Berkeley in the early '70's). You'd think that might have sent up a red flag ...

Aishah

zoltan - as Captain says it's all doable. Renting accommodation in Jaisalmer can be very cheap. You are probably aware that for several months in the summer it is ghastly and a good idea to head for the mountains, which is where I am at the moment. Sand storms and temps in the early 50's at present out that way.

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Sailaway

Hi Grikoo, if you have made 10% so far this year, you are definitely a genius. How did you do that

I have Indian and Chinese mutual funds (in the US, not directly in the respective countries). I also started a mutual fund linked life insurance in India. Now, when the US economy was ok, the values of these MF went up like crazy, outperforming US MF. When the US economy started to decline, they went down with US MF(Chinese MF is still doing a bit better). Do you think these Asian funds will eventually decouple from the US funds as the US will go into recession?

Sorry for trying to pick your brain, but I just wanted to hear somebody's opinion. I won't take anybody's words, do don't worry in that regard.

capt_mahajan

What a country

kmalik

First of all, this whole exchange with grikoo somehow brought memories of the movie 'Glenngarry Glen Ross'. I guess it is David Mamet play as well, although I've only seen the movie. Particularly worthwhile for those seeking financial advice on forums such as this.

On that subject, it is not difficult to make more than 10% in this or any other year. It all amounts to buy low sell high doesn't it? My two investment choices VWO and BIK (both index EFTs) bought in one of the low points during the year are up closer to 15%. That said, I might add that there are other parts of my portfolio that are down - don't know by how much. The first question to ask is are you an investor or speculator. If investor, why are you worried about the YTD returns?

Nobody has the crystal ball on these things, though that does not stop a lot of people from talking as if they do - and offering advice liberally. Sometimes such advice is honestly the best advice they can offer with no financial motive, often it is not.

Obviously, there are a lot of sound investment principles you can follow; and trends you can chase to satisfy the risk-taker in you. Going with low cost broad exposure investment funds (which by the way India and China funds are not) is generally a sound advice. You can go after the mega trends - oil, metals (grikoo is pushing), BRIK economies, energy, declining dollar, rising dollar you name it. Go for that if it appeals to you - but understand the risk. To the extent the trend is known, the prices reflect actions of other actors in the market besides you that also happen to be in on the trend. You may still go with it, a number of professional money managers do it successfully. The strategy is often called momentum investing but knowing the right time to slow the mementum down is what separates those winning the race from those in the ditch. You could get high rewards or lose some. If you can't afford to loose it, look for something less topsy turvy. In today's market, even that can be shaky (see Auction rate securities market - where the auction rate securities were treated and accounted for as safe as cash, and that market had problems recently).

If it sounds like I am pushing too much market uncertainty, I'd say there is a good reason behind it. You only need to look at runaway energy prices, faltering US economy (and the interconnections Sailaway mentions) and bunch of other stuff there is little time to get into. Does not mean one should stay out of the markets altogether, but does mean being circumspect and diligent about it. That's one man's view!

grikoo

Kmalik-

Let me clarify something- I haven't GIVEN any advice. Advice would only be offered to a specific person with a known situation. Trying to give advice to everyone would be ludicrous.

I've only stated that it's possible to do on that level of money, but I agree that it would require a very favorable economic climate or extremely well thought out investment choices for the low end estimates to work out, especially in the first few years. And a bit of luck. It is gambling after all.

And like I said, If someone had invested in your typical international funds from 2003-late 2007 they would have seen 20% or better average returns during that ENTIRE period. Emerging markets funds saw 25-30% average over that period. Will that go on indefinitely, of course not. Is that a high risk, ultra- agressive approach- yes. Was it a valid approach then- obviously it would have been. Am I promoting this approach- no, I'm not promoting anything, only talking about possibilities. I'm just saying that there are always bubbles forming and always money like that to be made somewhere. Which means it IS possible.

But if you can do that (i.e. make 20,000 a year in the first couple and only spend 10,000), you'll slowly put yourself in a better position. If then in the third year you take a whopping loss of 20%, you'd simply be back where you started, not any worse off. Whether that's probable or not none of us can say. It would depend on how sound the choices you made were. But it IS possible.

I don't at all think that education inoculates you to risk. As I clearly said- All investments are gambles. Know one knows the outcome ahead of time.

kmalik

grikoo -

Thanks. On a quick read, I agree with almost everything you say in your last post.

I continue to believe that while it is impossible to control/eliminate all risk, retirement and gamble do not fundamentally go together. A well-thought-out and coservative plan to make it last is a must. Even more so for those with an option to continue working. Otherwise, they would be better advised to stretch the working life longer - or consider partial retirement strategies. It is true today and will be even more true in the coming decades as the demographics shift towards an increasing number of retirees. [In fact, that is one sure mega trend coming our way - and one that is less of a buzz in the markets today.]

I believe this is a good enoough convergence of our points of view

Nick-H

Most of us retirees retire on very modest sums, and have little or no knowledge of investment. I don't think I owned a share in my life until a year ago, nor, for most of my life, did I have any interest in doing so.

So, for those who have not spent their lives as either professional, or keen amateur, investors, the bank deposit rate is really a much better indicator of potential income from one's capital.

Other stuff happens. My initial budget included spening about 30,000 UK pounds on a house in a relatively posh area of Chennai. When the time came, not that many months later, to do so, those houses were selling for 100,000-plus pounds.

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sb_amd_us

For those who're in US and approaching retirement/thinking about it, Vangurad has launched three different managed payout funds. All these funds preserve your capital and pays portion of div/capital gain as income every month. You can read more about them at following URL.

https://personal.vanguard.com/us/fun...ndIntEx t=INT

Summary:
VPGFX VANGUARD MANAGED PAYOUT GROWTH: 3% Payout + Inflation Protection + Growth + Capital Preservation
VPGDX VANGUARD MANAGED PAYOUT GROWTH: 5% Payout + Inflation Protection + Capital Preservation
VPDFX VANGUARD MANAGED PAYOUT DISTRIB: 7% Payout + Capital Preservation

As with any fund..there is no gurranty. But I'm still considering it because...
1) It'll be handled by professional managers, lots of research would have been put behind these funds as it's a new concept just introduced last month. College's in US uses the same concept and it has worked for them for years.
2) It'll be million times better managed than me manging it personally
3) Risk is very well diversified and actively managed.
4) Freedom to withdraw money from principal if there is an emergency.
5) It'll be better than putting money in FD/Savings acct/Annuity as there is no penalty for emergency withdrawl.

I'm planning to put about 60K in following fund starting next year and kind of have run through for three-four years before I make a big decision.

VPDFX VANGUARD MANAGED PAYOUT DISTRIB: 7% Payout + Capital Preservation

capt_mahajan

Perhaps, but that implies that the investor sold in late 2007. We know what happened thereafter.

An investor would (or should) typically have some money in the market (unless it is apocalypse now, where, ideally, he should be buying) based on asset allocation, understanding of risk/downside and risk profile.

Without these, he is still a gambler, but one who can gamble away his retirement money. Have seen it happen.