Retire in India and live off interest payments?

kmalik

Nick -

You indeed belong with the majority. It used to be the way of life and still is in a lot of contries.

In the USA, pensions have become extinct, and the Government program called Social Security (more a minimal support than a true retirement program) to which we all have been contributing is operating on a scheme Charles Ponzi would have proud of, and its obligations far exceed its projected income. Anyway, the long and short of it is that if you want a reliable retirement income - you must take yourself take ownership of that problem. Unfortunately by the time people come to that realization, it is often late - while the math of retirement savings works well mainly for the scenarios when you start saving early!

So, the country is full of a lot of people who have are not exactly prepared for retirement. And, they will have to make adjustments - either by working longer or adjusting their standard of living or both. In my personal view, this group is especially vulnerable to the 20%+ return pitch scams that could wind them in a worse shape than they are already in. Although Grikoo was not pitching anything (and I do not ascribe any such motive to him/her), the underlying logic in it is precisely what would lead to susceptibility to real scams perpetrated on this group (often as investment advice) - and that's why I felt compelled to enagage in the recent exchange.

There is absolutely nothing wrong with what you are doing. The key thing to be mindful of in your situation is inflation. Be aware that the same quantity of money will buy less over time with inflation. So, to the extent you can - either defer consuming the money now to have more available later, or hedge money against inflation - by buying assets that will appreciate at the rate of inflation or ideally above.

Hope this is helpful.

grikoo

Sure, agreed. And I would probably NOT recommend any such agressive strategy for someone in their 50's. Personally, and clearly we differ on this, I leave the high risk to younger people who if they take a big hit to their principal, have plenty of time to make it back up in whatever way turns out to be required (like going back into the workforce for a while, if necessary).

Yes, how do you think the retiree boom will pan out in the market? I have been looking at REITs that invest in long term care facilities. Any other thoughts?

Also, have been considering that the current boom in energy prices may result in increased research and production of alternative sources. I don't have any definite opinion, but recognize the possibility. Any thoughts on that?



****So to those of you following this with little experience in such things, the above sort of thinking is exactly what I'm talking about- trying to understand the dynamics of the market.

An example of how this might apply to a couple of companies-

In the early 2000's when the entire market was reeling from the dot.com bust, Monsanto, a GM seed supplier, started buying up all it's competiors at relatively low prices. This consolidated the market considerably and made monsanto the large seed supplier in the world, unassailable from any factor other than government regulation of GM crops. Then they won multiple cases against farmers whose crops had been contaminated by GM genes, the effect of which was to REQUIRE farmers to buy their GM crops, or face a possible lawsuit. Over the last 5 years the stock has grown 1500%. Was this a predictable outcome?- absolutely.

Another example- With no increase of arable land in sight, food demand and shortages increasing, transportation costs increasing, and food commodity prices increasing, what do you think is going to happen?- Demand for, and thus the price of, fertilizer goes up because it's the easiest way to produce more food, which benefits the people who manufacture fertilizers. Potash Company of Saskatchewan, one of the largest fertilizer producers in the world, has risen 1900% in the last 5 years. Predictable?- At least the last few years of it have been, particularly since the beginning of 2007, since which it's seen a 460% increase.

This is the type of education and understanding I'm talking about. It doesn't inoculate you from risk, but allows for better understanding of the way things work.

Ironically, most of the homeless people in this country actually have MORE money than the middle class. Having $0 net worth is better than having a negative net worth.

kullu gang

I opened a state bank account which were offering many schemes some are 9.5% you have to leave your money in for 50 days then just agree again when that period comes around again if your looking at staying longterm then the schemes become more attractive for instance 10 lakh after 4 years returns 15 lakh minus Rs38000 tax gives you just over 1 lakh 16000 rupes per annum which should be enough for a years lounging.

kmalik

Grikoo -

Thanks. I am not much a stock picker - not enough time at hand for that. So, can not comment. Two mega trends I along with countless others see are population growing old and global warming. To translate them into legal and ethical way of profits is a, shall we say, million dollar question.

Let's be clear: homeless people are not exactly fortunate. I do not want to play the sad game of "gee - the poor aren't really so poor, they are actually rich!" Works in some circles I know, but not the circles I want to belong to. Let's simply agree there are a lot of people that are unprepared for retirement.

kullu gang -

Nothing wrong with that strategy. Just remember that a year later, your principal is worth (1 - inflation rate) * original principal. So, if you consumed all of the interest during the year, you are poorer at the end of the year.

Nick-H

Probably the situation I am likely to be in! What matters is that it lasts as long as I do, rather than what it is worth at the end.

But, along with currently 8% inflation ---and could it get a loy worse, guys? I think it could. In England back in the 1970s, I remember getting 30% pay rises one year, while my parents on their fixed pension suffered 30% loss of purchasing power.

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Just one member of the IndiaMike Mod Team

kmalik

Indeed the right attitude! If you knew exactly how long you are going to last, the ideal strategy to consume all of it. In fact if your conscience does not bother you too much and if they can not pin any debt left behind on someone you care about, even borrow to the hilt (from big pockets, of course) and consume all - with the due date coinciding with your planned departure date

One of the rubs in the retirement puzzle is, of course, that the departure date is often not firmly known in advance. And, if one happens to overstay, the welcome can disappear awfully fast when you can not pay for it!

I do not mean to say it is all about money. Of course, health, happiness and the journey are more important, but moeny is an essential enabler that we happen to be discussing.

grikoo

Yes, definitely the million dollar question. That's why I DIDN'T invest in Monsanto, as they ARE one of the most evil companies on the planet.

I do have some Potash Co, as I think that will likely be an ongoing trend.

Homeless people- Sorry, I didn't mean to sound insensitive. Surely many of them are in uncomfortable situations, but I do have to say (and I know many of them personally, and work with them through charities) that alot of them are far happier than your average, debt-ridden suburbanite. It's mostly the mentally ill ones that are really tormented and in a bad state.

Indeed, that's another issue we didn't go into. Even in instances where your return doesn't quite cover your expenses, and you're pulling money out a little bit at a time, as long as it lasts to the end- everythings fine.

Nick-H

Although we also have to add into that the increasing likelihood and expense of healthcare as the years past.

I think one needs to have the cost of at least one major surgery in the savings account right up to the end.

grikoo

Good thing that'll be cheaper in India !

Nick, don't you get free healthcare in the UK?

batistuta

There might be an economic de-coupling, but the global finacial markets are inter-linked to such a degree that financial de-coupling might not happen anytime soon.

One way to circumvent this is to invest it Bric countries instead of Just Asian economies. Brazil and Russia will add a zing to your portfolio as their economies are slighly different ( More Natural resources to bank upon) than Indian economy. . I think there are mutual funds ( Templeton and Fidelity) in India which invest in these economies. Also, In the recent crash, these funds did not fall as much as other funds which were primarily invested in India.

Btw, Mutual funds, as investment vehicles, have more to offer when compared to Ulip's ( Mutual fund linked with life insurance). For insurance , one can opt for 'term insurance' plans. Ulip's have high entry load's when compared to Mutual funds.

Investing 5-10% of one's corpus in a gold etf would not be a bad idea, either.

Please, Don't take my word for it.

Nick-H

I'm not in the UK and, I'm not sure, but I believe that, now I am considered non-resident in the UK, no, I don't!

I wouldn't plan to return there for health care. That is the sort of very important difference for a person who is able to afford to keep a home in their previous country.

grikoo

China isn't really coupled at this point and has developed a life of it's own. India, on the other hand, being largely a producer of goods for export, is directly linked to consumer markets like europe and the US.

Agree with the comments on adding Russia and particularly latin america to your holdings. My latin america fund has done better than any other so far this year, with a 13% gain YTD. Brazil doesn't seem to have been dramatically affested by the US recession and is still going strong. A good diversified emerging markets fund should cover all of these and more. I have the T Rowe Price equivalent, as well as a region specific latin america fund.

Personally, I'm a little wary of chinese investments right now, as their economy seems very unstable to me. It's like it's trying to get up and walk independently, and I'm concerned it'll fall on it's face.

Too bad. That's unfortunate. For me, I'd rather get health care in India anyway. The prices here are just absurd.

Nick-H

5,000 miles is a long way to travel if you are having a heart attack ...

If someone is going to commit to a future in India, then I guess one has to take on board even stuff like life-expectancy is lower here. It's easy to think that one's money, especially if one has a comfortable amount of it, is going to insulate one from that; to some extent it can, but not entirely. Consider the road death statistics, and consider that one is likely to die in an accident here, or suffer major paralysis, where one might have walked away (even if the wlking had to be posponed by several weeks in a hospital) from the same accident in Europe or USA.

Nevermind just the living expenses; there is some tough shit to be taken on board too.

(think we might have been here before in this, or another thread, or maybe its just the driving thing that I'm thinking of)

grikoo

No, but for just about anything else, I'd rather pay 10,000 in India that 200,000 in the US.

Definitely something to consider. From my end, I'd rather be where I want, do what I want, etc. than be afraid of doing what I want. That method leads nowhere. I'm definitely not afraid of death at all, nor shorter life expectancy, but paralysis doesn't at all sound fun. Overall, I'm more worried about having a mediocre life, than no life. That's just me though.

kmalik

Nick -

What you say about the unplanned medical care is indeed the most serious concern for those electing to move from abroad to retire and/or live in India. It definitely gave us a sufficient cause to pause in a line of thought involving retirement in India, particularly Himalayas that was emerging. We definitely have not come out of that pause...

PS added after seeing G's previous post: No one is afraid of death, at least in abstract. The issue often is the path to it can be more or less comfortable. And, if one puts oneself in the right position, the choice is often not no life, mediocre life or great life; even a fool can make that choice. However, the real choice is about alternatives with competing pluses and minuses. And, this (emergency/road side/mountain/remote health care) counts as a serious minus.