r2i forum

cadude;51071Folks,

I need some suggestions with my portfolio allocation.

I'm planning to R2I in 2011. By that time, my 401K will be around 170K.

My taxable account savings will be around 330K. Total 500K. House in India
already taken care of.

My question is how much to leave in the US and how much to convert to Rupees and take back to India.

For the money I leave in US, I'm planning 45% US Total Stock Market index,
20% foreign stock market index, 5% REIT and 30% US total bond index
or US+ international bonds.

Does that look good ?

I'm thinking I'll leave 100K in Taxable account (VTSMX) and 170K in 401K
(foreign+reit+bond).

And take 230K(around 1 crore) back to india. In that, maybe I'll invest
30% in stocks/index/mutual funds, 10% car, 10% home set-up/furnishing and 50% FD.

Please provide comments/suggestions that will help me.

I hope to fund kids education with what I 'll earn in India. We have a 1 year old kid. So, education (1st grade) will be funded with india earnings.

Thanks a lot for your inputs.
cadude[/quote]

Hello Desi, Just pinging you. If u get some time, could you please give
some general suggestions on my proposed portfolio ?

Sorry to bug u.

Thanks
Cadude.

vivmat;56329Hi Cadude

While you wait for Desi's response, here are some general thoughts:

Your overall stock:bond split is pretty similar to what I follow as well for my AAP (65:35). I'm a little heavier on International tho.

You can consider the following:

1) Start moving your overall bond allocation to India slowly between now and 2011. If you are USC/GC, then either consider cash/FDs etc or if you can invest in your parents names, you can consider debt mutual funds. This will alleviate some PFIC pain. Reason for holding bond allocation of AAP in India is - so that it keeps up with inflation in the country of consumption - namely India

2) Move any initial set up expenses, furnishing, car etc to Indian rupees between now and 2011. Invest as 1) above

3) For India allocation on the equity side, either consider MINDX here in the US, or an individual stock portfolio (in India), or Equity MF in parents name in India

4) For Rest of diversified global equity exposure use your IRA (rollover 401k to IRA before you leave) and taxable mutual fund account in the US. (total US index, total intl index and reits in your case)

If I read your post correctly, apart for the initial set up during R2I (which is covered above), your salary and savings in India will take care of your other short-term needs (kids education etc)

Hope this helps.[/quote]

Thanks vivmat. Can you suggest some debt mutual funds in India ?

If I invest in my/spouse's I supposse I'll have to deal with PFIC etc.

Is debt mutual funds (intermediate/long) better than FDs ? I'll look into
investing in my parents name.

You assumption is correct. My home is taken care of. I have paid off the plot and set aside some money for constructing a home.

Thanks
cadude

vivmat;61451Cadude,

I wouldnt pick long term debt funds - I would stick to floating rate or short term - so as to take on minimal interest rate risk.

My picks in these categories would be:

HDFC Floating Rate ST - G
Tata Short Term Bond - G

Hope this helps[/quote]
Thanks vivmat. What is the main difference between growth option and dividend option for the debt mutual funds ? Are the dividends reinvested in
the growth option ?

Also, I supposse in the case of debt mutual funds, I can have my funds
repatriated into NRE account if the funds were held in my account right ?

Of course, I would have to deal with PFIC.

One mroe Q. Is the interest/short-term/long-term capital gain taxable fro NRIs ?

THanks
cadude

vivmat;61509Cadude,

Kind of yes. In the growth option, dividends are not given out to the investor (all the appreciation is reflected in an NAV increase). [/quote]

Thanks vivmat. appreciate ur inputs.