r2i forum

Bobus:

You had immensely helped me in preparing my AAP from the old forum. Here is the link.
http://groups.msn.com/R2INRIFinanceAndInvestments/general.msnw?action=get_message&ID_Message=46935&ShowDelete=0&CDir=2
I have executed almost all of them. But a couple of things have changed in the last year.
1. My wife has started to work. Which means increase in income requiring investments.
2. My plan to R2I in Feb 2008 is not certain. I would like to R2I within the next 3-4 years but do not know when.

I would like to request you to help me to address the above changes in my AAP and suggest on a investment direction. Heres the summary of my current AAP.

Short term
--------------
My short term needs of $51,756 has been met with Savings/CD. This includes emergency cash as well.

Medium term
------------
My medium term need (for house downpayment in 3-5 years from now) of about $20,500 is met with NRE 1 year CD's.

Long term
---------
For the long term (child education and retirement) I have the following investments in place.
IRA on my wife's name in Vanguard VBMFX for $6,670
Individual account in my wife's name in Vanguard - VGTSX for $5,000
Individual account in my wife's name in MINDX for $9,000
SBI magnum balanced fund in my mothers name ($250 each month) has accumulated about $3000
HDFC Prudence balanced fund in my mothers name ($250 each month) has accumulated about $500

Company ESPP - Mine - total $8000
- Wifes - total $1107
NRE CD on my Wife's name has about $5800
Money sitting in fidelity money market waiting to be invested any place is about $8000
Savings @5% in HSBC Direct has about $9500
My 401K
----
FBIDX $13,020.12
FDIVX $7,580.66
FSIIX $1,228.51
PTTRX $3,426.76
VITSX $9,985.89

Wages and contribs
--------------------
My annual salary - $83000
My wife's annual salary - $72000
401K contibution - Mine - 6%, wife - 6% (Company matches 100% of first 6%)
401K - contributions (both myself and my wife)
FID DIVERSIFIED INTL 25%
PIM TOTAL RT INST 13%
VANG TOT STK MKT IS 25%
FIDELITY US BD INDEX 37%
ESPP contribution (15% discount) - Mine - 10%, Wife - 10%
My Monthly contribution - My 401K - $415
- ESPP - $691
- Indian balanced funds (mothers name) - $500
My wife's Monthly contribution - 401K - to start from next month - $360
- ESPP - $600
My monthly savings ready to be invested - $500
My wifes monthly savings ready to be invested - $2300

Thanks
Cashierme

Cashier:

I will have to refresh my memory about your situation. Meanwhile:

Do you anticipate getting GC before R2I?
Do you have any specific queries that you want my input on?

Bobus:

> Do you anticipate getting GC before R2I?

The truth is I do not know. If I were to take a guess I would say "yes". (Its a process that I have started in parallel and if it comes well and good, if not thats fine too.)

>Do you have any specific queries that you want my input on?

1 - What kind of investments would you recommend for the current savings which are ready to be invested?
- What kind of investments would you recommend for my future monthly savings? - about $2800/month
I can make further investments in India on my mothers name or MIL's name if required.
- What kind of investments would you recommend for my money in ESPP. Most of the money remaining is less than two years but I can sell them if there is an investment direction for those.

2 - Suggestion on how much money I should move to India considering the depreciating value of the dollar especially since I plan to settle down there.

3 - I reduced my 401K contribution to 6% since my wife started to work (she is eligible for 6% as well) and also because of the change in my R2I plans. I would like your opinion on how much you think that each of use should contribute?

In addition, I missed out to mention the following long term investments I have already made in my previous mail
- I have purchased two plots in India (outskirts of chennai) valued at $50000. I can use them towards my long term investments.
- Individual account in my wife's name in Vanguard - VTSMX for $5,000

Cheers
Cashier

Bobus:

> Do you anticipate getting GC before R2I?

The truth is I do not know. If I were to take a guess I would say "yes". (Its a process that I have started in parallel and if it comes well and good, if not thats fine too.)

>Do you have any specific queries that you want my input on?

1 - What kind of investments would you recommend for the current savings which are ready to be invested?
- What kind of investments would you recommend for my future monthly savings? - about $2800/month
I can make further investments in India on my mothers name or MIL's name if required.
- What kind of investments would you recommend for my money in ESPP. Most of the money remaining is less than two years but I can sell them if there is an investment direction for those.

2 - Suggestion on how much money I should move to India considering the depreciating value of the dollar especially since I plan to settle down there.

3 - I reduced my 401K contribution to 6% since my wife started to work (she is eligible for 6% as well) and also because of the change in my R2I plans. I would like your opinion on how much you think that each of use should contribute?

In addition, I missed out to mention the following long term investments I have already made in my previous mail
- I have purchased two plots in India (outskirts of chennai) valued at $50000. I can use them towards my long term investments.
- Individual account in my wife's name in Vanguard - VTSMX for $5,000

Cheers
Cashier

Cashier:

Looks like you have no queries about how to invest for your short-term and medium term financial needs.

For short term, I would split emergency fund, travel expenses, and R2I settling needs and invest the first 2 in $ and the last one in rupees.

For medium term (house down payment), have you computed the need reasonably? Are the plots you own in the same city that you intend to R2I to or is the R2I city uncertain? Also any loans on the plots already bought?

Coming to long term (retirement and child education), I would suggest the following broad allocation:

India Equity: 20% to 30%
VTSMX, VEIEX, VEURX, VPACX: 35% to 45%
India fixed income and as second choice Vanguard Taxable Intermediate Term Bond Funds: 35%
(bond fund will go into 401(k)/IRA first)

Can you give a break-up of what you hold for the long term per the above categories?
What is your marginal tax rate (fed + state) now that your spouse has started working?

Now that your spouse is working, you can invest a lot in her name so that India tax liability is minimized later when you become ROR. All her salary can be invested in her name, with you taking care of all expenses and tax on salary income.

>For short term, I would split emergency fund, travel expenses, and R2I settling needs and invest the first 2 in $
>and the last one in rupees.

- Will do so.

>For medium term (house down payment), have you computed the need reasonably? Are the plots you own in the same city
>that you intend to R2I to or is the R2I city uncertain? Also any loans on the plots already bought?

The R2I city is mostly chennai but its not certain.
For the downpayment amount calculation, heres what I did.
If I buy a 2 bedroom flat in chennai today, I can get it for probably around Rs 40 lakhs which would be around $100,000.
I assumed a real estate growth of 10% in the next three years and the cost came to $133,100. I assumed a 20%
downpayment which comes to about $26,620 after three years. (Previously I had used an old exchange rate and the amount had come to
about $20000 :-(

>Coming to long term (retirement and child education), I would suggest the following broad allocation:
>India Equity: 20% to 30%
>VTSMX, VEIEX, VEURX, VPACX: 35% to 45%
>India fixed income and as second choice Vanguard Taxable Intermediate Term Bond Funds: 35%
>(bond fund will go into 401(k)/IRA first)
>Can you give a break-up of what you hold for the long term per the above >categories?

In name of Type Amount Percentage
------------------------------------------------------
My mother India equity $1,400.0 1.45%
My mother India bonds $2,100.0 2.17%
Wife VTSMX $5,000.00 5.16%
VEIEX 0 0.00%
VEURX 0 0.00%
VPACX 0 0.00%
My 401K FBIDX $13,020.12 13.44%
My 401K FDIVX $7,580.66 7.83%
My 401K FSIIX $1,228.51 1.27%
My 401K PTTRX $3,426.76 3.54%
My 401K VTSMX $9,985.89 10.31%
Wife IRA VBMFX $6,670.00 6.89%
Wife MINDX $9,000 9.29%
Mine ESPP $8000 8.26%
Wife ESPP $1,100 1.14%
US mine Savings $17500 18.07%
Wife NRE CD $5853.658537 6.04%
Wife VGTSX $5,000 5.16%
100.00%


Please let me know if this is what you were looking for? (I havent been able to formst this nicely in this new forum..Will keep trying and see if I can improve this)


Cheers
Cashier

Bobus:

Please let me know if you got a chance to review my last post. I tried various things to format, but still couldnt find a way to properly paste a table into this editor.

One question that I forgot to answer,

>What is your marginal tax rate (fed + state) now that your spouse has started working?
With my current 6% 401K contribution, it comes to roughly about 31% (28%+3.3%).

Thanks
Cashier

Cashier:

Thanks for the reminder and for the tax rate info. Will devote some time to this thread soon.

Bobus:

Just wanted to bump this thread.

I am planning on a India trip soon and if you can share your inputs on the funds I can look to invest in India (as a part of my AAP), I can try to get them all setup personally when I am there.

Thanks for your help as always.

Cheers
Cashier

Cashier:

My apologies for not getting to this earlier. Will address by this weekend. Thanks for your patience.