r2i forum

1. Return to India (R2I) or Live In America (LIA): - R2I
2. Your current age: - 37
3. Marital Status: - Married
4. Number of dependents and ages: Wife(32), Kids(5 and 3)
5.
(a) Current citizenship and/or Immigration status: GC
(b) If not a USC currently, do you have the option to take up US citizenship prior to R2I? Yes
(c) If you have the option to take USC, do you intend to do so prior to R2I? Yes
6.
(a) If you intend to R2I, when do you intend to R2I? -2008
(b) Immediately upon R2I, do you plan to retire (cease gainful employment), semi-retire, or continue to work for some time? ? Work
(c) When do you plan to cease gainful employment (Intended Retirement Age)? - 55-60
(d) If you plan to work after R2I, what do you estimate your annual after-tax savings to be? ? 5L
(e) If you plan to semi-retire after R2I, will your annual earnings from employment take care of your annual expenses during semi-retirement? If not, what do you expect the deficit to be per year? ? N/A
7. Is spouse also working? - No
8. RNOR eligibility of you and your spouse (use the calculator in doc section) or how long you have been out of India ? ? self(till ?11), spouse(till ?10)
9.
(a) Current annual after-tax savings including Roth IRA (excluding 401(k) and regular IRA contributions): $3k(no Roth IRA)
(b) Current annual savings into tax deferred accounts i.e. 401(k) and regular IRA ? $10k(401k only, no IRA)
(c) Current annual expenses (excluding tax): $60k
(d) What is your current marginal (not average) federal tax rate, based on your filing status? ? 25%
(e) What is your current marginal (not average) state tax rate, based on your filing status?- 3.2%
10. House owner? - Yes
11. What percentage of your total portfolio loss in a year will make you lose sleep? 10%? 20%? 30%? Or 40%? ? 20%
12. Do you have any loans? CC? Car loans? House loans? What is the current interest rate?
Car ? 5%
Home ? 4.3%
HomeEquity ? 5.5%
13. Do you or your spouse?s participate in retirement plans: 401K, IRA, Roth-IRA? If so, how much do you and your employers contribute every year to these accounts? ? 10k(self) and 3k (employer)
14.
(a) What are your short term (1 year) financial goals?
- Balance/Reallocate current assets towards Medium/Long term goals

(b) What are your medium term (2-5 years) financial goals?
? Settling expenses for India
- Build a house in BLR, already have a plot, expected total cost 50L including furnishings
(c) What are your long term (>5 years) financial goals?
- Kids education and marriage, capital appreciation
- Build a strategy for Rs.40k/mo regular income at today?s value.
15. Need to save money for your kids future education? If so, please answer the following questions:
(a) Do you have a 529 plan? - No
(b) Do you want to fund your kids? Indian or US education or both? If so, please provide a detailed description of the kind of education that you want to fund. (All expenses in today?s Rs/$)
- Primary/High School in India @ 1Lakh/year/child
- Undergraduate education (a). India @ 5Lakh/year/child or (b). US @40k/yr/child
- PG education in USA @ 40k/year/child
16. After you retire (cease gainful employment), what do you estimate your annual living expense figure to be (in current dollars or rupees, based on the life style you want)? Does this figure include housing cost? ? Rs. 5L assuming own home/flat.
17. If you are R2I, what percentage of your portfolio do you want to leave in US? And where? Stocks? Bonds? Cash?
- Not sure, perhaps 50/50 based on reading on this website. Regardless of location, I would like it to be in a good mix of S/B/C. Need a lot of help on this.
18. Do you have any insurance? Life, disability, long-term care? Total value of your policy?
? Employer sponsored 500k for self and spouse.
19. Do you have an emergency fund? How it is invested? ? Money Market
Current US Assets* (Please provide a separate breakup of tax deferred and after-tax accounts):

NON-RETIREMENT(after tax - 400k)
1. Stocks (Total 226k):
- 126k in VFINX(15), VTSMX(18), VGSIX(25), VGTSX(46), VISVX(22).
- 100k in individual stocks (primarily tech)
2. Bonds(Total 84k) :
- 75K In I-Bonds (10K ~ 5yrs @3%, 32k < 5yrs @2.1%, 33k < 5yrs @ 6.8%)
- 9K in VFSTX, VBMFX
3. Cash (Total 40k) : In Money Market accounts
4. Real estate(Total 50k): I am assuming this is what I will have after selling home in 2008 after closing costs, Home equity payoff, appreciation etc.,



RETIREMENT(before tax ? 120k)
1. Stocks (Total 90k):
- 40k in VGENX(27), VEIEX(13) (Rollover IRA from prev employer)
- 10k in a custom Dev Mkt Fund (401k)
- 10k in a custom Emerging Mkt Fund (401k)
- 30k in a custom Stock Fund(80% of a fund akin to VG?s Tgt Ret 2020 in 401k)

2. Bonds(Total 30K) :
- 15K in VBMFX (Rollover IRA from prev employer)
- 5K in a custom High Yield Bond Fund (401k)
- 10K in a custom Bond Fund (20% of a fund akin to VG?s Tgt Ret 2020 in 401k)
3. Cash (0) :
4. Real estate(0):
5. Other (0);



Current India Assets(23L- C/SB/R), 200L - RealEstate ):
(in Rs @ curren mkt value)
1. Stocks : 10Lakhs (individual stocks), 20K in Mutual Funds
2. Bonds : None
3. Cash : 4Lakhs
4. Real estate :

- Flat1(45L) : Rented at 16k/mo, will serve as interim residence after R2I until we build our house. We intend to rent this again thereafter for regular income.
- Flat2(15L) : Rented at 5k/mo, continue to rent.
- Plot1(70L) : Future home
- Plot2(50L) : Long term investment/ home construction
- Plot3(20L) : Investment
5. Other : POMIS (9Lakhs in parents? and sibling?s name)

Based on looking at other recent AAP discussions for sspp, kumar etc., My high level allocation:

1. Kids education : Kid1(180k), kid2(170k) assuming $40k/yr/kid in today's expense for 6 yrs. If kids end up doing Undergrad in India, then rest for their marriage/future

2. Retirement : 170k and rest of the real estate investment/income + future savings(assuming 6L/yr until retirement)

3. R2I Settling : 50k(covered entirely by US home sale returns)

4. India Home : Use Plot1 and sell Plot2(50L) for construction + furnishing cost

I am not able to post my XL with break-up due to size limitations. It is quite accurate using same calculations from other posts

Breakup of future allocation/ plan:


- All of current equity investments are in one Spouse1 name only.
- A new VG account in Spouse2(VGS2) name to be opened and all new investments will be done only in this account and IBond and MMkt funds will be used for all new investments
- Upon quitting current job, rollover all 401k assets to VG.
- Existing Brokerage account investments(104k) approximately break up into 28k(India stocks ~ MINDX) + 15k(small cap ~ VISVX) + 51k(Lg Cap ~ VTSMX) + 4k (Intl ~ VEURX) + 6k (MINDX). I am treating them as equivalent VG funds for this exercise. When sold, they will be allocated to respective VG funds.
[LIST=1]

Kids Education (350k)[/LIST] 20% Fixed Income(70k)
[LIST=1][LIST=1]

VFIIX(15% ) ? 11k in VGS2 <-IBond

VWEHX(15%) - 11k in VGS2 <-IBond

VIPSX(15%) - 11k in VGS2 <-IBond

VTBMX(55%) ? 37k (24k(existing) + 13k <- future Rollover )[/LIST][/LIST] 35% US Equity(122k),
[LIST=1][LIST=1]

VTSMX( 80%) ? 98k (18k(existing) + VFINX(15k) + VGENX(26k) + VGSIX(23k) + 16k <-future rollover)

VISVX(10%) ? 12k (reduce 22k to 12)

VISGX(10%) ? 12k (10k <-VISVX + 2k <-VGSIX)[/LIST][/LIST] 45%- International Equity(158k) :
[LIST=1][LIST=1]

MINDX(50% ) ? 79k(45k(MINDX) in VGS2 <-IBond + 28k of India Stocks <- Brokerage + 6k (MINDX) existing)

VEURX (20%) ? 32k (26k <-VGTSX + 6k in VGS2 <- MMkt)

VPACX (15%) ? 24k( 21k <-VGTSX) + 3k in VGS2 <-MMkt)

VEIEX (15%) ? 24k( 12k existing + 12k in VGS2 <-MMkt)[/LIST][/LIST]
[LIST=1]

Retirement (170k):[/LIST] 50% US Equity(85k)
a) VTSMX(70%) ? 59k <- 51k - Brokerage Acct( LgCap) + 8k <-Rollover
b) VISVX (15% ) ? 13k <- Brokerage Acct(MidCap)
c) VISGX (15%) ? 13k <- 2k - Brokerage Acct(MidCap) + 11k <-MMkt
27% Intl Equity(45k)
d) VEURX(40%) ? 18k( 4k <- Brokerage Acct( Intl) + 14k <-MMkt
e) VISVX (30% ) ? 13.5<- Rollover
f) VISGX (30%) ? 13.5 <- Rollover
23% India Equity(40k) ? I am categorizing existing India Stock, Mutual Fund and POMIS into this bucket.


Now, the question(s) for the Gurus:

I am little bit stuck with my options on retirement portion allocation. There is significant portion in RealEstate which is not easily movable in India. My other difficulty is with Brokerage account holdings which if I dump-all, would incur capital loss that would take years to even gain tax deduction at this point. Any thoughts here would be very helpful.

With the current plan, I have to buy approx 50k worth on MINDX over next 12 months. Are there other options along with MINDX to distribute the risk.?

Finally I figured out adding smaller attachments :). Here is the proposed plan for Kids and Retirement in simple tables.

For the Gurus of the forum.. Any feed back is greatly appreciated. I am starting to rebalance my AAP which was started in 2004. I plan to achieve target allocation in the next 8-12 months.

Thanks
mak

Bumping up to see if any of the gurus got a chance to look at my post :-)

MAK,

I had this portfolio in my mind and i am trying to build this in the next 8 years.
It's encouraging to see some one with discipline achieve this.

Thanks for sharing these details

Recommendation:
You are 37 and you should consider reducing exposure to the equity market and build more bonds (PF's in India).

a) High inflation, high interest rates being predicted for the next few years.
b) Stock market has had a bull run for the past 5 years and U.S economy (which is 30% GDP) heading into a mild recession.

Good luck on your move