This is one of the hot topic being discussed in any of the parties, informal get together, meetings and ofcourse in our online forum.
The simple and easy answer is "It Depends !".
But no one is satisfied with that, because every one knows that, even before asking the question.
We have got various answers from 100K to 640K and some wild numbers like million $.
So, let us put some assumptions and work out the numbers.
Let us start with basics.
1) Let us assume an unmarried boy/girl came to US to work for some time and planning to go back as single. This person will return back to work in India.
We dont want this guy to seek handouts from friends and relatives for his return and will give a target to save.
Flight ticket - one way $1K/person
Ship goods - $2-$5K
Immediate settlement expenses.
- buy a car, house rent/advance, appliances etc ($15-$25K)
- living expenses in India for Short Term ( $5-$10K)
Total = $23K to $41K
2) Let us assume a family of 3 returning back.
Flight ticket - one way $1K/person = $3K
Ship goods - $2-$5K
Immediate settlement expenses.
- buy a car, house rent/advance, appliances etc ($15-$25K)
- living expenses in India for Short Term ( $5-$10K)
- toys, clothes, kitchen utensils, furnitures, house wares $5K-$20K
Total = $35K to $63K
3) Some argue if you can't buy a house after return, what is the point of going to US ? This is generally accepted argument by most of us. We dont question the logic behind it. It is so obvious why question this ?
But the ground reality is very much different. It is easier to buy a house in US, ( cheaper, easy money available, long term loans available) compared to any of the metro. First you have to downsize, second you will pay more price for lower standard of living.
Ask yourself, what will happen,
1) if you return w/o money to buy a house? Will the sky fall ?
2) Can't you earn enough to pay for a home mortgage after your return ? If not you have other serious problems, and r2i is not an issue at all for you.
3) What is the difference between renting and paying mortgage to the bank ?
I am not saying one should not save for home. But dont put pressure on yourself, by including that as a "MUST GOAL".
4) Additional goals:
Some of you plan to save some moeny towards child education, your own retirement, buy a secondary house in hill station etc.
Obviously this needs some time to learn the individual's situation, returning city, cost of living of the city, inflation, number of children and their age, and so many other factors.
Factors affecting the target amount calculations:
1) Few want to return at the age of 40, retired. I would say this is just a fashion statement. This fashion will fade very quickly.
2) Few plan to return for semi retirement. It means they are neither retired nor working. A form of useless state. They are young and can't explain to any one why they are not going to work, when their father is working.
3) India is status conscious society, whether you like it or not, you have to accept it. What you do, where you live, what you wear, what you drive, where you eat all matters. Every one wants to know about it. Don't ignore this in your target calculations. There is a general feeling here, if some one return, it is because he made lot of money or he is a failure, could not find a right job in USA. This very much affects your lifestyle and also related expenses. Include this factor in your savings calculations.
4) If you artifically set a very high limit, beyond your reach, you will need more time to work and save before return. This has directly opposite effect on your return plans.
The longer you stay, you are risking the possibility of not returning. ( kids grow up, parents in haven, no friends in India, difficulty to adjust to a living conditions of a third world country )
Eventually you are left with your target money minus your r2i goal. You will screw up your own plans.
Good luck ! :)
How much is enough ?
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peace_lover
- Posts: 31
- Joined: Mon Jan 08, 2007 3:41 am
How much is enough ?
RRK
Great points. I would like to add that we will have set our goals initially when we landed in the U.S. These goals will not remain the same over time and may need slight modifications.
For example if we thought that 200k was enough in 1998 it is not the same today because a decent apartment in a good neighbourhood costs between 40-70 lakhs. So we need another $70-80k more than 200k. That is the kind of modification I would make.
If we have achieved it then if we can try r2i. Life wise there are certain adjustments we have made to live in the U.S when we initially arrived. This is the cultural change and adaptation one has to go through in an alien culture. Now when we go back, there is the reverse cultural adaptation we need to go through. Indian middle classes have changed over the last 10 years or so and we have accepted certain values from the American/ Alien way of life. So we need a reverse adaptation.
Thanks
Great points. I would like to add that we will have set our goals initially when we landed in the U.S. These goals will not remain the same over time and may need slight modifications.
For example if we thought that 200k was enough in 1998 it is not the same today because a decent apartment in a good neighbourhood costs between 40-70 lakhs. So we need another $70-80k more than 200k. That is the kind of modification I would make.
If we have achieved it then if we can try r2i. Life wise there are certain adjustments we have made to live in the U.S when we initially arrived. This is the cultural change and adaptation one has to go through in an alien culture. Now when we go back, there is the reverse cultural adaptation we need to go through. Indian middle classes have changed over the last 10 years or so and we have accepted certain values from the American/ Alien way of life. So we need a reverse adaptation.
Thanks
How much is enough ?
My thinking has always been to:
1. Buy a house in India and pay off the money. Same for Car.
2. Take X$ back with you -> which translates to Y Rupees per month. WHile this may not cover all your montly expenses its a good buffer to have. If the Y rupees you get per month are good enough for your montly expenses, thats awesome.
3. Take a job which can cover your monthly expenses
1. Buy a house in India and pay off the money. Same for Car.
2. Take X$ back with you -> which translates to Y Rupees per month. WHile this may not cover all your montly expenses its a good buffer to have. If the Y rupees you get per month are good enough for your montly expenses, thats awesome.
3. Take a job which can cover your monthly expenses
How much is enough ?
This is a puzzle to me.
When some one is slogging in US, they dont think how much is enough to stop working. They got bills to pay, vacations to enjoy. Got to go to work tomorrow.
Even retirement at 65 is a dream, if you have two kids and have to send them to college.
But you raise the subject of returning to India, they start "day dreaming":(
why ?
If you are ready to work your *** off when you are in US, why not do the samething after return to India ? Why would you have to take it easy ?
Why do you have to pay off your home loan next day ? and live life king size ?
Why would you make an unrealistic budget and then say, it is not possible to save that much money, and abort r2i plan and go to work next day ?
If you are ready to work in US, why not come back and work in India ?
:confused:
When some one is slogging in US, they dont think how much is enough to stop working. They got bills to pay, vacations to enjoy. Got to go to work tomorrow.
Even retirement at 65 is a dream, if you have two kids and have to send them to college.
But you raise the subject of returning to India, they start "day dreaming":(
why ?
If you are ready to work your *** off when you are in US, why not do the samething after return to India ? Why would you have to take it easy ?
Why do you have to pay off your home loan next day ? and live life king size ?
Why would you make an unrealistic budget and then say, it is not possible to save that much money, and abort r2i plan and go to work next day ?
If you are ready to work in US, why not come back and work in India ?
:confused:
How much is enough ?
RRK;2662If you are ready to work your *** off when you are in US, why not do the samething after return to India ? Why would you have to take it easy ?
Why do you have to pay off your home loan next day ? and live life king size ?
Why would you make an unrealistic budget and then say, it is not possible to save that much money, and abort r2i plan and go to work next day ?
If you are ready to work in US, why not come back and work in India ?
:confused:[/quote]
Good question.
IMO, it is a "legacy dream and wish" issue. When most NRIs boarded the boat, we probably told ourselves and our loved ones that we would go to the west and reap the benefits of efforts.
We may have said that we would become rich/wealthy and come back live life like a king or a much envied person.
Now, fastforward to reality. After the sticker price shock and one pays off the home, the R2I'er is no better off (financially) than his neighbor, rich friend or someone who inherited a house.
The goals that the FoB desi had in mind have slowly turned into unrealistic budget over time due to RE inflation.
And to top it off, he/she is looking at a life time of employment w/ severe competition in education for his children. The LIA decides to stay put.
Now, to answer how much is enough? Not a whole lot, if you are willing to lead the life style you did before you first went to the US; not a whole lot if you are willing to maintain the standard of living you had before you went to the US; not a whole lot if you decide to live in a tier-II/III city, which is exactly what your present day metro was, several year ago...
How much is enough ?
RRK;2662
If you are ready to work your *** off when you are in US, why not do the samething after return to India ? Why would you have to take it easy ?
Why do you have to pay off your home loan next day ? and live life king size ?
[/quote]
what is wrong in hoping to pay off your loan and live life king size. When you multiply by 45 it makes things easier in India
RRK;2662
Why would you make an unrealistic budget and then say, it is not possible to save that much money, and abort r2i plan and go to work next day ?
If you are ready to work in US, why not come back and work in India ?
:confused:[/quote]
Sure, one can can work in India. No is saying no to that.
Also one doesnt need to make unreliastic plan. Everyone needs Roti, Kapada and Makaan (Food, Clothes, House).
First 2 are taken care of if one works in India.
House is a nice to have item - if it is taken care of already
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Old-Spice2
- Posts: 1898
- Joined: Wed Jan 17, 2007 11:38 pm
How much is enough ?
>>Why do you have to pay off your home loan next day ? and live life king size ?
For general r2i crowd, average age is between 35-45. It is ok to take 20 yrs or 30 yrs mortgage when you are below 30 as you have enough time to work and pay off. At 40+, it does not make sense to take 20 yrs loan.
For an average salaried person in India, buying a home from own money is an uphill task. It was like that 15 years back and now it is harder. I guess it is more to do with psychological effect of having own roof over the head.
For general r2i crowd, average age is between 35-45. It is ok to take 20 yrs or 30 yrs mortgage when you are below 30 as you have enough time to work and pay off. At 40+, it does not make sense to take 20 yrs loan.
For an average salaried person in India, buying a home from own money is an uphill task. It was like that 15 years back and now it is harder. I guess it is more to do with psychological effect of having own roof over the head.
How much is enough ?
Old-Spice2;2709>>Why do you have to pay off your home loan next day ? and live life king size ?
For general r2i crowd, average age is between 35-45. It is ok to take 20 yrs or 30 yrs mortgage when you are below 30 as you have enough time to work and pay off. At 40+, it does not make sense to take 20 yrs loan.
For an average salaried person in India, buying a home from own money is an uphill task. It was like that 15 years back and now it is harder. I guess it is more to do with psychological effect of having own roof over the head.
These are not binary options, pay off entirely or take a mortgage for most of the purchase cost. Most R2Iers, even those who return with "just" $50K or so, will be able to put all or most of it down, which reduces the loan to perhaps 20-60% of the home's cost, depending on what and where they are buying, compared to an India-grown professional needing say, 80% Loan. This differential will certainly help an R2Ier even though they may be similar to an India-grown professional in terms of salary and other recurring expenses.
Having reasonable expectations, such as a 35-40 year old typical R2Ier must probably work to pay for at least recurring expesnes - which are pegged at comparable level India-grown professionals, will greatly mitigate the post-R2I stress IMO. In other words, be reasonable about expense control and earned income upton R2I. That is what I felt RRK was implying in his message.
How much is enough ?
Hi all,
I know this sounds hard but the reality that many NRIs took India For Granted and did not invest over a period of time [Time Value of Money and Ever Increasing Inflation]. Instead they were just chasing a moving target which started at $100K some 8 - 10 years back and is now at something like $600K [may be even $1 Million ..]
The general assumption was that while the rest of the world marched on India would stand still there stuck/waiting for the Sons of the Soil [Daughters included] to come back whenever they liked and live comfortably for the rest of their lives on their hard-earned earnings abroad. Unfortunately the reality is that India though it still has a long way to go in economic progress is still far ahead today than many would have dreamed / thought of a few years ago. It was a dream for many an NRI to make so much money that he/she could come back and live life king size like someone said. But unfortunately it is more closer to a dream than to reality for most NRIs today mainly because whether you like it or not India is expensive and this is one of the prices we have to pay for Economic Progress and Growth.
So the secret to R2I and good life there after is to come back with right expecations regarding how far your abroad savings can take you and for how long you need to work before getting anywhere close to Semi-Retirement or Retirement. There is nothing wrong with taking a loan for your housing where by the house gets paid for over a period of say 10 years as long you do your other investments prudently and diversify across financial instruments of varying risk according to your risk taking appetite.
If someone says I missed the boat 2-3 years then the sad reality is that it would have been a better time to come back to India/invest, but if you do not start investing in India even now will be a even bigger missed opportunity if you are anyway of the type who will R2I sooner or later and have the right reasons to do so and will be doing it with the right expectations.
Regards
Venkat
I know this sounds hard but the reality that many NRIs took India For Granted and did not invest over a period of time [Time Value of Money and Ever Increasing Inflation]. Instead they were just chasing a moving target which started at $100K some 8 - 10 years back and is now at something like $600K [may be even $1 Million ..]
The general assumption was that while the rest of the world marched on India would stand still there stuck/waiting for the Sons of the Soil [Daughters included] to come back whenever they liked and live comfortably for the rest of their lives on their hard-earned earnings abroad. Unfortunately the reality is that India though it still has a long way to go in economic progress is still far ahead today than many would have dreamed / thought of a few years ago. It was a dream for many an NRI to make so much money that he/she could come back and live life king size like someone said. But unfortunately it is more closer to a dream than to reality for most NRIs today mainly because whether you like it or not India is expensive and this is one of the prices we have to pay for Economic Progress and Growth.
So the secret to R2I and good life there after is to come back with right expecations regarding how far your abroad savings can take you and for how long you need to work before getting anywhere close to Semi-Retirement or Retirement. There is nothing wrong with taking a loan for your housing where by the house gets paid for over a period of say 10 years as long you do your other investments prudently and diversify across financial instruments of varying risk according to your risk taking appetite.
If someone says I missed the boat 2-3 years then the sad reality is that it would have been a better time to come back to India/invest, but if you do not start investing in India even now will be a even bigger missed opportunity if you are anyway of the type who will R2I sooner or later and have the right reasons to do so and will be doing it with the right expectations.
Regards
Venkat