AAP for Shasha - Start taking care of Finance

[shasha]

All,
Being a visitor of this forum for last few months, & I decide to take care of my finance (my DH is not interested), also need to look into our child's future. Already took some action based upon various suggestions given here. Here is the answer to AAP questions:

1. Return to India (R2I) or Live In America (LIA): R2I
2. Your current age: 34, DH is 38
3. Marital Status: Married
4. Number of dependents and ages: One (19 months)

5.
(a) Current citizenship and/or Immigration status: All USC and OCI
(b) If not a USC currently, do you have the option to take up US citizenship prior to R2I?
(c) If you have the option to take USC, do you intend to do so prior to R2I?

6.
(a) If you intend to R2I, when do you intend to R2I? 2012
(b) Immediately upon R2I, do you plan to retire (cease gainful employment), semi-retire, or continue to work for some time? Continue to work
(c) When do you plan to cease gainful employment (Intended Retirement Age)? 45, 50(DH)
(d) If you plan to work after R2I, what do you estimate your annual after-tax savings to be? 0
(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? Work/Semi-retire will take care of annual expenses

7. Is spouse also working? Yes
8. RNOR eligibility of you and your spouse (use the calculator in doc section) or how long you have been out of India ? 3 years

9.
(a) Current annual after-tax savings including Roth IRA (excluding 401(k) and regular IRA contributions): 65K
(b) Current annual savings into tax deferred accounts i.e. 401(k) and regular IRA: 22K
(c) Current annual expenses (excluding tax): 50K
(d) What is your current marginal (not average) federal tax rate, based on your filing status? 28%
(e) What is your current marginal (not average) state tax rate, based on your filing status? 6%

10. What is the ratio of your income to spouse's income? 0.75/1.0(DH)
11. House owner?No
12. If planning to purchase a house to live in, in India, estimate the price you expect to pay if the purchase were to be made today. 1 Cr.

13. What percentage of your total portfolio loss in a year will make you lose sleep? 10%? 20%? 30%? Or 40%? 30%

14. Do you have any loans? CC? Car loans? House loans? What is the current interest rate? No
15. 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? 401K. 16.5K/5K(DH)

16.
(a) What are your short term(1 year) financial goals?Nil
(b) What are your medium term (2-5 years) financial goals?Buying home in India
(c) What are your long term (>5 years) financial goals? Retirement and kids education

17. Need to save money for your kids future education? If so, please answer the following questions:
(a) Do you have a 529 plan? Yes
(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.Both (Graduation and higher studies in US)

18. 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? 50K INR per month, not including housing cost.

19. If you are R2I, what percentage of your portfolio do you want to leave in US? And where? Stocks? Bonds? Cash? Fine with 75% in US (60% Stock, 40% Bond)

20. Do you have any insurance? Life, disability, long-term care? Total value of your policy? Provide information on any life insurance on spouse also. Whatever provided by employer
21. Do you have an emergency fund? How it is invested? Include employer provided life insurance information also. Yes, Invested in US I-Bond

Current US Assets* (Please provide a separate breakup of tax deferred and after-tax accounts):
1. Stocks: ($612K) - all taxable a/c
VTSAX -$328K
VTMSX -$038K
VFWIX - $189K
VGSIX - $057K (IRA)

2. Bonds ($227K) - All tax-deferred
VBTLX - $126K - IRA
PTTAX - $101K - 401Ks

3. Cash ($60K)
4. Real estate
5. Other 529($35K), Emergency Fund ($25K)
VTHRX - $35K (529)
I-Bond - $25K

Current India Assets:
1. Stocks
2. Bonds - INR 82 Lakhs - various Bonds/Post Office schemes, generating 8%-10% returns annually
3. Cash
4. Real estate
5. Other

Specific Questions:
- What to do $60K cash? Not generating interest.
- Presently no new investment in US besides 401K contribution. What to do $5K-$6K/month saving till we R2I?
- Investment skewed towards US. This is where I had argument with DH and he told me to do whatever I want to do :). He's happy with higher US investment %, but I prefer to have higher % in India. But don't know how to proceed and what to buy? If I don't act, he'll do his own way :(.
- How does my current investment looks like? Since I took over from him (he had invested in bunch of stocks and rest was in CD), I came with above AAP based upon various reading. Don't know how good is this one.

thanks.

[RRK]

You have good asset size for your age. Congrats !

Asset Allocation Plan - it is a plan meant for your financial goals. Try to allocate your money for different buckets (financial goals) and based on individual goals time horizon and your risk tolerance, first plan stocks/bonds allocation. [ example: For goals less than 5 years, go for 0/100 allocation or 10/90 allocation. ]

Once you have done allocation for individual goals, find out the composite allocation and manage it. If needed tweak, your current holdings towards composite allocation.

Please read some articles we have in our forum on this topic. Also it may help to google and learn more.

http://www.r2iclubforums.com/forums/content.php/25-Why-do-we-need-Asset-Allocation

http://www.r2iclubforums.com/forums/content.php/36-Basic-Financial-Planning-r2i

http://www.r2iclubforums.com/forums/content.php/50-Financial-Planning-using-Asset-Allocation-step-by-step-guide

[shasha]

Thanks RRK, for taking time & replying it. I'm not as intelligent as most of forum members here i.e. commerce graduate from average university from India. So pardon me, if some of my questions are silly.

Try to allocate your money for different buckets (financial goals) and based on individual goals time horizon and your risk tolerance[/quote] I read this on few post here after search. But got confused and didn't get clear picture. If I understand it correctly, If one is planning to R2I in next few years, her short/medium bucket will have to 0-15% equity & rest will be in bond. Most probably this bucket needs to be implemented using investment options in India. But don't know what are the options available in India for OCI. It would be helpful if someone advice me.

On few threads it was mentioned that one needs to use Debt portion for AAP in India because of returns will be higher becuase of inflation. Most of my debt investments in India are either PPF(opened before we become USC), Senior Citizen Scheme (invested on behalf of my parents and in-law i.e. 60 lakhs) and some other Post office schemes. Now I ran out of options.

Please read some articles we have in our forum on this topic. Also it may help to google and learn more.[/quote]I came to this forum doing google search of 'R2IClub' that noticed when I glanced when I passed one of my co-worker's desk. He immediatly closed the browser but little bit late and I saw header. Previously I thought he was browsing this forum for receipe/matrimonial :).

Most of financial DIY sites does not addresses unique perspective of R2Iers.

[RRK]

We have several interesting discussions and useful ideas for r2iers. R2Iers need are unique. Financial websites you find in India and US cater to the general local public. But they dont serve well the needs of r2iers.

Please read all important threads in the finance forums and educate yourself. Most of your questions could have been answered already. If not, pls post them in relevant topic threads.

If you find this forum useful, pls send links to interesting threads to your friends who could benefit by these discussions.

Under the banner ad, you will find Thread Tools >> email this page.

I am sure your friend will bless you for the priceless gift.

[Lakshya]

ShaSha

First of all welcome to the forum. Stay away from this forum. This is black hole, it will suck you in.

Well I am not guru-expert or as intelligent as most of forum members e.g I am also commerce graduate from average university. :))Your brain power has nothing to do with your degree. I bet you Ivy league graduate must be scratching their head after looking your portfolio size at this age. And yes we have some really smart people here who may not even hold any degree. So there is nothing wrong in asking any question. But as RRK Suggest I would say Read Read and Read. Wealth of Information is sitting here.

Now in my view you have two options. Read and learn and ask question here. Someone will come fwd and will put his/her thoughts. Or take professional help if time/interest is not on your side.

You can start by putting your fund info into Morningstar X ray (Google it), which will give you general idea how your AAP look at this point. I quickly put your no and roughly its look like this

Cash 9%
US stock 46%
Int Stk 20%
Bond 25%



Specific Questions:
- What to do $60K cash? Not generating interest.
Give it to me, I am not that far from South NJ. :rolleyes:


I would say for now you should put NJ Tax exempt (VNJXX?) money market and from there you should do DCA to your various funds to balance your AAP.


- Presently no new investment in US besides 401K contribution.
What to do $5K-$6K/month saving till we R2I?

Same as above DCA or you can split between NJ Money Mkt VG GNMA and some in VG high quality bond, because you will need 1 Cr to buy your RE in India. (Short term Goal) In that case you may not want to invest this money in equity, unless you are planning to liquidate 81L in India towards your RE purchase.


- Investment skewed towards US. This is where I had argument with DH and he told me to do whatever I want to do. He's happy with higher US investment %, but I prefer to have higher % in India. But don't know how to proceed and what to buy? If I don't act, he'll do his own way

You may want to check MINDX, India specific funds. Good MF company for Asia Investment.

My honest suggestion is that take professional advice from Members here. Unless you like to manage your own finance then its different story. With sizable assets your wrong move in taxable account may create tax event.

Good Luck and just follow what I said here but use Google search on this forum which will take you to right direction.

[shasha]

You can start by putting your fund info into Morningstar X ray (Google it), which will give you general idea how your AAP look at this point.[/quote]Thanks for pointing x-Ray tool. But it's not fully useful, I invested my Bond portion of AAP in India. I can't put this into X-ray. Do you know any Indian centeric tool similar to this?

I would say for now you should put NJ Tax exempt (VNJXX?) money market

I'll do that.

You may want to check MINDX, India specific funds.[/quote]Only condition from DH is don't make too many mistakes. I already have international stock fund. Do you think MINDX or India Specific fund better than over-weighting emerging market?

Thanks Lakshya, glad to know some member(s) who has similar education background. I'm also accountant by profession, are you in same profession or in IT?

[Lakshya]

Thanks for pointing x-Ray tool. But it's not fully useful, I invested my Bond portion of AAP in India. I can't put this into X-ray. Do you know any Indian centeric tool similar to this?

I do not have any familiarity of Indian Debt market so I really can’t comment on that. But if you want to see overall picture you can convert Indian Bond in $ value and use PCY or EMB symbol in your x ray (Emerging Mkt Bond ETF). This will not give you accurate picture but will increase your total bond Portion in your AAP.


Only condition from DH is don't make too many mistakes. I already have international stock fund. Do you think MINDX or India Specific fund better than over-weighting emerging market?

Well its question of preference, nothing wrong to add some more flavor specially to home county fund. Mathew is good fund family with decent track record in Asian Mkt. Yes what you have to figure out how you can create space for MINDX in your AAP.

Lets say you want to keep US investment something like 60(S):40(B), out of 60 you may split 50:50 or 60:40 for your US:Int . Now in Int you may want to do 60(VG int):40(MINDX). Read here I think in this thread RRK talk about Int fund.

http://www.r2iclubforums.com/forums/showthread.php/16102-Investing-in-International-Equity-after-r2i

Before creating your AAP I would say think how you are planning to pay for your RE purchase. Because that can change your AAP very well. Are you planning to take home loan or will buy from savings? Also you shd think how you are planning to get monthly x inflation adjusted amt after you retire (in your case t 10-11 years) Also avoid lump sum investment in mkt always follow DCA. BTW you both maxing out your 401k ? I am not sure its right strategy for you guys at this point but you may check with others.

Also read AAP done by Desi for others that will give you very good idea how to create your own.

One thing I am still trying to understand how Indian real inflation play role when you transfer large sum of money back home. I would personally keep my major savings in US. I feel your 50k monthly exp sounds little conservative to me, but its all depends on your Life style.

Thanks Lakshya, glad to know some member(s) who has similar education background. I'm also accountant by profession, are you in same profession or in IT?

We are in same profession.:) BTW which specific area you work? You said you saw your co-worker surfing this site. I hope I am not the same guy :))

Good Luck!


PS I have one Excel sheet ( found from Google) and customized slightly for rebalance AAP but I am not sure how to upload it here. Will check with Admin.

[woozycoolguy]

Thanks for pointing x-Ray tool. But it's not fully useful, I invested my Bond portion of AAP in India. I can't put this into X-ray. Do you know any Indian centeric tool similar to this?

Check out Value Research Online. This is an completly indian site and foreign MF's are not listed here.

Congrats to you and your DH on the portfolio size. If it's not too personal, would you care to let us know how you were able to accumulate all this so early on.

[shasha]

Check out [URL="http://new.valueresearchonline.com/"] If it's not too personal, would you care to let us know how you were able to accumulate all this so early on.

I think it's is below average as compare to most IT guys/families, who are in US for 10 years. Came to this country about 9.5 years ago (HD came few years early) and started job in late 2001 with $30K/year salary. Don't have any secret besides being an intelligent spenders, e.g:

'Sasta Roye Bar-Bar, Mahga Roye eak-Bar' (it's in hindi, don't know how to translate) i.e. usually buy quality product not cheap products. Besides disposable items (e.g. diapers, toilet papers or items not available anywhere else) I don't buy anything from Walmart or similar shops (e.g. target).

Not an impulsive shopper, buy few but quality cloths e.g. Anne Klein, Banan Repulic, Polo, A&E (but not Gap/Old Navy type). IKEA(but not target/walmart/costco).

Never shoped in mall, never used coupon, never went for shopping during big sales events (time is more important than money). But always shopped in factory outlet during quite period (mostly Saturday morning).

Never hesitate for purchase if it has true value e.g. in late 2008 went to car dealer shops to see a car (we needed a car but don't know which one), met two Desi people taking delivery of their car in nearby desk from a desi salesman. Talk to salesman and he said he has 2 more car left and if we are ready to buy now, he can give me $11500 below invoice price(same deal those two guys are getting). Immediatly gave them credit card/check and bought the car in 10 minutes.

Read here I think in this thread RRK talk about Int fund.

I'm still browsing all the threads. Some has excellent information but most are repeated stuff. It seems whiz kids like Desi, RRK, Babu(and few others) are really intelligent and some are really good in stock trading. I wish I should have studies more seriously during my childhood period to compet with these IT geeks . Yet to find some desi girl's post related to finance :).

BTW which specific area you work? You said you saw your co-worker surfing this site. I hope I am not the same guy

Are you in office now :o? I worked in account receivable group.

[Lakshya]

[QUOTE]
It seems whiz kids like Desi, RRK, Babu(and few others) are really intelligent and some are really good in stock trading. I wish I should have studies more seriously during my childhood period to compet with these IT geeks .


Now if you talking about RRK Desi & Bobus I know Desi & Bobus do not have IT background, and RRK i guess have semi IT background.


[QUOTE]
Yet to find some desi girl's post related to finance


Its not possible, i think I am seeing first one who is really serching finance thread on this fourm. :thup:

[QUOTE]
Are you in office now :o? I worked in account receivable group.


Yes I am. Can you see that guy with Yellow shirt, Red Pants and Green shoes that?s me. Do you see bandage on face? That?s me, I was beaten up by wife recently.:(

BTW I work in different area, so we are not at same place.