kumararumugam

dear members thanks for sharing your ideas and educating other members. i am a nri and i have sold my property in chennai for 90 lacs. i am 40 and i want to retire in my life. what are the best diversified investments throgh which i can make 30000 rs per month to run my day to day life and to invest in real estate at good location to get a good appreciation after 10 to 15 yrs. pls give a correct location for real estate investments and banking schemes to gain 30k rs per month.

Thanks in advance and appreciate your help

enduser

You may refer to Mutual Fund Insight magazine by Value Research. There are several case studies that are discussed, like if you are 35 and have certain income and need to satisfy certain requirements, how much you need to invest and in what, etc.

It may not answer your queries directly, but I guess you could get some idea. Also, you may ask you own query to the magazine and if lucky it could taken be up for study and maybe also for publication.
(Some cases are too theoretical though )

See ]http://www.valueresearchonline.com/subscribe/new_subscription.asp[/url]

PS: BTW, I am no agent or salesperson of this magazine

Economist

Defenatly 90 lakhs is not sufficient to retire in India.
Inflation will kill you.
If you do decide to retire with 90 Lakhs make sure your investment are in growth assets that can have a "long term average" return on at least 8% over Inflation.

If you deposit funds in FD Inflation will ensure it becomes peanuts in 5 years.

I hope you have a mortgage free property to live in,Because you need atleast 20K for rent.

Watch out for Inflation.

kumararumugam

webiste is more informative and educative thanks a lot bro

kumararumugam

eco thanks for your advice and caution... can u pls explain me practicle implementation of 90 lac and how to invest and where to invest to overcome the inflation.... i have mortgage free property to live in

wiseman

Dear Arumugam,

Though you should go to a good (and certified) investment planner (as they would be best at covering every angle including sectors to invest in, approx. longterm ROI, risks, frequency and uniformity of returns (monthly, annual, etc), taxation, etc, etc, here are what comes to my mind immediately ...

First of all, you stated 30k pm as your requirement. Is this for you single or are you married with a family? Secondly, to get 30k in hand, you will need significantly more pre-tax (income tax).

Then, there is the issue of inflation which is likely to increase in the coming decade, especially in the area of food & oil (petroleum). So, you must generate surpluses from your income that will grow your capital to cover inflation in the coming years (not enough simply for the capital to only generate 30k).

Then, there is risk of capital. The risk-free return in India may be around 7%(?). If you want more returns there is every chance of your losing capital like in 2008 stock market, etc.

And your investments should be in a balanced manner to mix capital gains as well as income so that you grow your money for the long term as well as have some to eat for the short term.

Then comes RE (your language led me to believe that you also wished to buy property within this 90L.

If you want to cover all these, 90L seems quite inadequate since it will give you returns of only 42k pm (at 7% return and 20% tax) and 60k ( (at 10% return and 20% tax).

Besides, lastly, why are you retiring at such a young age? Imagine, in the next 10 years, you could easily put away another 90L so that you may then think seriously of retiring. And retiring at this age will have you brain-dead in a few years, unless you are thinking of another profession/occupation.

Think carefully.

cheers

Venkytalks

Nobody can live decently on 30,000 per month income, five years from now. Whats good now will become peanuts then.

To maintain current living std, assuming you get 30,000 pm income now, you need 60L in FD (quarterly interest) plus another 60L in FD for inflation protection (cumulative).

If you have another 30L in investments in addition to home and RE sale proceeds, you can retire in my opinion. Surely, as NRI, that will be peanuts for you.

I would continue to work in a light job close to wherever home is. Just to keep your skills active.

If you have children, you will need 1 crore per child to educate and settle them decently. Another 50L to holiday outside India one a year on its interest.

So that is 1.2 +1+1+0.5=3.7 Crores (assuming 2 children).

If you have more money, go ahead, retire and invest in RE for long term appreciation as well.

realacres

Just a question out of curiosity:- Why do you want to retire at this age? Maybe some investment options can be worked out based on this.

Economist

On certain situations I have recommended a strategy that I call "No frills cash flow strategy"- This simple strategy worked extremely well for many and also has options to fine tuning to more complex setting as you go.

Part A – C&FI – high income and low growth

• Identify how much funds you need p/a for recurring expenditure + tax + capital expense for 1 year. (Say in your case 3.60L recurring exp, tax say 60K + 1L capex (like property repairs, holiday, TV etc) total = 5.2L p/a.

• Index the amount by say 8% for inflation and compound it for another 4 four years.

Funds required Year 1 = 5.2L
Year 2 = 5.6L
Year 3 = 6.05L
Year 4 = 6.55L
Year 5 = 7.10L
Total = 30L

• 30 L to be invested in conservative cash & FI as follows;

Funds require in:
Yr 1 = 5.2L in bank cash and short FDs (say 6 months),
Yr 2&3 = 11.65L in long term F/Ds up to 24 to 36 months
Yr 4&5 = 13.65L Invest in Indian gov bonds, Intl bonds, coupons, long FDs.

Aim of part A is - for 30L to keep up with inflation and meet your outgoings for first 5 years (therefore you are not forced to redeem any growth assets when the market is down).

Part B – Growth low income but high growth

Funds that is not required for the first 5 years (i.e.60L)

Invest these funds (60L) in highly liquid, and diversified blue chip assets classes such as :
1. Indian equities/fund (up to 50% exposure)
2. International equities/funds 25% exposure
3. LPT funds (15%)
4. Alternative asset class - geared (10%)

All the above investment should be in various funds and well diversifies with in each asset class (Say 5 or 6 six funds with in Indian equities asset class) and also

Your planner would review your portfolio half yearly and take profits from growth assets class (Part B) when the market is good and top up your cash and FI (Part A).
When the market is down (In Part B)you do not need to draw down funds from your growth assets.

This is simple, tried and tested old fashion strategy

PS : A small exposure to direct RE can be made by some gearing strategy (I shall explain later) using combination of deposit, loan and rental income (Say 10 L Deposit + 10 L loan)

DISCLAIMER :
THIS IS JUST GENERAL DISCUSSION ONLY AND NOT SPECIFIC ADVICE AND IT MAY NOT SUITE YOU - PLEASE CONSULT A CERTIFIED PLANNER FOR PERSONAL ADVICE.

enduser

All the above options are based on the assumption that Indian Economy would grow at 15-16% CAGR for decades and decades. Don't you think such a CAGR is not feasible over long period?