[blackwasp]

Originally Posted by am1m

I'm really curious about hard numbers from someone who's actually sold their house in today's market.

A cousin of mine sold her house in Navi Mumbai and moved to Kolhapur. Their family of 2+2 & 2 dogs, a turtle and a couple of birds moved from a cramped 2 BHK apartment to a spacious bungalow with huge rooms, a basement converted to an office and a nice terrace. Ample front yard for the pets, walking distance to school for my niece and nephew.

Not to mention they closed off all their loans as well and were left with a nice kitty for investment as well. The savings in EMI alone would be a win, but the location, amenities and the move to a city with lesser hustle and bustle were a bonus. Her profession makes sure that she can pull off such a move (she's an architect).

[am1m]

There's no 'thanks' button for the 'Shifting Gears' section, so saying thanks to smartcat, V.Narayan and blackwasp for your replies. Some actual data at last; this is difficult to get.

Looks like it is as I suspected- for those non-commercial, non-real-estate-professional chaps like me, selling a house in a metro city in India is actually going to be a bit of a slog.

Everyone always looks at the crazy values quoted by builders and assumes their place too must be worth x times what they paid for it and they will be able to easily sell at will. Good to be warned that it's probably not the case. So treating your house as an easily converted asset is probably not wise when making retirement calculations.

Originally Posted by blackwasp

...moved from a cramped 2 BHK apartment to a spacious bungalow with huge rooms...

Yeah, this is what I'm hoping to do someday too. Nothing wrong with the present home itself, but the city as a whole is becoming a real mess and doesn't look like it's going to get better. Can't imagine living as an elderly person here, even though I was born here. Hope to head off to some out of the way town one day.

[AltoLXI]

Originally Posted by am1m

Looks like it is as I suspected- for those non-commercial, non-real-estate-professional chaps like me, selling a house in a metro city in India is actually going to be a bit of a slog.

Yes it is ! Twice I tried to sell my apartment here in Bangalore - not a fancy one with all the amenities. Bought in 2006 and tried selling it in 2016 and the buyers were ready to pay for around the double of what I spent (purchase price + interest on EMI). Tried to sell again last year and during the 6 months got a few buyers and finally the average they were willing to pay was again twice I had spent. With the rentals saved + tax benefit, the CAGR worked to around 8% returns. Not bad but with the new apartments costing 60-70 lakhs with inferior build quality I have postponed selling my apartment for now. Remember that I bought long back when the prices were low. Selling apartments that cost in crores today may not be easy to sell in the future.

Originally Posted by am1m

Everyone always looks at the crazy values quoted by builders and assumes their place too must be worth x times what they paid for it and they will be able to easily sell at will. Good to be warned that it's probably not the case. So treating your house as an easily converted asset is probably not wise when making retirement calculations.

Never trust builders (and the newspaper advts) !!! The picture they paint is too rosy for my comfort. All the words "lakeside", "chirping", "forest", "orchard" never entices me even to look at these apartments/villas. There is enough damage the builders have done to the environment here encroaching on green belt and lakes.

Originally Posted by am1m

Yeah, this is what I'm hoping to do someday too. Nothing wrong with the present home itself, but the city as a whole is becoming a real mess and doesn't look like it's going to get better. Can't imagine living as an elderly person here, even though I was born here. Hope to head off to some out of the way town one day.

Ditto here except that I was not born here but spent substantial number of years of my working life here. How I love the Bangalore of 90s. The city has become a huge mess.

[SmartCat]

Originally Posted by V.Narayan

An apartment purchased in 2009 for Rs 260L was sold by me for all cheque in 2018 for Rs 360L. I have barely covered inflation if at all and less after deal expenses.

Yikes. Works out to be 3.68% CAGR returns . At par with my Citibank Suvidha savings account. But when you add rental yield of around 3 - 4% per annum, then yeah, you just about managed to keep up with inflation.

Originally Posted by AltoLXI

Bought in 2006 and tried selling it in 2016 and the buyers were ready to pay for around the double of what I spent (purchase price + interest on EMI). Tried to sell again last year and during the 6 months got a few buyers and finally the average they were willing to pay was again twice I had spent. With the rentals saved + tax benefit, the CAGR worked to around 8% returns.

What are the returns if you exclude the interest cost? Enter the purchase price, selling price and time duration here:
https://www.investopedia.com/calculator/cagr.aspx

Never trust builders (and the newspaper advts) !!! The picture they paint is too rosy for my comfort. All the words "lakeside", "chirping", "forest", "orchard" never entices me even to look at these apartments/villas.

[V.Narayan]

Originally Posted by am1m

Looks like it is as I suspected- for those non-commercial, non-real-estate-professional chaps like me, selling a house in a metro city in India is actually going to be a bit of a slog.

Very true. Very true.

Everyone always looks at the crazy values quoted by builders and assumes their place too must be worth x times what they paid for it and they will be able to easily sell at will. Good to be warned that it's probably not the case. So treating your house as an easily converted asset is probably not wise when making retirement calculations.

Correct assessment. My wife sometimes asks me about the value of the home we live in. Then gets excited when I tell her. Then I remind her that the figure may have meaning one day to the yet unborn grand child who will place a sandalwood garland (or maybe by then a 'virtual 3D hologram' garland) around my photo and thank 'dadaji' for his astute investment.

Originally Posted by smartcat

Yikes. Works out to be 3.68% CAGR returns . At par with my Citibank Suvidha savings account. But when you add rental yield of around 3 - 4% per annum, then yeah, you just about managed to keep up with inflation.

Sir much worse. I am not a rent guy so no rent and maintenance and city tax outgoes to boot. [Imagine emoji here with holding your ears and wearing a dunce cap]

[V.Narayan]

Originally Posted by amtak

Starting this as I was pondering over a simple thought of - What percentage of our salary (annual) should be our savings or in other words, where should a line be drawn on our expenses?

Originally Posted by am1m

There's no 'thanks' button for the 'Shifting Gears' section, so saying thanks to smartcat, V.Narayan and blackwasp for your replies. Some actual data at last; this is difficult to get.

As you have shown me kindness I will continue and offer some more advice. At my age most of us have two faults - (i) we keep repeating ourselves; and (ii) we offer unsolicited advice.

So coming to your question on percentages. If you are a salaried person I would say save as much as you can after enjoying a reasonable lifestyle. For a salaried person the period 1947 to 1997 was a time of predictability and assurance. The next 50 years 2018 to 2068 will I guess have more variability and unpredictability.

The other question is what standard of living are you shooting for and will you stop at it (tough but possible) or will your burn rate keep climbing proportional to increases in income. Being a self employed with more unpredictability in my income my wife and I froze our standard of living by around 2006- 2008 and don't burn more on consumption today then we did then adjusted for inflation. 1n 1995 80% was consumption 20% was saving. In 2015 10% was consumption 90% was saving. Today we live on a pension and some scraps I collect and it is 70% consumption and 30% saving.

[Chetan_Rao]

Originally Posted by V.Narayan

....

The other question is what standard of living are you shooting for and will you stop at it (tough but possible) or will your burn rate keep climbing proportional to increases in income......

Excuse me butting in with my two paisa, but that was the first question on my investment adviser's questionnaire!

What does your preferred lifestyle cost today (the one you want, not necessarily have right now) and how much would it cost in today's money to maintain it?

Adjusted that for inflation, calculated over my remaining earning years and gave me a reasonable target retirement corpus.

All adjustable of course (we are fickle, needs/wants hardly stay constant), but it's very important to decide how much is enough to make any sort of future financial plans. Well, reasonable ones anyway.

[SmartCat]

Originally Posted by Chetan_Rao

What does your preferred lifestyle cost today (the one you want, not necessarily have right now) and how much would it cost in today's money to maintain it? Adjusted that for inflation, calculated over my remaining earning years and gave me a reasonable target retirement corpus.

Tiny problem -> your lifestyle changes with age. Your spending patterns change significantly every 5 years (20 to 25, 25 to 30, 30 to 35 and so on) based on certain milestones (first job, marriage, new born kids, kids in school, kids in college etc).

That is, you might be spending a lot on travel, shopping, latest gadgets etc now. But the same spending habits will not continue forever, definitely not in retirement.

[Chetan_Rao]

Originally Posted by smartcat

Tiny problem -> your lifestyle changes with age. Your spending patterns change significantly every 5 years (20 to 25, 25 to 30, 30 to 35 and so on) based on certain milestones (first job, marriage, new born kids, kids in school, kids in college etc).

That is, you might be spending a lot on travel, shopping, latest gadgets etc now. But the same spending habits will not continue forever, definitely not in retirement.

You're right, financial planning can't be absolute. Who knows if I'll even make it to retirement to see the benefits of all the planning?

That said, the prep questionnaire I got was pretty exhaustive. Marriage, kids, real estate, vanity purchases, holiday/vacation plans, medical/accident/term insurance for self/dependents, existing assets and investments, a bunch of other stuff that will impact me financially for life.

The idea was/is to capture and reasonably estimate what my financial requirements would look like on an ongoing basis, not just ~30 years from now when I'm retired. Investment advice provided to meet these requirements, then annual reviews to account for any adjustments w.r.t. income or changing needs/wants.

There will always be moving parts, but it's definitely better to prepare within reasonable limits than not at all.

[Latheesh]

This thread is one of the culprits why I am still driving around in my tiny hatchback (2009 model and ~ 102000 on the odo)

[wangdu]

Originally Posted by Chetan_Rao

.. Investment advice provided to meet these requirements, then annual reviews to account for any adjustments w.r.t. income or changing needs/wants.

There will always be moving parts, but it's definitely better to prepare within reasonable limits than not at all.

Only sharing my experience - this "advice" is where the brokers & fund houses make their income. The ulterior advice is usually of "preferred" funds and models that serves the MF and the broker the best.

The advice is nothing genius just gauging the risk capital and show it to us as we fall for jargons of the financial world, our dreams exploited by their threats. Remember- threat sells else there wouldn't even be 'boost' on the shelves let alone insurance plans.

And then most if not all is linked to stocks which has a bull-bear cycle. The same investment advice and MFs which promise a rosy picture (with that asterisk) mostly cut a sorry figure when the bears come roaring because MFs and the "advice" won't short the market but instead 1) move some funds to debt & alike to minimize loss 2) to balance out FII sell the houses will keep buying through DII (from our funds) - but DIIs can hardly balance FIIs. The latter is initiated by govt to stop the free fall.

I have consulted many such life/education plans and they are nothing more than a sophisticated scam which we can avoid by "holding the bull by its horns" and spread in assets per our own research, exit when the markets are high (and we meet our reasonable not greedy targets) and wait for the crash to re-invest lump sum or re-start SIP.

I was all excuses for not having time to research and invest myself but learned the hard way that eventually it's our own hand that feeds our mouth.

[dark.knight]

Interesting thread.. there are a few ways we can keep squeezing out savings for the future whilst still keeping our ever fluttering minds "engaged" in consumerist tendencies.

The two key mantras on keeping money alive :

1) A penny saved is a penny earned.
2) A penny earned is a penny saved.

Property, now I know exactly what few are talking about and also exactly why many will not be able to relate.. its because property is hot in very few locations as it is in Bangalore. Bangalore still has unbelievably large land-banks at what would to an outsider be very well developed areas.. at extremely cheap prices. I'd say the city has seen the maximum rise in millionaires in the past decade.. many childhood friends of mine who were in fact lower-middle class at that time are hotshot players today, thanks largely to the unbelievable rise in real-estate values in areas and homes which at that time (hardly 25 years back) were acquired for under a lakh of rupees. Bangalore has great rental returns and per sq.ft charges grow at a decent pace (10+% per annum) in key areas. My uncle who bought a flat in the CBD for about 30L over a decade ago, has now valued the same property at over 4 times.. a stunning rise of 15% YoY compounded and it has served the purpose of being a home for 12 odd years. Comparatively in Mumbai or Delhi where acquisition costs are very high in key areas, and appreciation returns are very low in cheaper areas.. property investment is seen as not very tempting.

Our first rental investment hunt was kind of a lottery, shortlisted a new middle-class flat and negotiated but the builder was charging a heck of a premium and thus kept away. Demonetization happened 2 months later and the builder personally got in touch the very next evening as he feared that his capital will be locked up for months and sealed a deal for a discount of over 25%.

There is very little that should not be done when it comes to investing. I don't trust banks too much these days. A spread of property+rental income+FD+SB+MF+Tax saving bonds should do the trick to ensure that a middle/upper-middle class life can be sustained. With all that in place, wise purchases can be done such as car (as an entrepreneur the first buy should be a car to activate the depreciation benefit) and just ensuring that the engine of the economy is churning because without consumerism this monetary system will fall flat on its face (who'd have ever thunk it eh??).

Personally, I'm not a MF/market guy, of the entire portfolio this darn thing has gotten me the least returns, sometimes way lower than inflation so even if there is a profit it nets in a loss. I'm off the markets for now, maybe someone here can help me?

[Chetan_Rao]

Originally Posted by wangdu

Only sharing my experience - this "advice" is where the brokers & fund houses make their income....

Precisely why I took some sage advice, steered clear of the kind of advisers you rightly mentioned should be avoided, and hired a fixed-fee adviser. He's got no stake in where I invest, no commission on my investments and earns nothing from me except the very reasonable fixed annual fee I pay for his services.

All my MF investments are in direct mode through individual AMCs (he doesn't invest on my behalf), and I can go solo anytime I want by not paying his fees, which I expect will be a couple years from now when I've got the hang of the kind of investments that fit my risk/investment profile and needs. By his own admission and experience, he expects most of his clients to become self-sufficient in 2-3 years and manage their investments on their own.

[Red Liner]

Originally Posted by Chetan_Rao

Precisely why I took some sage advice, steered clear of the kind of advisers you rightly mentioned should be avoided, and hired a fixed-fee adviser. He's got no stake in where I invest

Very sage advice. PM sent.

Is anyone expecting a bear run anytime soon? What is the prognosis? I think closer to the 2019 elections, there will definitely be a small dip in the markets in anticipation of who wins and in what majority. I am just about to begin entering the market, does it make sense to wait?

[ajayclicks]

Originally Posted by Chetan_Rao

hired a fixed-fee adviser. the very reasonable fixed annual fee I pay for his services.

Do you mind sharing some details on his service, fees etc. Here, or via pm, or even happy to call you at your convenience.