Is it better to invest in India or in US

Hi All,

As US economy slowdown, real estate market being down...where to invest in India or in US. What are different options & retirement plans. I need your suggestions. Can anyone throw some light this subject ?

Thanks in advance !

Veen,

It depends on lots of factors and your future plans. My personal opinion :)

let me explain

Your investment plan might vary depending upon the answers you give for these questions.

Initially let me start with these:

(1) Return to India? If so after how long?
(2) Income? Both or Single?
(3) Kids? How many present or future?
(4) Budget - How much every month can you set aside for investment?


If you are planning to return to India and within less than 5 years from now:

Home investment in India is the best option. Why?

If Rent:

5 X 12 = 60 months = Rent approx $1200 = 72000


If Owning:

Home Approx $500,000 (minimum)
Downpayment - For good interest rate, atleast it should be 10%, but lets just say $25,000

So you will be getting loan for $475,000
Interest Rate - 6.25%
Mortgage Term = 30 years

Every month your mortgage will be - $2924.66

So now you can see, how it goes out from your pocket.

At the end of the year, when you are planning to sell, you need to factor in these interest amounts that you had paid and then make sure if you can make a profit out of it.. so think, a $500,000 house, should be sold for atleast $700,000. Now is that possible after 5 years ;) Now that should help you decide, if just shedding out $72,000 and save as much as possible is better or end up with nothing is better :)

If you are planning to return to India and within 10 years from now:

Since the market is in recession, real estate is predicted to come back to its boom phase 10 years from now. So it is assumed that by the time you sell, it will be in its peak price. Since you are buying a home at its lowest cost.

But will it still be an investment. Will you make a profit out of it? The answer is still NO. Why. The same calculation as above. You would be still paying the interest amount and very very small amount from the principal. Also a house that you are buying today is 10 years old from now and it has its own disadvantages.

So the conclusion is: If you are planning to return to India, now is not the right time to buy.

But if you are planning to settle in USA, Pleas go ahead. Now is the right time to purchase here.. 15-20 years from now.. This is great time and a smart investment.

All the other answers depends on how much you can pay out for your investment :)

Now finally retirement options. There are many..

(1) Best: 401K [company matches or gives out a percentage for your
saving]
(2) Mutual funds. [ but you need to really make sure the profile on each one of them and check out their history and future plans]

Other investment are always there:
(1) Gold bars/coins
(2) Savings account in Bank
(3) Stocks [ you shud really have some experience, else its a loser game]

Let me know if you need more info. :)

Nandhu,
Thanks for the smart and detailed info...
Though this may seem out of topic...Where can one buy Gold coins/bars in US?Any reliable/govt source?

Nandhu,

There are also other costs hidden in owning a home other than mortgage...home owners insurance,propert tax,security alarm,montly HOA fees,increased utility bills,maintanence,pest services...oh..Boy...what not more?

But if you can really afford nothing can beat the joy of owning a Home!!!!!!!!!which is priceless... especially in a country like U.S where you have lotsa space inside and out when compared to India...

Originally Posted by shravanthika

Nandhu,
Thanks for the smart and detailed info...
Though this may seem out of topic...Where can one buy Gold coins/bars in US?Any reliable/govt source?

You're welcome :)

I guess we discussed that in some other thread.. Most banks nowadays sell them at the daily rate :) So you migth want to talk to them first. Its the best place and secure too. They can hold it for you as well if you have an account.. something like that..

Originally Posted by shravanthika

Nandhu,

There are also other costs hidden in owning a home other than mortgage...home owners insurance,propert tax,security alarm,montly HOA fees,increased utility bills,maintanence,pest services...oh..Boy...what not more?

Yep.. but don't want to scare her more ;)

But if you can really afford nothing can beat the joy of owning a Home!!!!!!!!!which is priceless... especially in a country like U.S where you have lotsa space inside and out when compared to India...

Owning your dream home can be anywhere, is what I personally feel.. For the same amount and getting a single family house with a reasonable yard, for that same amount, I might very well have a bungalow and acres of farm around in India..

I just don't feel that the month we shed here over a home is just not worth it.. a $800,000 house is not upto the mark at all here. Also if in India, I CAN/WILL get my dream home.. But never here, I always had to adjust and compromise to "something"... unless you build it here ;)

I agree with shravanthika...
Apart from this, you get a tax benefit too.
Always your equity on the house remains yours.
It is left to the individual to make choices.

Originally Posted by shravanthika

Nandhu,

There are also other costs hidden in owning a home other than mortgage...home owners insurance,propert tax,security alarm,montly HOA fees,increased utility bills,maintanence,pest services...oh..Boy...what not more?

But if you can really afford nothing can beat the joy of owning a Home!!!!!!!!!which is priceless... especially in a country like U.S where you have lotsa space inside and out when compared to India...

Originally Posted by puni88

I agree with shravanthika...
Apart from this, you get a tax benefit too.
Always your equity on the house remains yours.
It is left to the individual to make choices.

tax benefit - thats peanuts to the money you are spending every month on paying all sorts !!!!

Equity - riiiight... but what if your home is not appraised as you wanted?

End of the day, you got to waive if its a smart investment or not...

Hi

I agree with nandshyam. It all depends on what your long term plans are. If you plan to go back to India, it may be better to send money back while the exchange rate is high so you get more for your dollars. The dollar is getting weaker day by day and soon we may not even get 39/40 rs for a dollar. You may also want to invest in real estate in India as the prices are going up everyday. If you plan to stay here, then now is probably a good time to buy a house as prices are low (may go lower still).

Hi Nandhu,

Thank you very much for detialed & informative reply. We r owning house here & mortgage, HRA etc too much. We had to move from that place b'coz of job. So we were thinking... is it worth a invesment here. Since real estate in India is booming. In India also will it fall?

Thank you for giving info about different investment options. I would like to do more research on this.... any good websites u wd suggest.

Thank you very much....

veen

Owning your dream home can be anywhere, is what I personally feel.. For the same amount and getting a single family house with a reasonable yard, for that same amount, I might very well have a bungalow and acres of farm around in India..

I just don't feel that the month we shed here over a home is just not worth it.. a $800,000 house is not upto the mark at all here. Also if in India, I CAN/WILL get my dream home.. But never here, I always had to adjust and compromise to "something"... unless you build it here ;)

Yes I totally agree...but it also varies with the individual's preference and taste..."a dream home " ...concept also varies accordingly..I think you are talking abt homes in your area which seems to too expensive...When you compare 800K home to one buying in India ...yep u r right...but how many of us here in US are shopping around for 800K home?I dont think a lot many...

Even in US you can get your dream home around 200K if your only focus is big yard and sophisticated amenities...wherever you live you always have the choice of "home improvement".....but you have to sacrifice your school dist,city life and many such things...Some cities even have nicer neighborhood,good schools for around 300K...



As puni88 mentioned...your equity always grow...but maintenance is always a issue here..you cannot expect your home to bring you money...but you will always have a satisfaction"of your own home"

Though this may seem off topic...I always wanted to share how you'd be happy and contented here if your dreams are not "million dollar " homes...and not investment oriented..

Just my 2 cents...no offense intended...