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Need Savings Advice

Discussion in 'Money Matters' started by Caughtinbetween, Jun 24, 2019.

  1. Caughtinbetween

    Caughtinbetween Silver IL'ite

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    hi ,
    i am confused with few things i am considering and want to know your views on it .
    let me put here my unfiltered thoughts here about where i stand financially and how to improve from here .

    1: So far , i pay about $1500/mon for the day care , buy baby stuff / my basic stuff , paying medical bills and some grocery shopping , some spend on takeouts if i have to work long hours on a day , paying loans taken during fertility treatments and such which mostly comes up to another $1300-1500/mon.

    2: i also take a pay deduction of about $1500/mon towards 401k
    then dependent care fsa , hsa and some other benefits that round up to $500.

    3: i got stock assets every year since i started working and more so since i joined my new role so this november i will have part of these stocks vest and some more next year and so on. Those stocks are worth $50k .

    here i have options (want to know your view on the best one ) :

    i) I can pay 40% tax on those stocks and keep it in my brokerage account without selling any of those. So in future whenever i want to sell those i only pay the tax for the extra amount it has grown since i bought those stocks . I think its called capital gains tax ? So here in order to pay the tax i would need around $25k approx. by november that i dont have right now . I would probably need to take a loan for that.

    ii) I can let them sell the shares , cover the money for the taxes and then they convert the remaining amount to shares again which we can keep or transact , the tax is same 40% .

    I dont see the difference in both or maybe i dont understand .

    So either way and including other previously vested shares i would have ~$35k by end of the year.

    I have about $12k in loans that I am trying to pay off asap. If I reduce the 401k contribution i would be able to pay off my loan in the next 4-5 months .

    Initially i used to think that i should transfer all of my stock earnings to child's college plan but lately i feel this strong urge to own at least a small apartment in india from my earnings even if its a one bhk or a small condo . So i am thinking I for the time being save some small amount in college plan and 401k and put max. towards buying a home in india .

    Note :I dont pay towards household expenses .

    How should i work on saving for the home , lets say with a target of 1-1.5 years to save for the down payment.

    Only I plan to put entire money towards buying the property so want something very basic , not expensive . I think I would be able to pay$1k in emi min. if i adjust 401k and other expenses . City i am planning is Hyd , in an average area.

    thank you for your help as always .
     
    Thyagarajan likes this.
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  2. Laks09

    Laks09 Staff Member Finest Post Winner

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    CIB - First of all, congrats. That’s a great accomplishment!

    I don't know much about options converted back to stocks. It's better to sell, pay tax and invest elsewhere since un-vested stocks are always going to be there. I wouldn't want vested and un-vested options sitting on one company, but rather would diversify. That's just me though.

    I would rethink the house in India if I were you. I’ve done that and it's good money sitting in an asset that cannot be easily converted back to cash.

    I wouldn't do the college savings plan either. College plans can be started and built over the years with small monthly contributions. Once its in the plan, its hard to take it out, for anything other than a college expense. Your baby is still small, the bulk add option is for people who have older kids who are going to college in the next few years and need to make up for all the lost years.

    When you are investing money, always think about how to get the money out if needed. It's good to have real estate assets and diversification in India. It is also prudent to know your savings are accessible and convertible quickly. In your specific situation, I wouldn't park money in an apt and buy it out with cash down. If I were you, I would invest in the US, have a target and keep that money here. I would look at specific short/medium/long term funds and invest in those. If after all this, I have surplus money that I don't need to convert and bring back to the US in the near foreseeable future, I would buy the place in India or find other investment avenues in India.

    An apt is a beautiful dream but think of the realities of having a place. You will be paying monthly maintenance, dealing with tenants or agents or both, spending money on upkeep and not living in the place you own. We have sold apts because of the difficulty in coordinating all of this. Regardless of how good your family in India is, you will be pulled into these things. Its a complication you don't need. There are other investment avenues in India.

    Btw- you need a financial planner. You should look for someone who will help you with all this. Investing is work and you can't rely on the internet for investment advice. Until you are able to manage yourself, find someone who can help create a portfolio, diversify, give investment advice etc. Once you have that person, all you have to do is ask questions and whys and then follow that person's advice.
     
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  3. Thyagarajan

    Thyagarajan Finest Post Winner

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    :hello: I am proud of your achievement or and accomplishment .
    2. I happened to read your post out of curiosity and remembered awrite up in the link below

    Nri Investment Avenues For $ In India

    Ideas in it probably might help to judge and conclude your investment in India. At present Indian currency taken a severe beating vis a vis$ and Indian exporters in dollerermsare a happy lot.
    As for real estate, I tend to agree with @lak09 analysis/views & suggestions.
    God bless
     
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  4. Caughtinbetween

    Caughtinbetween Silver IL'ite

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    Thank you @Laks09 for your comprehensive reply. Thats very helpful and puts my thoughts in perspective .

    Right now , I'm working on getting debt free in the next couple of months before the end of the year as a priority.
    I have read about the importance of a financial planner in your previous replies to some other posts as well. those replies were on my mind and i was thinking of tagging you but thought you would be very busy as such with kids vacation and stuff but silently expected you to answer :) I have never approached a financial planner ever in my life. So when I am close to it , i will ask you again about some more details about it . No hurries , I know you are extremely busy so whenever you get a chance . Thank you very much for taking time out .

    You are right with my need for liquid cash . With all the history that you know of , I would like to have as much cash as readily available as possible . Its just that its a small dream somewhere that i should own a small place of my own , that no one thinks that i have no place to call my own - is behind my thought process.

    I have a college plan but right now i only save like $100 in it a month .

    Honestly , until when we are in the U.S is not in my hands .Its completely controlled by H and ILS .I would expect we would be here for the near future . Because ILS family jointly i.e ILS , H and SIL invest in properties in india for which H takes loan . So i assume he cant afford to go back with loans unpaid at least in the immediate future . But i am completely out of the picture there. thats why I am confused about how and where to investing .

    However I also bought about 15 tolas gold in the last two-3 years.

    You rightly pointed out hassles in buying and maintaining the property . I would need to depend on my father to do the same and he is not very experienced in handling these matters . So thats another thing to consider as well. Besides I should have easy access to the money whenever i need it .

    thank you very much , i will think more about it and revert .
     
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  5. Laks09

    Laks09 Staff Member Finest Post Winner

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    I just got lucky CIB. A friend was changing careers to do this FT and we were his first clients. He has done well over the years and is a trusted friend so I've never felt the need to find anyone else. It is hard to find the right one though.
    Here is a WSJ article I passed on the other day to a friend. This is a good starting point for anyone thinking about getting financial planning help. It talks about hiring the right professional to help with FP needs. Hope this helps. I've heard of insurance brokers or others claiming to be estate planners/asset planners/financial planners. Beware of those folks. They do get commissions for their ins sales and may not give you the right advice. The article says more.

    Of course, I completely understand. A home is a home. Nothing can replace it. There are ways to keep money aside for a home without actually having a home. I believe there are REIT index funds available in India that you can buy. It grows with the real estate market and when you are there and ready for your own nest, you can switch from the fund to buying a house. Or you could have mutual funds dedicated to "house" in other investment avenues and keep it for when you are ready to invest.Just putting it down in an asset plan and earmarking those funds for the house and going by the plan when you make investments will ensure the money won't be used elsewhere unless its an emergency.

    That's my favorite kind of investment in myself. People talk about gold index funds too but nothing beats shopping for jewelry with one's own money. Way To Go!!!

    Tag anytime, CIB! I'm in awe of your resilience and persistence. It's so refreshing to see these posts from you. Despite everything, you have moved forward. You are a true role model to me and many others out here. I got a lot of positivity and perspective from your recent posts! You are an inspiration to many of us.
     
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