How to maximize savings if planning to move to India in 5-7 years
Hi All, I am currently working at Cisco, San Jose with a base of 125k (and 50K RSUs which I got just now) - Grade 8 currently. I have an MS degree in CS and about 5.5 years of experience right now (2 years in India before MS and 3.5 years here at Cisco). My wife is also at a similar job with the same pay. We have a plan to move to India in 5-7 years. Keeping that in mind, how do we maximize our savings here in the US? Would you guys suggest that we move out of Bay Area to some other low cost places like Austin, Raleigh etc.? Also, would buying a home (in Austin/Raleigh) and selling it off in 5-7 years give us a profit (or at least no-loss)? Sorry for the long post, we are really confused as to what the next step should be. Any help/input is greatly appreciated. Thanks in advance!
Avoid buying things you don’t need. Save as much as possible with keeping the necessities. Start investing in Indian real estate e.g. buy a land. It is easy to save in USA than in India. Once you move, you already will have house money. Don’t sell stocks or any investments in USA, they will be helpful given the inflation in India. Reduce the house rental cost which is maximum cut from paycheck to increase saving to invest in India instead. You can move to lower cost area but you need to also calculate the actual difference in cost of living. If living far from work is an option, do that. Don’t buy house if you are here for 5 years. The first 5-7 years are only interest, plus you will need to pay for realtors and other parties when you sell. House will be profitable only if the appreciation in 5 years is more than 15% and provided it sells easy, in short, high risk given your time frame. Instead you can rent a cheaper place little far from work.
Thanks for the suggestion. But if the house does not give a loss at least and we end up paying similar amounts for rent and mortgage, wouldn't it be better to stay in a bigger house for the same money (considering the down payment and all too)?
But is that a risk that you are willing to take given the tight timeline?
Change jobs for starters
I am willing and planning to. But I am confused if I should look for a job here in the Bay Area or elsewhere.
Switch jobs every 2 years, negotiate higher base/cash bonuses. Make sure you have competing offers every time and use them to negotiate higher sign-on bonus over equity. The reason is that you won’t be vesting all stocks/options if you intend to leave, but never say that to recruiter/HM. When you are ready to leave, see if your company can internally transfer you to the Indian branch. Some lucky people get to keep your USD salary/unvested stocks.
Post it here if you ever move back to India. Everyone says they will move back after a few years but a LOT of people keep living here. Agree or not, it's all about 💲💲 man.
Completely agree. I am trying not to take in too much at this point and plan whatever I can for now :P
Disagree ! With rising Indian salaries lot of people stay back due to family reasons, home here etc.
We're in a similar situation. After doing some research, here are a few things to do: Maximize your TC by jumps. Max out pre-tax 401k - withdraw it after moving to India (lowers tax rates + employer match). Don't buy a house - speaking as a homeowner, the current tax laws are not favorable to buy in the Bay area. Unless you're sure that a house price will go up by 50% or more, don't bother. Don't buy stuff, travel - visit Europe, south america, Canada instead of that flashy BMW. You're less likely to visit these places once you go back to India. Also, stuff loses value quickly. Join Google/Microsoft a year before you leave to India - you get to keep your stock grant.
Good ideas . On the last point, any company that has branches in India and provides RSUs fits the bill
Will one not be taxed at a non-resident rate (which is way higher) for 401k withdrawals after moving to India? Slap a 10% penalty for early withdrawal.
You should consider setting yourself a $ target based on how you want to live in India. It will make it way easier on day to day decisions, as you can then weigh the pros and cons vs achievement of that target.
Moving to Austin/ Round Rock can definitely help, here you can still find nice houses for 250k-350k or rent really nice(think pool houses) places for less than $3000.
Thanks for the suggestion. Any idea how the appreciation of house prices in Austin is? I am trying to at least make a no-loss if I buy a house.
Steady 3%-5% appreciation every year , predicted to accelerate since apple just invested a $1B here to add more jobs
H7
How much Do u intend to save before heading to India ? How much of investments do you already have ?
Sorry for not mentioning it earlier. we do not have an exact target amount before leaving - our target is more about the deadline of 5-7 years rather than the amount. But, of course, we would want to make the most of these 5-7 years :) Right now, we have about 30k in savings that we can use as investment.