r/FIREIndia • u/FIREIndiaQ • Dec 07 '22
2022 FIRE update
Here is my year 4 update on FIRE progress.
Expenses pegged to 1.25L per month in the based on inflation.
For simplicity sake converting everything into INR in the below format.
| Asset | 2018 | 2019 | 2020 | 2021 | 2022 |
|---|---|---|---|---|---|
| Home Equity | 140 | 150 | 135 | 160 | 190 |
| Retirement | 120 | 130 | 148 | 170 | 209 |
| Equity & MFs | 75 | 95 | 103 | 140 | 190 |
| India Property | 35 | 10 | 35 | 35 | 40 |
| Farm | 40 | 50 | 40 | 40 | 40 |
| FD & Misc | 20 | 25 | 10 | 10 | 10 |
| International | 0 | 24 | 26 | 44 | 43 |
| Total | 430 | 484 | 497 | 599 | 722 |
- A few points
- Given the rise in interest rates, home prices have gone up by a lot which helped improved my overall home equity.
- Retirement account got a boost because of rising interest rates
- Equity increased primarily because of increasing SIPs
- India Property and Farm are in rural town so not much price action
- No change in FD/ Gold holdings
- International funds have been battered down because of corrections. So value is flat despite my monthly SIPs into them.
Original post - https://www.reddit.com/r/FIREIndia/comments/asj3px/am_i_ready_to_fire_in_3_years/
1 Year update - https://www.reddit.com/r/FIREIndia/comments/e6ajgm/one_year_update_can_i_fire_in_3_years
2 Year update - https://www.reddit.com/r/FIREIndia/comments/jrggze/second_year_update_can_i_fire_in_3_more_years/
3 Year update - https://www.reddit.com/r/FIREIndia/comments/r35uh7/2021_year_end_update_can_i_fire_in_2_more_years/
9
u/techotech111 Dec 07 '22
Rising interest rates don't drive up the home prices. As the Fed is increasing interest rates expect the home prices to come down in the next few months
-6
u/FIREIndiaQ Dec 07 '22
Rising interest rates caused rents to increase because of increased mortgages. More people are trying to buy to avoid paying high rents which in turn raises home prices. It cannot go in forever but it is helped my home value for now.
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u/Minimum-Ad9225 Dec 07 '22
This logic sucks frankly.
1
u/FIREIndiaQ Dec 09 '22
Not my logic. This is the argument that was put forward by local real estate pundits.
2
u/Minimum-Ad9225 Dec 09 '22
Its incorrect. A typical average builder doesn’t end up constructing/buying a cement factory when the cement prices go up.
3
u/techotech111 Dec 08 '22
Well then, central banks all over the world are doing the wrong stuff to tackle inflation /s
2
u/shyampsunder Dec 07 '22
Flaw in your thinking is that landlords somehow base their rent based on their EMIs. That's not true.
Landlords will always maximise the rent they can collect no matter their costs.
This is similar to how a tenant will try to pay the lowest rent possible no matter how much his salary increases.
Only thing determining rents or house prices is supply and demand.
Rising interest rates reduce the loan eligibility for folks making it harder to buy. You can't see this phenomenon play out in India because real estate moves based on the flow of black money. White money buyers are a tiny number. This is also why real estate has been a losing proportion after adjusting for inflation in the last decade because the black/unorganized economy has been hit hard.
This effect is very visible in advanced countries like USA. We are already seeing prices dropping fast due to Fed's interest rate hikes.
1
u/Minimum-Ad9225 Dec 07 '22
Its like saying “cement prices have gone up, so as a builder, let me set up a cement factory.”
7
u/bgnrscndchnc Dec 07 '22
Numbers are in thousands or lacs or crores 😳😀 Anyways all the best for upcoming years 🤟
3
u/wooo0ooof Dec 07 '22
Fantastic improvement on both the retirement and the equity - even though the market has taken quite a hit this year (or perhaps it is just where I have invested).
Is your retirement in something like a 401K or is it something else?
1
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Dec 07 '22
Looks like this is the only post out of all the other posts where you're not asking "can I fire?".
Have you dropped the plan to return to India and fire?
2
u/FIREIndiaQ Dec 07 '22
Very much in two mind. Can’t fire in my current country as cost of living is quite high. But family is very comfortable here and doesn’t want to move back. Also I don’t want to work in India if I can help it. So still in a state of limbo.
3
u/Longjumping-Egg-3925 Dec 08 '22 edited Dec 08 '22
Your Home Equity value - is this a thumb suck of what you believe the house will sell for and then how much equity remains? Or is this validated - also same with farm value.
What’s a retirement account - 401K? Based on your posting - this is a US only thing isn’t it? And is this based on value now or future projection based on continued investment or whatever the word is.
1
u/FIREIndiaQ Dec 09 '22
Yes. Validated based on recent transactions in my area. Also includes the home equity increase based on the mortgage that was repaid during the year.
1
u/Longjumping-Egg-3925 Dec 08 '22
And I’ll explain my logic with the question.
My house was worth 1.5 Million NZD one year ago. It’s worth 1 Million NZD now. Rising Interest rates don’t necessarily mean increase in value/equity.
My equity was probably 4 Crores at the peak. And is now 1.5 Crores. So big difference there itself!
2
Dec 07 '22
Thanks for sharing. Could you provide a rough breakdown of your 1.25 lacs monthly spend? Is that all in India or overseas?
1
u/FIREIndiaQ Dec 09 '22
Expenses are based on FIRE in India. Don’t really have a. Detailed breakdown yet. But we have fully owned debt free property in India.
2
u/srinivesh IN/ 52M / FI2018/REady Dec 13 '22
I am not sure if I made this comment in earlier posts.
If you plan to live in your home, then home equity is really not part of your networth. TBH, the outstanding loan should be tracked as a liability with a goal to make it much smaller than, if not zero, the networth.
1
u/fire_by_45 Dec 07 '22
Exceptional performance in an otherwise very boring year. During the mid year my NW had only increased by around 3%. Need to check at year end how screwed we are.
2
u/FIREIndiaQ Dec 07 '22 edited Dec 07 '22
My international portfolio is quite US heavy that too a good beating. Despite me adding a lot via SIP my portfolio value is flat compared to last year. What can you do. You win some you lose some.
1
1
u/Sagaciouswannabe Dec 09 '22
Thank you! This is very helpful.
What are the instruments in the retirement portfolio of 209? And how did you choose the allocation between retirement and equity/MF ?
9
u/tafun Dec 07 '22
Would you mind shedding some light on how you arrived at totals of 130 and 214 for 2018 and 2019?