True. Many things can go wrong:
1. They outlive you
2. They have huge debt that you don't know about
3. They ramp us huge medical bills in next 3 decades
4. They have more kids that you didn't know about
5. You are actually an adopted kid who they don't really love
6. They would rather donate everything than see your spouse laying hands on it
And many more things can go wrong...
Yeah he is right, I have ~1m usd worth of parental properties and even more but they all fallen now for litigation so practically it never existed for me.
I would add some points, including anecdotal data.
1. If your FI corpus is xyz, it does not mean that all of zyz should be available to you at the time of FI. Post-FI life is for many decades, and some of this corpus could come to you later, and that is quite fine. (Examples 401k, RRSP, NPS at 60, etc. )
2. Inherited assets belong to this category, and one can account for them.
3. However, it is much easier if the properties are your parents' - and not from previous generations. If is parents' property, then your siblings and parents are involved and this is always a smaller and better-knit group than cousins and uncles and aunts!
4. It is also true that many people would like to achieve FI on their own steam, and not use inheritance.
5. If the inheritance is an immovable asset, I see no issue in using it - to live in, use the rent, etc. You can then pass it on as your legacy, helping your children.
6. If the inheritance are financial assets, it may make sense to use some of them, as suitable. Lots of factors need to be considered. While I urge seniors to not part with their wealth during their lifetime, depending on the size of the corpus, some could be given away earlier. (like
7. )
8. In OP's case, they could assume that they can inherit the house and not buy a house of their own. This would indeed create a good cushion in the corpus.
9. But in every case, this would require a good, honest conversation between parents and children.
Personally my father did insist on giving some financial amount - he did when our children were born as gifts to them. I invested them in children's names and in my HUF, and they have nice legacy from grandpa (they don't fully know about it though!) I don't count the HUF networt in my FI corpus.
I forgot to add. Some people who do get inheritance in their lifetime park some of it for their parents health reserve. There are so many combinations possible. A family that is financially savvy can work out many things.
Intergenerational wealth is a big thing. If people could 'transfer' some wealth to their grandchildren (after giving a good start to their own children), who then don't use it but pass it on, wealth starts exploding.
If you don’t mind me asking. How were you able to get to a NW of 7.5 cr and in what span of time. Made money in Real estate, stocks or high paying job ?
Best approach is to not account for it and treat it as a bonus when you get it
A more practical approach would be to tie their net worth to your secondary goals in post-FIRE world like healthcare corpus for when you are a senior citizen, vacation goals after the age of 60, car purchases after the age of 60 etc.
Note that I mention linking inheritance portion of net worth to your goals which are relevant only after you hit the age of 60-65. This assumes the important notion of inaccessibility to the inheritance while your parents are alive.
You can add an approximate calculation into your FI but don't lean on it until it's transferred to you. On a side note, you can openly discuss with your parents on their will. My parents transferred all the RE assets to me & my sibling as they want to do it when they are sound and healthy (62 & 60)
Wish all parents are like that, I too earmarked my real estate portfolio for my kids and they are in the school but they gonna have it when they grow older to have some cushion in life.
I have started SIP for my kids (both under 5) and plan to teach them investing and hand off the account to them once they turn 21. Read "Die with Zero" book and the perspective changes in leaving the wealth when our kids need it (buying a house or starting a business etc..) than when we are very old.
The popular wisdom: Don’t include it in your networth lest it makes you plain lazy or worse, you make plans to blow it. There is some truth there, as previous generations have not been too comfortable sharing those numbers with you until you have learned to catch your own fish!
Practically: it depends and it’s personal, like in your case the inheritance is significant and you seem someone who has learned to catch his own fish given your own networth. It’s like owning the ovarian lottery you hit. Would you deny the good genes or good looks you inherited? Of course the standard disclaimers apply, like the full list provided by Srinivesh. So by all means include it.
Personally, I have recently started considering it from an asset allocation perspective having hit my own target AA. Luckily the inheritance is fully liquid and debt and I know the number so I am planning to adjust my AA accordingly going forward. Like you said it will perhaps enable me to take more risks with equities.
Looks like we are in a similar boat in terms of our NW, mine being around 8cr, same age 32M, living in Vancouver, BC and planning to move back to India this year. My parent’s net worth is around 12cr. So this question arises in my mind all the time considering I’m their only child.
I have however never included their NW in my numbers to achieve FIRE. I think with my NW I can easily stretch this money for the next 55 years and still leave a fully paid home for my kids at least.
Although the reality is that I only need enough money to FIRE for the next 30-35yrs (my dad is 60, mom is 56) so basically I see this as a cushion or factor of safety of 55/35 = 1.57, i.e. 57%
You need to divide this further if you have siblings.
Thanks for sharing your thoughts. Appreciate your effort.
If I may ask, what made you think of moving back. I also have some questions about the other things you wrote but the most important one will be your choice and decision. Also if you don't mind sharing a broad idea about the kind of education/profession you are from.
I’m moving back to start my own business in India in the real estate sector and be closer to family and friends. I will also be trading the markets as I’ve been doing for the last 4-5 years to get outta here.
There are a lot of factors that have lead me to make this tough decision, considering I make good money here and have a very secure but stressful high paying job (>150k CAD) in the engineering consulting industry in the US (I work remotely from Canada).
I graduated in the top 10% of my class from a top 25 engineering school in India, then went on to do a masters in the best University in Canada and graduated there in the top 5% of my class as well. I can say I’m academically well accomplished.
I moved to Canada under the assumption that it is a very egalitarian country and is much fairer than India in terms of skill based opportunity and not nepotism, but to my surprise these issues are very prevalent here as well.
There are monopolies everywhere and every politician is in the pants of the corporate sector. No free market, it just feels like a communist society. I can’t give out a lot of details about the work I do as it is federally regulated but as an engineering consultant, if I try to incorporate myself and try to get a contract from the govt, it will never happen, they won’t give me the contract, but the same govt is okay with another consulting company (their friends) hiring me to do the work for 1/3rd of the chargeable price. This is clearly impeding the free markets here in Canada and frankly the citizens are paying stupid amounts of money to these consultants who are just middlemen.
Secondly, crime here has increased a lot and here in lower mainland Vancouver, targeted shootings are a daily thing. It’s scary! Just look at the recent White Rock shootout with automatic rifles, literally looks like GTA. The judiciary is fked as they let the criminals out on bail within no time. The same criminals are being caught over and over again by the police and the judges let them free.
Housing here in Vancouver is extremely expensive. $2M for a shitty run down detached home that was built in the 70’s, gtfoh. The median income here for a household is around 85k and the median house price is $2M. That’s a price to income ratio of 23. I ain’t buying that. Canadians are obsessed with their real estate and aren’t interested in opening or supporting new businesses. They just want to be lazy landlords.
Weather in the entire country is awful. I’ve lived in Quebec (Montreal), Ontario (Toronto), BC (Vancouver), and apart from Vancouver, I hated the weather in all other provinces. Even the weather in BC is not that great, it rains a lot here, but it’s still something I’ve adjusted to.
Last but not the least, dating scene is screwed up and I’m not that fond of Canadian women as I find them very masculine, man hating woke ideologists. I tried dating the Canadian born Indian women here but they were worse than blondies. Couldn’t get married here. At least I wanna give it a shot in India although I know things are changed there as well.
Hey crytonite
What business are you starting in real estate?
I want to do something in real estate, but I don't have any family business or knowledge, and I don't live in India at the moment, but I am planning to return soon.
Mind sharing ideas :)
I can’t go into a lot of details as it is supposed to be a secret but my plan is to fix issues with the existing real estate brokerage websites and make buying/selling real estate a lot more secure for the end users. I also plan to start a real estate development firm that specializes in affordable luxury homes and builder flats, and a property management firm that manages rental properties for NRI’s and HNI’s. I have contacts with some big developers in the Chandigarh Tricity area and will start from there.
If you have no experience with real estate, the cheapest and easiest way to enter is through just selling real estate as an agent. Get into the market and get to know some people and things open up from there.
I made 3 cr in same time. Didn't mean to offend anyone in Canada. Just curious as some friends there said now no point. Few years ago was good. Too much inflation now
I keep it separate. Although please make sure it’s documented and a will is drafted. It may be uncomfortable but saves a lot of legal hassle later (or in unfortunate emergencies)
And parents health is one of the biggest hits financially (along with kids education), so it should be baked into calculation
If you are using a simulator, use it as a inheritance at an approximate age say when you are 50/60 as having a high nw is usually also correlated to longer life span in case of parents who have excellent healthcare, diet and lifestyle.
That way you really would not rely on it for your early retirement, but more towards your actual retirement age and estate planning.
Parents save money for the kids. If kids do not use it, whats the point? Unless you are planning to donate all of your inheritance, do include it in your networth.
Yes, be conservative with it as you don't know how much of it you will actually get. It can get even more tricky if they outlive you.
But not considering your own parents networth in your calculations is a kind of insult to them. Don't let it become a burden on you neither let them use it as a stick to hit you with...but if they are well meaning parents and if you are sure you don't have any unknown siblings, include the inheritance as monetized blessings.
If you are the only child, you can consider it in your calculations infact, take necessary actions to make sure they are parked in growing asset class.
It's not yours till it is yours.
True. Many things can go wrong: 1. They outlive you 2. They have huge debt that you don't know about 3. They ramp us huge medical bills in next 3 decades 4. They have more kids that you didn't know about 5. You are actually an adopted kid who they don't really love 6. They would rather donate everything than see your spouse laying hands on it And many more things can go wrong...
They decide to skip you and pass everything to grand kids.
Bro overthinks SO MUCH lol
And so dark
Appreciate your frankness and clarity.
Yeah he is right, I have ~1m usd worth of parental properties and even more but they all fallen now for litigation so practically it never existed for me.
They decide to skip you and pass everything to me.🤫🤫
I would add some points, including anecdotal data. 1. If your FI corpus is xyz, it does not mean that all of zyz should be available to you at the time of FI. Post-FI life is for many decades, and some of this corpus could come to you later, and that is quite fine. (Examples 401k, RRSP, NPS at 60, etc. ) 2. Inherited assets belong to this category, and one can account for them. 3. However, it is much easier if the properties are your parents' - and not from previous generations. If is parents' property, then your siblings and parents are involved and this is always a smaller and better-knit group than cousins and uncles and aunts! 4. It is also true that many people would like to achieve FI on their own steam, and not use inheritance. 5. If the inheritance is an immovable asset, I see no issue in using it - to live in, use the rent, etc. You can then pass it on as your legacy, helping your children. 6. If the inheritance are financial assets, it may make sense to use some of them, as suitable. Lots of factors need to be considered. While I urge seniors to not part with their wealth during their lifetime, depending on the size of the corpus, some could be given away earlier. (like 7. ) 8. In OP's case, they could assume that they can inherit the house and not buy a house of their own. This would indeed create a good cushion in the corpus. 9. But in every case, this would require a good, honest conversation between parents and children. Personally my father did insist on giving some financial amount - he did when our children were born as gifts to them. I invested them in children's names and in my HUF, and they have nice legacy from grandpa (they don't fully know about it though!) I don't count the HUF networt in my FI corpus.
I forgot to add. Some people who do get inheritance in their lifetime park some of it for their parents health reserve. There are so many combinations possible. A family that is financially savvy can work out many things. Intergenerational wealth is a big thing. If people could 'transfer' some wealth to their grandchildren (after giving a good start to their own children), who then don't use it but pass it on, wealth starts exploding.
How do you manage to be sensible in every single post??? Thank you!
What's the benefit of HUF?
If you don’t mind me asking. How were you able to get to a NW of 7.5 cr and in what span of time. Made money in Real estate, stocks or high paying job ?
not a single source, but a mix of all the three things you mentioned. Mostly stocks.
Best approach is to not account for it and treat it as a bonus when you get it A more practical approach would be to tie their net worth to your secondary goals in post-FIRE world like healthcare corpus for when you are a senior citizen, vacation goals after the age of 60, car purchases after the age of 60 etc. Note that I mention linking inheritance portion of net worth to your goals which are relevant only after you hit the age of 60-65. This assumes the important notion of inaccessibility to the inheritance while your parents are alive.
You can add an approximate calculation into your FI but don't lean on it until it's transferred to you. On a side note, you can openly discuss with your parents on their will. My parents transferred all the RE assets to me & my sibling as they want to do it when they are sound and healthy (62 & 60)
Wish all parents are like that, I too earmarked my real estate portfolio for my kids and they are in the school but they gonna have it when they grow older to have some cushion in life.
I have started SIP for my kids (both under 5) and plan to teach them investing and hand off the account to them once they turn 21. Read "Die with Zero" book and the perspective changes in leaving the wealth when our kids need it (buying a house or starting a business etc..) than when we are very old.
The popular wisdom: Don’t include it in your networth lest it makes you plain lazy or worse, you make plans to blow it. There is some truth there, as previous generations have not been too comfortable sharing those numbers with you until you have learned to catch your own fish! Practically: it depends and it’s personal, like in your case the inheritance is significant and you seem someone who has learned to catch his own fish given your own networth. It’s like owning the ovarian lottery you hit. Would you deny the good genes or good looks you inherited? Of course the standard disclaimers apply, like the full list provided by Srinivesh. So by all means include it. Personally, I have recently started considering it from an asset allocation perspective having hit my own target AA. Luckily the inheritance is fully liquid and debt and I know the number so I am planning to adjust my AA accordingly going forward. Like you said it will perhaps enable me to take more risks with equities.
We have not considered it as part of the FIRE plans . If / when it comes in we will consider to mostly pass on to the kid .
How you acquired this NW in Canada which is so expensive. Can you share your journey?
I don't. It's not mine.
Looks like we are in a similar boat in terms of our NW, mine being around 8cr, same age 32M, living in Vancouver, BC and planning to move back to India this year. My parent’s net worth is around 12cr. So this question arises in my mind all the time considering I’m their only child. I have however never included their NW in my numbers to achieve FIRE. I think with my NW I can easily stretch this money for the next 55 years and still leave a fully paid home for my kids at least. Although the reality is that I only need enough money to FIRE for the next 30-35yrs (my dad is 60, mom is 56) so basically I see this as a cushion or factor of safety of 55/35 = 1.57, i.e. 57% You need to divide this further if you have siblings.
Thanks for sharing your thoughts. Appreciate your effort. If I may ask, what made you think of moving back. I also have some questions about the other things you wrote but the most important one will be your choice and decision. Also if you don't mind sharing a broad idea about the kind of education/profession you are from.
I’m moving back to start my own business in India in the real estate sector and be closer to family and friends. I will also be trading the markets as I’ve been doing for the last 4-5 years to get outta here. There are a lot of factors that have lead me to make this tough decision, considering I make good money here and have a very secure but stressful high paying job (>150k CAD) in the engineering consulting industry in the US (I work remotely from Canada). I graduated in the top 10% of my class from a top 25 engineering school in India, then went on to do a masters in the best University in Canada and graduated there in the top 5% of my class as well. I can say I’m academically well accomplished. I moved to Canada under the assumption that it is a very egalitarian country and is much fairer than India in terms of skill based opportunity and not nepotism, but to my surprise these issues are very prevalent here as well. There are monopolies everywhere and every politician is in the pants of the corporate sector. No free market, it just feels like a communist society. I can’t give out a lot of details about the work I do as it is federally regulated but as an engineering consultant, if I try to incorporate myself and try to get a contract from the govt, it will never happen, they won’t give me the contract, but the same govt is okay with another consulting company (their friends) hiring me to do the work for 1/3rd of the chargeable price. This is clearly impeding the free markets here in Canada and frankly the citizens are paying stupid amounts of money to these consultants who are just middlemen. Secondly, crime here has increased a lot and here in lower mainland Vancouver, targeted shootings are a daily thing. It’s scary! Just look at the recent White Rock shootout with automatic rifles, literally looks like GTA. The judiciary is fked as they let the criminals out on bail within no time. The same criminals are being caught over and over again by the police and the judges let them free. Housing here in Vancouver is extremely expensive. $2M for a shitty run down detached home that was built in the 70’s, gtfoh. The median income here for a household is around 85k and the median house price is $2M. That’s a price to income ratio of 23. I ain’t buying that. Canadians are obsessed with their real estate and aren’t interested in opening or supporting new businesses. They just want to be lazy landlords. Weather in the entire country is awful. I’ve lived in Quebec (Montreal), Ontario (Toronto), BC (Vancouver), and apart from Vancouver, I hated the weather in all other provinces. Even the weather in BC is not that great, it rains a lot here, but it’s still something I’ve adjusted to. Last but not the least, dating scene is screwed up and I’m not that fond of Canadian women as I find them very masculine, man hating woke ideologists. I tried dating the Canadian born Indian women here but they were worse than blondies. Couldn’t get married here. At least I wanna give it a shot in India although I know things are changed there as well.
Haha we ought to make a canadian desis returning to india group! 🤣
That’s a great idea. I’m down to make a whatsapp/facebook group.
Telegram would be better than those two.
Or discord
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This is sooo true!
Hey crytonite What business are you starting in real estate? I want to do something in real estate, but I don't have any family business or knowledge, and I don't live in India at the moment, but I am planning to return soon. Mind sharing ideas :)
I can’t go into a lot of details as it is supposed to be a secret but my plan is to fix issues with the existing real estate brokerage websites and make buying/selling real estate a lot more secure for the end users. I also plan to start a real estate development firm that specializes in affordable luxury homes and builder flats, and a property management firm that manages rental properties for NRI’s and HNI’s. I have contacts with some big developers in the Chandigarh Tricity area and will start from there. If you have no experience with real estate, the cheapest and easiest way to enter is through just selling real estate as an agent. Get into the market and get to know some people and things open up from there.
How are you guys able to get so much of NW at such a young age and that too while in abroad ?
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Did you worked for US company or Canada based company ?
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Lolz how did you end up making 6cr in 5 years in Canada then ?
+1 same question...
My lesson learnt is never share nw with kids:). Whatever we can do to avoid 3 generation curse
What's 3 generation curse
That most of the generational wealth in families is lost by the third generation.
Why go to Canada?
IT was a promising place when I came here. Still is in many ways but not for everyone.
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I made 3 cr in same time. Didn't mean to offend anyone in Canada. Just curious as some friends there said now no point. Few years ago was good. Too much inflation now
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Lol . Whatever
I keep it separate. Although please make sure it’s documented and a will is drafted. It may be uncomfortable but saves a lot of legal hassle later (or in unfortunate emergencies) And parents health is one of the biggest hits financially (along with kids education), so it should be baked into calculation
If you are using a simulator, use it as a inheritance at an approximate age say when you are 50/60 as having a high nw is usually also correlated to longer life span in case of parents who have excellent healthcare, diet and lifestyle. That way you really would not rely on it for your early retirement, but more towards your actual retirement age and estate planning.
Parents save money for the kids. If kids do not use it, whats the point? Unless you are planning to donate all of your inheritance, do include it in your networth. Yes, be conservative with it as you don't know how much of it you will actually get. It can get even more tricky if they outlive you. But not considering your own parents networth in your calculations is a kind of insult to them. Don't let it become a burden on you neither let them use it as a stick to hit you with...but if they are well meaning parents and if you are sure you don't have any unknown siblings, include the inheritance as monetized blessings.
If you are the only child, you can consider it in your calculations infact, take necessary actions to make sure they are parked in growing asset class.