Practical issues with money when you choose to work in India

If you work for a multi-national company in India, you probably have had the chance to work outside of India. Actually, most Indians working in software can probably go work outside of India. They’ve either fantasised about moving out of India or have actually done so. Some, a very few, like me have moved to the US, worked and then moved back to India.

This means that’s at one point, most of us have had the opportunity to earn in a currency other than the Indian Rupees. I knew that I was not going to make more money by going to India but I did not realise the penalty I pay on my savings my keeping them in INR. Here is a table that shows that just in the last 5 years, I’ve lost over 50% of my savings just by keeping them in INR against keeping them in USD assuming the same rate of return on the savings. 

The latter is not entirely true though. The rate of returns on good equity funds in the last 5 years offsets against this loss because large cap equity funds in India have returned between 13-22% in the last 5 years. 

So you make an absolute return of 100% on your money while losing 50% to currency losses. This means you have to take a lot of risk in India to make up for just the currency loss, but it is possible. Also, if you invested your US savings at a similar risk in the US, you would have made 8.5% annually in a DJIA ETF, giving you 50% on your dollar savings. 

Thus, if you are equally invested in equity funds in the US and in India over a 5 year period, you would net out even.  

Even if you don’t take the risk, guaranteed return on your money in India are between 7-9.5% thus giving you the 50% loss due to the currency. But, this is the worst case scenario. You net out better than UK, JPY and Euro if you were invested during the last 5 years.

Plus, salary rises in the other goes were not as high as they are in India. So, your net savings would have been less in the last 5 years if you were in the UK, US or any other geography. So, working in India in tech is better and your savings are better if you invest wisely. 

I’ll try to post a table with this info in the coming days.

Ofcourse, past performance may not be carried forward in the future. 🙂

–Anubhav

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