Thought Provoking

Good one.Such aspects of retirement planning need to be highlighted and marketed.

I dont agree, yes you have provided a cash flow solution, you have caused emotional stress, Mr. Rao would be in bed every night shattering his dream of leaving something for his kids, The cash generated from selling need not generate the same rate from appreciation as location/city for his two unused properties is not given. His current assets/cash could be better deployed and aggressive rental location on both unused property might keep everything intact for him. Unless medically ill, other expense deduction/rationalisation would be another solution. This is just my personal view.

Taking a contrary view, I believe, investment in well planned rented commercial property is one of the best bet for retirement planning. With return of 5-6% p.a. & prospects of capital appreciation (thus resulting in increased rentals), it takes care of inflation as well. Agreed commercial properties have not appreciated in last 5 years, but trend can not be everlasting. To take an extreme exception, that prices do not rise, what has one forgone? A return of 2% p.a? Not even that much, as rentals are more tax efficient income. This way you plan your retirement as well as leave a legacy. If we expect our client to step out of deep rooted mindset, we should also try to come out of textbook mindset.

Retirement planning cannot be only long term equity saving as we Indian are strongly obsess of property nor it should be the property owning too, we must clear this to the clients with the data & facts of Liquidity option available there in..................Nice artilcle.

Good. Hard to believe that children supported selling property. Advice proper

Excellent case study. But I wish ebverybody has children like Mr.Rao. Thanks Suresh for sharing this.

Good article. However all IFAs note that winning TRUST is the key to the Sale. Sell PLAN not Product. Unfortunately NO AMC is in the business of Building TRUST which takes a long time to build, they only want us to Sell and sell fast. But Haste makes Waste, which I am sure many of my IFA friends must have learned by now (including myself).

Indian mindset does not permit property sale even in dis-trace situation. Like western mindset property mortgage for retirement expenses too is not considered. Family attachments is major factor. Confusion persists in leaving legacy, quantum of legacy to be left behind and quantum of retirement requirements due to unknown inflation factor. Second home concept has triggered and added to this confusion, further. Financial Stability, comfort factors are blurred. Trust level, discipline in financial planning is realized too late or never. A wide gap still exists in all these.

The observation is quite appropriate. It is almost impossible to convince a retired to sell property for his well being. Apart from their wish to pass a legacy, it is also seen by them as lowering of self respect i.e. to sell an asset for their own comfort(what will society say about it). If passing legacy is the only problem, one option could be selling the property and taking a Return of Purchase Price pension plan. It shall ensure a regular income till they are alive and shall also pass the original corpus to the nominee.