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Geographical arbitrage

Geographical arbitrage

  One of the popular themes of the FIRE community is location / region  arbitrage. But most of the examples that i have seen in the FIRE space is people relocating from the east coast or west coast to the mid west or to other lower cost locations within the US.

Obviously it is not easy to uproot yourself and move away from family and friends, but it might yield some interesting and favourable results.

Our situation is slightly different, because I am a guest in the current country that I am living in (Singapore) and I have always planned to return home (India). It is an easier decision since I would be moving closer to family and friends rather than moving away.  I sure will miss my friends and colleagues here, but I am better prepared for it. This would probably be the case for most NRIs who want to retire in India.

If we were to crunch the numbers, what would that mean?  Let us break it down into a few items starting with


Duh!, the obvious one. The very reason most of us want to work outside of India is to increase our saving potential 5 to 10 fold just on the strength of the currency.       

Cost of living

  Singapore given its “developed country” status is fairly expensive. It has been consistently ranked in the top 10 most expensive cities in the world.


India by comparison is fairly inexpensive and provides a huge range of living options. You can essentially spend the same amount of money living in a swanky apartment in Mumbai but you could live in a tier 2 city like Pune / Indore / Coimbatore with much less outlay.

In my personal experience the cost of living difference is anywhere between 3 to 5 times lesser in India than in Singapore depending upon how and where you live and what lifestyle choices you make.  

Same amount different currency

   Imagine holding a portfolio of 1,000,000 SGD and assuming a safe withdrawal rate of 2.75 %, you will have 27,500$ annually. It is a lot of money, you are talking about 13 Lakhs rupees assuming an exchange rate of 50. That amount goes much further in India than in Singapore.

I know this is a rather simplistic view of the two countries as there are clearly lot of other variables at play

  • quality of life

  • safety

  • convenience

  • Proximity to family and friends

  • Ease of travel

  • Education

  • Access to parks and recreation

Will I ever reach a state where I could FIRE in Singapore without relocating? Probably, but I don’t think it can happen in 5 years time. So the only way to accelerate this within my current 5 year plan without me wanting to strangle someone at work (joke!) is to relocate.

Geographical arbitrage within India

This arbitrage is something a person living in India can do as well. Move from an expensive tier 1 city like Mumbai / Bangalore to a tier 2 or 3 city. Your expenses will reduce, cost of living will come down. It will not be as significant a jump as someone relocating from a different country but you still could reduce your expenses anywhere between 25 to 40%.

For someone looking to FIRE that difference could be the ability to FIRE early by 5 years or FAT FIRE vs regular FIRE.

What are your thoughts on this topic? Would you want to use geographical arbitrage to your advantage? Or is it never a part of the equation?

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