A recent report revealed that India remains at top of the list of major remittance recipients, with an expected remittance of about $65 billion in 2017, says an article in The Economic Times. More and more NRIs have started investing in the Indian market, given the flexibility and stability it offers. Here are 5 good investment options for NRIs.
1. Fixed Deposits
Fixed deposits are one of the most popular investment types in India, for both residents and NRIs. You can deposit your funds for a pre-decided period and at a pre-defined interest rate. NRIs can open FDs with their NRE, FCNR or NRO accounts. You can earn up to 6% to 7% interest on NRE accounts. Remember that the interest earned on an NRE fixed deposit is exempt from tax, while interest on NRO fixed deposit is taxable, according an article on Fintistic. And, the balance of the NRO FD account is calculated after deducting tax.
Also read:Best life insurance policies for NRIs returning to India
2. Mutual Funds
Another exciting and highly-profitable option for NRIs to invest their money is mutual funds. Whether you are looking for short-tern or long-term investment, there are plenty of options to suit your financial goals and risk appetite. However, for NRIs residing in the US, there are some limitations because of stringent FATCA r egulations. Note that you need to have an NRE or NRO account to invest in a mutual fund and all your investments need to be in Indian rupees only. You can choose a Systematic Investment Plan (SIP) for higher returns.
3. Certificates of Deposit
Certificates of Deposit or CDs are a non-negotiable money market instrument, issued as promissory notes or in DEMAT form. It provides higher liquidity than fixed deposits and has a maturity period of 7 days to 1 year. You can open a CD account on a repatriable basis and the account can be transferred from one person to another. This is a great option if you are looking for a short-term investment plan.
4. Real Estate
Buying and selling property is often considered the most profitable investment in India. There isn’t anything better than owning a home in your home country. And, many NRIs are opting to have their own house in India. You can easily buy residential property or commercial land, but the purchase needs to be carried out in the Indian rupee. However, NRIs can’t purchase agricultural land, plantations and farm houses in India, although they can inherit such property or can accept it as a gift.
Read: Tips for NRIs to buy real estate in India
5. National Pension Scheme
National Pension Scheme is a cost-effective, easily accessible and tax-efficient way to invest your money. Any NRI between the age of 18 and 60 years can open an NPS account and can get an additional tax benefit for investments of up to ₹50,000, says an article on NRICafe. You will just need to submit certain documents, such as a copy of your passport, address proof and identity proof.
Whatever investment instrument you choose, make sure you do an in-depth study and make an informed decision. Mutual funds and stock markets are usually subject to market risk. So, choose a plan depending on your principal amount and risk appetite.
Nice article, Mani. The investment options for NRIs are good. The option of investing in real estate is the most popular one. You should choose your investment based on your investment objectives and the ability to take risk. Useful for the NRIs who want to invest in the Indian market.
I loved this post but I would say the options you have listed are not just good for NRIs but also for resident Indians. The interest rates of FDs have gone terribly down probing investors of India to consider other options such as SIP. Keep sharing such investment related posts to add knowledge for readers. Visit: https://www.kotakmf.com/sip/