Sunday, September 8, 2019

Investment options for Non Resident Indians


Indians have been moving to foreign countries like the USA, UK, Canada and Singapore for decades now. These foreign countries boast of having a very vibrant diaspora of Indian communities who contribute comprehensively towards their economic growth. That India is also rapidly emerging as an economic super-power is a known fact, which is not hidden for the Non Resident Indians settled in these foreign countries. It is because of this, that NRIs earing in foreign currencies like dollars, pounds and euros are parking their earnings in Indian banks and investments for years now. In fact, foreign investment in India has grown rapidly since the 1990s and the NRIs have been equal contributors to India’s growth story. As such, NRI wealth management has become an important part of banking and investments. If you are an NRI looking for good investment options, you can consider one of the following listed below.
NRE, NRO or FCNR Fixed Deposits: NRIS can invest their money in any of the following three types of accounts
·         Non Resident External (NRE) Account
·         Non Resident Ordinary (NRO) Account
·         Foreign Currency Non Resident bank deposit (FCNR) account
The money held in the NRE and NRO accounts can be maintained in Indian Rupees and can be accessed as normal savings accounts, current accounts or term deposits. While NRE accounts are great for those wanting to transfer their foreign income to Indian accounts, the NRO accounts are ideal if you have any income in Indian currency, such as rent, pension, and dividend etc., earned in India. The FCNR account is one in which you can deposit your earnings in foreign currency and can be jointly held with an Indian resident. While you must pay taxes on the principal amount, the interest you earn on these accounts is not taxed.
Direct equity: Another way to go about with NRI wealth management is to invest in direct equity. Direct equity or stock market investment is for anyone seeking higher returns. Stock markets are by nature, extremely complex and one must consider the overall outlook and the associated risks carefully before foraying into it. A good rule of thumb is to stay invested into the market for a long term, in order to earn profits. It basically boils down on your appetite for risks. Yes, the returns may seem attractive, but one must always remember than the element of risk never really goes away. Therefore, it is essential to study the present market situations carefully and take advice from wealth management experts before foraying into direct equity investment.
Real estate investments: Realty investment is usually at the core of attraction in developing nations such as India. The REIT or Real Estate Investment Trust is usually more liquid as compared to direct realty investment. NRIs can easily invest in residential or commercial projects and do not require any approvals for the same. However, they cannot purchase any land for agricultural purposes. In the past few years, the Indian government has been in favour of NRI wealth management and investment in India and has been encouraging this community of Indians to invest in projects by simplifying investment rules, particularly in the real estate sector.
Mutual fund investments: Most mutual funds come with systematic investment plans (SIPs) for NRIs. As such, NRIs can divide their total investments into quarterly or monthly instalments. They can invest in mutual funds on either a repatriable or a non-repatriable basis. Those looking to invest on a repatriable basis must have either an NFRE or FCNR account with any recognized, preferably nationalized Indian bank. The money set aside for investment must be remitted through the common banking channels or from the above mentioned accounts held by NRI investors.
Investments in bonds or government securities: The Government requires funds from time to time for its several infrastructure projects. Hence it issues bonds for raising this money. NRI wealth management is boosted by investing in these bonds or securities. NRIs who invest in bonds are considered as lenders but do not hold any equity stake in the project or company for which the government raises this money. NRIs, like any other Indian citizens, can invest in government securities and bonds and earn fixed returns on the same.
Certificates of Deposits: Another popular means of NRI wealth management is subscribing to certificates of deposits. This can however only be done on a repatriable basis. Certificates of deposits are essentially non-negotiable money market instruments which are issued either in demat form on as promissory notes. They yield a higher interest rate as opposed to regular bank deposits. Certificates of deposits have shorter maturity periods, lasting from 1 week to 1 year and are ideal for investors with short term financial goals.

No comments:

Post a Comment