If you are an NRI and you are planning to invest in India, Then you are at the right place. In this article, I’ll describe why and how NRIs should invest and the best option for you to invest in India.
Why Should NRI Invest In India?
To invest is to portion your cash to procure future advantages or come back in money terms. Finance ensures current and future long-run money stability. Since life is extremely unpredictable, each individual believes in securing their future financially. The simplest approach of doing that’s by finance within the right sector.
The Reasons For NRIs To Invest In India
i. India is one of the fastest-growing and stable economic countries:
Keep in mind that India is one of the fastest-growing countries comparing to others. It is important to consider that you should invest in a country which is stable enough. Also, it should give you a perfect return.
ii. High-interest rate:
Comparing to other economic countries, the interest rate in India is quite high. When you see a country like Japan, you can see that they provide a negative interest rate. Even in a country like the U.S., a maximum of 2 to 3 % interest rate get proposed. So investment in India will give you proper savings.
iii. Preparation for retirement:
You have to save for your old age from your young age. Thus, for your retirement plan, you should invest money in any way. The amount of money you will invest now gives you a standard and suitable life to live in your old age.
iv. Get returns:
If now you use your money wisely, then you will get more money in the future. Whatever you invest now grows with time with the interest rate. Then you can get a big amount on your retirement, and you can spend the rest of your life peacefully.
v. Send money to your family:
Maybe your current salary is enough to handle your family’s financial situation. But when you invest some money in India’s NRI investment option, you can send more money to your family. Apart from that, it will be of some help to them and you too.
vi. Build financial assets:
Though you have enough money to happily spend your daily life, investing in the NRI investment option will grow your financial wealth and help you build your financial assets. It can even help you to achieve certain goals in the future and even for emergency purposes.
vii. Because you perceive the investments in India:
You can perceive numerous investment choices in India and money products. By this, you need not worry about what happens to your cash due to there’s a way of familiarity with the money system. The term and procedures are quite secure.
viii. Principally you’ll be back in India:
A majority number of NRIs come back to India when operating for a couple of years from abroad. Eventually, they can use all their investments back in India. That’s one robust reason you must invest a serious a part of your cash in India itself. All the investment products outside India square measure higher than Indian money products. There are even many choices which you must check out. So, give a try on this. Who knows where your luck may shine brighter, especially if the pavement is itself secure.
Some Best Options For NRIs To Invest In India
Here we come with some best investment plan for the non-resident Indians in India.
1. Mutual Funds
Mutual funds can give you better returns than normal bank FDs, but it is risky. There are so many various fund options where you can invest money and get a big return. However, Non-Indian residents can only invest through their NRO or NRE or FCNR accounts. They can only invest by Indian rupees, not by any foreign currencies. Here are some mutual funds where an NRI can invest are SBI Mutual Fund, ICICI Mutual Fund, etc.
It has two different categories, and they taxed differently –
i. Equality Funds
In that equity funds, you have to pay only a 15% tax if you sell it in the very first year. This also contains more than 65% of the fund. It will be tax-free for the NRIs if they owe to it for more than 1 year.
Who Should Invest In Equity Funds?
- Individuals who can take the high risk
- Investors trying to look out for future Investment options
- An individual who’s seeking tax-saving investments can invest in Equity Linked Saving Schemes only.
ii. Debt Funds
You have to pay a 30% tax on that debt funds if you sell it in the first 3 years. It also contains less than 65% of the fund. It also charges you to pay only 20% of tax if you owe it for more than three years.
Who Should Invest In Debt Funds?
- Risk apathetic investors
- Individuals with an investment horizon of 3 to 4 years
- Investors trying to hunt out highly liquid investments
iii. Hybrid Mutual Funds
Mutual Funds that are invested in addition to one investment security, like stocks and bonds, refers to the Hybrid funds. This makes these funds ideal for beginners or core holders to create diversification.
Who Should Invest In Hybrid Funds?
- Individuals who are seeking for low-risk investment avenues
- The individuals who want a large equity exposure in their portfolio without any risk.
- Investors with future investments.
2. Fixed Deposit
A fixed deposit is not only for the Indian residents but also for the non-resident Indians. It’s prevalent among them as well. If you compare bank FDs with the mutual fund, then know it that the bank FDs are safer than the mutual funds. But you will get less interest rate in it. It also depends on the amount of how much money you invest in the bank.
NRIs Have An Option Of Three Types Of Fixed Deposit Account
- Non-resident external account:
You have to keep money in Indian rupees. The interest rate is dependent on the money you invest in it. You can expect a 7 to 9% interest rate in this investment.
- Non-resident ordinary account:
The NRIs use this account for their Indian income. Currently, this account limits $1 million for transferring in any U.S. account. Apart from that, it also charges a 30% tax for that.
- Foreign currency Non-residents :
In this account, you can keep your money in your currencies. This account solves the problem of currencies. And here, dollars get an interest rate at 2 to 3%.
3. National Pension Scheme
This is another option for the NRIs. Here, they can invest their money, which again gets controlled by the government. Investing in NPS is safer than other investment plans. If your age is between 18 to 60-year, then only you can invest in this scheme. You can expect a 12 % to 14% of the annual interest rate.
Who Should Invest In National Pension Scheme?
- The individuals who want to get the benefits of tax up to Rs.50,000. They can invest in NPS.
- Investors with a long-term financial requirement.
4. Real Estate
It is one of the most popular investment plans for NRIs in India. Especially in cities like Mumbai, Pune, Bangalore, etc., the demand is high. Even the real estate price is too high in the last decade. Many non-resident Indians are also purchasing too much money to buy houses or flats. Then they’re giving them for rent. For these transactions, they can only use the NRE, NRO, FCNR accounts.
Who Should Invest In Real Estate?
- Those who are looking for an appreciation in value with inflation can invest in the scheme.
- Investors who are willing to generate regular rental income.
- Individuals who are willing to diversify their investment assets.
5. Public Provident Fund
This is another safe investment options for the NRIs. It is fully under government control. Any Indian and non-Indian residents can invest in that account, and they will get an 8% interest rate per year. Apart from that, the maximum amount they can invest in it is about is 1.5 lakh. Keep in mind that it is a long term locked investment process for 15 years.
Who Should Invest In Public Provident Fund?
- The investors who want to invest in any long term investment option for around 15 years.
- Investors who would like to enjoy the tax rebates.
Chart Of The Interest Rate Of Public Provident Fund
If you are a non-Indian resident and an aggressive investor, then you can invest in that account. You can take a risk by investing in the PINS scheme by RBI. For that, you also have to use the NRE, NRO, FCNR accounts for transactions.
7. Unit Linked Insurance Plan (ULIP)
Unlike Insurance policies, the Unit joined Insurance set up (ULIP) get offered by the insurance firms. It offers associate in Nursing capitalists each insurance and investment choice. It’s even integrated as one set up. The individuals trying to find secure life plans and want to secure their returns can invest in ULIPs. The customer will pay the premium on a monthly or an annual basis.
The individuals have to pay associate in Nursing yearly premium in favor of ULIP. A region of this premium gets employed for providing insurance cowl. Thus, the remainder of the number gets invested within the fund. It might be Equity, Debt, or Hybrid, as chosen by the customer. The beneficiaries can get insurance cowl or the market fund. Apart from that, it is highly supported by the chosen ULIP set up.
Aggressive individuals will invest in either equity or debt-related plans. Ancient insurance plans square measure familiar to supply returns of 4 to 6%. The unit joined insurance plans will give you returns if invested within equity funds.
Who Should Invest In ULIP?
- Investors seeking twin edges of capital investments in addition to a life cowl.
- Individuals with an extended-term investment near about 15 years lots of cash.
- Individuals with an extended-term investment of about 15 years
8. Senior Voters Saving Scheme (SCSS)
Here, a five-year saving theme gets offered for Indian Senior voters. People exceeding 60 years get on will build deposits for five years from the date of the account gap. They can even earn smart interest in the number. The interest rate is 8.6%. The possession of the investment instrument can get extended by three years.
SCSS is providing the best rate of interest as compared to different saving schemes. You can open your account through Public/Private sector banks or Indian Post Offices. Moreover, it’s counted in the list of the best tax-saving scheme. It’s because the investment in this scheme is tax-deductible under Section 80C of the tax Act, 1961 up to Rs. 1.5 lakh every year.
Who Should Invest In SCSS?
- Senior voters of WHO square measure trying to find investment choices. They choose the one that supplies them regular financial gain, tax edges, and high safety.
- Individuals that are willing to take a position for semi-permanent wealth creation. Apart from that, it must be government-backed schemes.
9. Post-Office Monthly Financial Gain Theme (POMIS)
Post Offices in the Asian country regulate the monthly saving theme. It’s one of the most effective schemes for monthly financial gain. It’s a government-backed saving theme. It permits investors to save a lot of bucks monthly.
The maturity amount of the theme is five years from the date you created the account. UNA is a resident of the Asian country. It’s free to open a Post-office MIS account with a minimum of Rs. 1,500.
The individuals of UNA are searching for a scheme that will give them the tax-saving possibility. Yet, they cannot choose this instrument. As a result, the Post workplace in a monthly financial gain theme doesn’t offer any tax rebate on the investments.
Who Should Invest In POMIS?
- Investors of United Nations agency are seeking fast monthly financial gain. Even they don’t involve any risks in their investments.
- It is favorable for retired people or senior voters of the United Nations agency. As they have landed into the no-more-paycheck zone, they can go for it.
- Investors that are willing to delight in a one-time investment. Those who aim to obtain regular financial gain can opt for this.
- Investors with broad monetary goals.
Chart Of Some Investment Plan
What Do You Understand When You Hear NRI?
NRI means non- resident Indians who have spent less than 183 days in India for the financial year. It’s the definition as per India’s Foreign Exchange Management Act of 1999. NRI also refers to the subject living overseas for 183 days during a year. That is, as per the Gregorian calendar, first August to March thirty first. Individuals living in and dealing out are typically interested in investment in India. However, very little understanding of the market discourages them from investing.
Frequently Asked Questions
1. What is the best investment for NRI in India?
i. Fixed Deposits or FD in banks
ii. Mutual Funds
iii. Direct Equity
iv. Real Estate
v. Bonds and Non-Convertible Debentures or NCDs
vi. Government Securities
vii. Certificate of Deposits
viii. National Pension Scheme or NPS
2. Which is the best bank for NRI?
I’m mentioning a few banks with high security that also provides a high rate of interest. So, kindly read the table below-
3. Can NRI invest in post-office schemes in India?
Apart from that, if you’re an NRI, I’m sorry to say, but even the government plan gates are closed for you. In the present scenario, there are no such improvisations made for the NRIs. However, we can certainly hope for the best shortly.
Yet, if you’re keenly interested in investing in the post office plan, you can. Yes, you saw it right. However, the procedure is going to be a bit lengthy. You’ve to carry out the requisite procedure by any of your family members or acquaintance. Yet, there’s another barrier to it that they must be Indian. That is, they must be residing in the country.
4. Can NRI have 2 Demat accounts?
5. Is a PAN card necessary for an NRI in India?
Apart from that, if you do not have a PAN card, you can’t even purchase the property. Added to that, you can’t even expend in any savings plan in India. So, if you’re an NRI and planning to reside in the country for a long, apply for a PAN card. It’s always better to be on the safer side. Isn’t it?
6. Can NRI buy property in India?
You can go for every property except for agricultural lands and areas under the government property. Yet, if you’re quite interested in agricultural lands, you can invest in it only through a third person. That is, the property you purchase needs to be in the name of your close acquaintance. It’s again mandatory for your acquaintance to be an Indian citizen.
7. How can I maintain my NRI status?
For instance, if you have been staying in India for about 62 days now. Added to that, you also stayed a total of about 370 days in the last four years. So, you shall get regarded as a resident and not only an NRI.
Non-resident Indians have great options for investment in the industrial development country India. You have to calculate very wisely regarding which plan is the best. Based on that, you must invest in the plan. Then only you will get a good return from those investments. Thus, according to our investment plan, you can invest safely in India. So invest in any security plan and enjoy the benefits.