NRIs have several investment opportunities in India. They can consider the following:
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A large number of Non Resident Indians (NRI) come under the bracket of middle or low income group despite their NRI status. For their friends and relatives back home, they may be matter of discussion for their ‘good life’ in a foreign land, but only they know the reality of their hard-earned money and obligations they have to fulfil in own countries and residence countries where they work.
To meet the uncertainties in the job market and businesses they need to do some right investment in India to ensure financial stability or even lead a hassle free retired life.
Most of the rich NRIs know the right investment avenues, still there are many who end up investing only in real estate or fixed deposits.
Following are some options for the NRIs to choose and ensure financial stability:
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National Pension Scheme (NPS)
There is a question among most of the NRIs about the pension schemes. They should know that there is a government-backed pension scheme (NPS) that invests in equity, debt or a combination of both.
There are tax benefits attached to this investment, making it one of the best NRI investment options. Anyone between 18 and 60 years of age can join to the NPS. NRIs can open online eNPS account if they have a PAN or Aadhaar card.
NPS TYPES:
The NPS has two variants.
Option One (Tier 1). That offers tax benefits up to INR 2 lakh under Section 80C and 80CCD (1B). One can invest a minimum of INR 500 per contribution and at least INR 6000 per year. When the investor reaches 60 years of age, he can withdraw 40 per cent of the corpus and invest 60 per cent in a pension scheme.
Option 2 (Tier-2) This account is more flexible with no restriction on withdrawals. It also does not come with any tax benefits.
Through the NPS, one can invest funds in a mix of debt and equity. The funds are managed by professional fund houses similar to a mutual fund.
The NPS can be linked through NRE accounts. It is one of the very good options for NRIs to invest early and get secured monthly income at the age of retirement.
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Fixed Deposit
Fixed Deposits (FDs) are popular amongst both, the resident Indians and NRIs. This is risk free investment that gives average return. It is easy to invest through NRE, NRO or FCNR accounts. The benefit in terms of rate of interest depends on bank, deposited amount and tenure of the deposit.
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Stock market or direct Equity
Stock market gives very high return at the same time high risk involved here. Good equity portfolios make for great investment plans for NRIs. Any NRI who has a Portfolio Investment Scheme (PIS account), an NRE/NRO account, a Demat account and a trading account can invest in the Indian stock market.
It is up to the ability of a person to invest and reap profit. This investment, however, should be done as per advice of a good financial manager who has good knowledge of the stock market.
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Mutual Fund (MF) schemes
Mutual funds are relatively safe and moderately higher in return. A proper investment plan can give the investor better return than Fixed Deposit in banks. It is the best suited for the NRIs. With wide range of investment options MFs can be done in the from debt to equity, and carefully chosen schemes can deliver good returns. To invest, you need an NRE or NRO account. One can invest in Indian rupees. The rate of returns depends on the type of fund you’ve invested in, like debt, equity or hybrid. Capital gains liability on the returns on earnings may be there.
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Real Estate
Real Estate is one of the most popular investment options among the NRIs. Real estate is a popular platform because of the emotional attachment with the land and urge to to own property in India. You can invest in residential or commercial real estate. Investing in property has two benefits: earning regular income through rent and benefit from capital appreciation. According to the RBI’s House Price Index, the average annual return from June 2010 to June 2020 was 11.6%. You can fund your property purchase through your NRO, NRE or FCNR account.
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Unit Linked Insurance Plan (ULIP)
Unit Linked Insurance Plan (ULIP) is a combination of investment and insurance. Under this hybrid option the investors are allocated a portion of premium towards offering a life cover and the rest as investment in a different financial instruments.
ULIP has certain lock-in period, generally of five years. The investors can claim tax benefits under section 80C of the Income Tax Act.
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Government Securities
It is again a low risk investment. Such securities are backed by the Government of India, the maturity of which ranges from days to years. They are issued in treasury bills or bonds. These bonds may have fixed interest rates or floating rates that are determined based on market-related changes.
It is up to the investor to choose the products as per their requirement and convenience. One should not put all his investments in one basket, it is advisable to diversify the investment and choose as a matter of portfolio.