Investing is an important part of wealth creation that helps fight inflation, fulfill financial objectives, and also secures the future. However, do NRIs have sufficient investment opportunities in India? NRI investment holds a very important place in India. There are several investment options where NRIs can invest and generate profitable returns. The popular NRI investment options are mutual funds, fixed deposits, bonds, shares, and government securities.
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The first step towards investing is financing in the right and suitable investment option. An ideal investment option will help one to be financially independent. Let’s understand in detail about the NRI Investment:
When it comes to investment, NRIs have various investment options in India. Moreover, the government has also encouraged and facilitated this by simplifying the procedures. The NRI investment can be done in two ways i.e. with and without Government approval.
Investment helps in securing the future and provides a financially happy life after retirement. The objectives for investment can vary between liquidity or higher returns on investments. With advanced technology, NRIs have easy access to all the investment opportunities. The following segregations are proposed for the smooth investment for NRIs:
Most of the investments carry a specific level of risk that affects the returns. Generally, the investment returns are more, when the risk levels are high. Though, in such types of investments, there is a high risk of losses. The decisions of investment are taken based on the risk appetite of an individual. Here's a quick laydown of all risk levels:
An investor is advised to make an informed decision based on his/her risk appetite. Based on the level of the risk, various investment options are categorized as follow:
High Risk |
Direct Equity |
Long-time investment option to receive ownership company’s rights. |
High Risk |
Mutual Funds – Equity |
They mainly invest in stocks or shares |
Low Risk |
PPF i.e., Public Provident Fund |
This helps in retirement planning and is a government-backed option |
Low Risk |
Fixed Deposit (FD) |
Offers assured returns and no risks to investment |
Medium Risk |
Debt Funds |
Investment in income securities (fixed) such as bonds |
Medium Risk |
Balanced Mutual Funds |
Balanced between equity and debt instruments |
**”The investment risk in investment portfolio is borne by the policyholder”.
FDs are the most common and popular among NRIs. FDs are the great NRI investment options if as an NRI, you are looking out for a comparatively risk-free investment option that offers you average returns. Investors can start investing in fixed deposits through NRE, FCNR, and NRO accounts. The rate of interest depends on the bank, deposited amount, and time of the deposit.
The stock market returns have been factually higher than the fixed income products. Great NRIs investment plans are made by good equity portfolios. An NRI who is having a PIS account i.e., Portfolio Investment Scheme, a Demat account, an NRE/NRO account, and a trading account can invest in the Indian market easily.
A mutual fund is an important part of investments, where NRIs can directly invest. These funds offer a wide range of NRI investment money options i.e., from debt to equity. You are required to have an NRE and NRO account to invest in mutual funds but in Indian Rupees only. The return rate depends on the kind of fund you have invested into such as equity, debt, or a hybrid.
NPS is a government-backed scheme that invests in both, equity and debt and also in a combination of both. The tax benefits in this scheme make it one of the right NRI investment options. A person between the age of 18 years to 60 years can invest in NPS. NRIs are allowed to open an e-NPS account if they have a PAN card and Aadhar card.
Unit Linked Insurance Plan is a combination of investment and insurance. In this, a part of your premium is allocated towards your life cover and the remaining amount is invested in several financial instruments. ULIP has 5 years lock-in period. You can also get tax benefits u/s 80C of the Income Tax Act.
They are the low-risk investment options that are backed by the Government of India. In this, treasury bills are issued whose maturity time ranges from some days to years. These bonds or bills have fixed rates of interest which are determined based on the market-linked changes. Government securities are tradeable securities whose prices in the market are responsible to fluctuate based on external parameters.
How can one decide, what is the best investment money option for NRI? So, the right selection depends on the investment objectives, your risk-taking appetite, and your returns expectations. It is advised to create an investment portfolio of different assets that might help you reach your milestones.
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