India offers many investment options to NRIs such as mutual funds, bank FDs and Indian stocks. There are also corporate and government options. bonds, and even real property. Before investing in their money, NRIs should evaluate all options within the context of their needs.
You may consider investing in India as an NRI for two reasons. You have an emotional connection to India and want to return after a few years. You want your future to be secure if you leave a lucrative job overseas and return to your home country. Another reason is that you are looking to invest your savings in high yielding avenues around the world. India has the best return potential and compliance with regulations.
Be sure to ask yourself why you are choosing to invest in one of the options.
Real-estate is the best option if you are looking to make an emotional investment in India. It will not only give you the opportunity to own a property there but also provide you with a reason to return. But investing in India’s real estate has its challenges. This is a risky investment as it can be difficult to sell the property off if you want to either book the gains or invest the money elsewhere. It is not liquid and can be costly in terms of maintenance, legal issues management, leasing through brokers, etc.
Another option is to put your savings in long term equity mutual funds. These funds create wealth over time, and you can use the proceeds for a home purchase in the future when you are ready to return to India.
You are searching for NRI investment opportunities in India which can provide a better return than those available in your home country. India has made it easy for NRIs to make repatriable investments here over the years. These investments have the advantage of being liquider than real-estate and offer full control. You can access them anywhere you are and you are able to operate them.
You can use bank savings accounts or liquid/ultra-short-term mutual funds to store your excess money and then deploy it later. Both options can give you single-digit percentage returns but they are significantly higher than what you would get in developed economies like the US and those in Asia such as Singapore. You can choose to invest for the medium-term (3-7 years) in either equity-oriented or mixed mutual funds that have a higher debt allocation. If you want to fund certain goals in your life, you can increase the allocation to equity mutual funds. To invest for the long-term (over 15 years), you can only do so in equity mutual funds. You can now manage all of your mutual fund investments from one location. You can buy mutual funds online and redeem your units.
If you are interested in India’s growth story, you can also invest on the India stock exchange. Intraday trading is not allowed. You must have a trading account with an SEBI registered broker and a Demat account in order to own the shares. You need to stay invested long enough to experience the Indian growth story. equity mutual fund is a better choice. Fund managers are professionals who analyze macro and microeconomic factors and then choose the right companies and sectors to invest your money.
You can also invest in India’s debt market by purchasing bonds from corporates or the Government and its agencies. Or you could buy money market instruments such as Certificates of Deposits, which offer higher rates of interest than bank FDs. Instead of investing in individual bonds and money market securities, you can choose a debt-oriented mutual fund that provides exposure to all options. This will provide diversification and greater potential for higher returns.
You need a NRE/NRO account to invest in stocks and mutual funds. A NRE/FCNR account is required for investing in bonds or bank FDs. You should carefully consider the tax implications of each investment option and whether proceeds can be fully repatriable before you make a decision. Each option should be evaluated in terms of tax implications, repatriation and liquidity. Also, consider future return potential.