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Investment Options for NRIs in India

Investment enables you to make your money work for itself. Through regular investments you can develop a financial discipline. Know about the best investment options in India in 2022.

  • 5,486 Views | Updated on: Jan 04, 2024

A ‘Non-resident Indian’ is an individual of Indian origin who is not a resident of India. The NRI status is attained by a person who has resided in India for less than 182 days in the preceding financial year. NRIs have a golden opportunity to create wealth by investing in the lucrative investment tools available in the market. Since the value of the rupee against a dollar usually remains low, investment for NRIs in India is considered an excellent option to convert their hard-earned income into high investment returns. Let us now understand how an investment for NRIs in India is beneficial and explore the available NRI investment options in India.

Why should NRIs invest in India?

Plan your retirement

Savings is often insufficient to achieve your post-retirement goals; hence investing is vital to maintain your existing standard of life. Investment can help you build a foundation for your life after retirement. Setting up a retirement plan in India is comparatively cheaper than in countries like the US. This can be done by investing in different sectors such as stocks, mutual funds, or buying real estate in India.

Gain higher returns

The value of a rupee is much lower compared to a dollar. Hence, your foreign investment in Indian investment options can bring higher returns. For example, investment in real estate in India would be more affordable and approachable for an NRI, and the returns are usually high.

Diversification

If you are an investor, you can diversify your portfolio by investing in multiple assets such as equity, stocks, bonds, debt funds, liquid funds, etc. Diversifying the investment minimizes the risk and modifies your portfolio to earn the desirable returns.

NRI Investment Options in India

Fixed Deposits

The most common and safest type of NRI investment, Fixed Deposits, keeps your money safe in an account for a predetermined period along with the applicable interest. You need one of the following accounts in India to deposit money:

  • NRE Account (Non-Resident External Account)
  • NRO Account (Non-Resident Ordinary Account)
  • FCNR Account (Foreign Currency Non-Resident Account)

Mutual Funds

The risk involved in Mutual Funds is a bit higher than that of FDs, but Mutual Funds also provide higher tax-efficient returns. You can invest in Mutual funds through a Systematic Investment Plan(SIP). One must check the terms and conditions of the plan and invest according to their risk-taking appetite.

Real Estate

Real estate is one of the favorite NRI investment options as it is a decent source of income in the long run. In addition, NRIs can easily afford to buy financial assets such as real estate. For example, buying a house can provide you with a rental income and also be used as security while applying for a loan.

Investment in Equity

Directly investing in equity is the perfect fit for you if you’re an aggressive investor with good knowledge of the investment market. However, it is mandated for NRIs to have an NRE/NRO bank account, a Demat account, and a trading account to begin to invest in the Indian stock market.

National Pension Scheme

NPS is available for individuals between 18 to 60 years old. You can begin to invest in an Active choice mode, where you decide the asset allocation in equity, government securities, Corporate Bonds, etc. If you do not have prior knowledge of investment, you can select Auto choice, where the assets are allocated automatically, depending upon the policyholder’s age.

ULIP Plans

Like Indians, NRIs have the right to invest in Unit-Linked Insurance Plans under the Foreign Exchange Management Act (FEMA). ULIPs provide the dual objectives of insurance cover and investment. Along with the tax benefits under Section 80C deduction, ULIPs offer transparency, flexibility, and the opportunity to create wealth.

Conclusion

India’s remunerative investment options and resurgent economy have caused a spurt in the investment for NRIs in India. However, one should consider factors such as interest rate, risk-taking appetite, tenure of the plan, etc., before beginning to invest. Therefore, invest wisely to secure your future and accumulate wealth with flexible investments in your homeland.

- A Consumer Education Initiative series by Kotak Life

Amit Raje
Written By :
Amit Raje

Amit Raje is an experienced marketer who has worked in various Fintechs and leading Financial companies in India. With focused experience in Digital, Amit has pioneered multiple digital commerce in India. Now, close to two decades later, he is the vice president and head of the D2C business department. He masters the skill of strategic management, also being certified in it from IIMA. He has challenged his challenges and contributed his efforts in this journey of digital transformation.

Amit Raje
Reviewed By :
Prasad Pimple

Prasad Pimple has a decade-long experience in the Life insurance sector and as EVP, Kotak Life heads Digital Business. He is responsible for developing user friendly product journeys, creating consumer awareness and helping consumers in identifying need for life insurance solutions. He has 20+ years of experience in creating and building business verticals across Insurance, Telecom and Banking sectors

In this policy, the investment risk in the investment portfolio is borne by the policyholder.

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