NRI’s are very keen on investing in other nations; They invest in India and get many tax exemptions and benefits by the government. NRI’s are often suggested to invest some money in their native countries, as everyone cannot invest in equity or companies, so they are advised to invest in FCNR accounts and NRI investments. These small investments help to improve the inflow of foreign currency and improve the economy. These investments provide funds to the banks, and the investors get many benefits like tax exemptions and interests.
Investors prefer investing in FCNR accounts and NRI investments, as these accounts give them various benefits and good returns. These investments also keep the principal investment safe and free from risk. These benefits attract many potential investors who are willing to make low-risk investments.
Investment Options For NRI’s
Similar to regular fixed deposits, NRI fixed deposits are not affected by market fluctuation. The interest rate on these fixed deposits varies from bank to bank. NRI fixed deposits are good investment options for steady growth, as they provide us with constant returns without risk and fluctuations. They are subject to TDS on the basis of interest earnings. NRI fixed deposits provide good interests, and they also keep the principal amount safe.
FCNR accounts are a very efficient investment tool for NRI’s in India. After the recent regulatory changes, the FCNR investment route has become a perfect option for foreign investors in India. The revised interest rates have helped to merge NRI portfolio investments with international portfolio investments. These changes have increased NRI investments in equity and ban accounts. FCNR accounts are one of the major investment options in India as they provide steady interests and growth without risks.
It is known as a foreign currency non-resident account. FCNR account is a term deposit that allows investors to transfer their money in India, and this effectively eliminates the risks of market fluctuations. FCNR account has a minimum investment term of 1 year and maximum tenure of 5 years. Interest income in FCNR accounts is a non-taxable income in India. FCNR accounts are freely repatriable; this can be done by internet banking or through a branch. FCNR account can also be used to get a loan from banks or corporates. Unlike NRO and NRE accounts, the FCNR account is a foreign currency account.
These are some standard investment options for NRI’s; these investment tools do not require much investment and are also consistent and safe.
Some other investment options for NRIs are government securities, bonds, real estate, and mutual funds. These some less known investment tools, as the majority of investors invest in fewer risk funds and investment tools. Investors prefer government bonds as they are mostly risk-free, and at the same time, they give good returns. Many NRI investors also prefer investing in shares of Indian companies.
Planning Investments In India
There is a general perspective that NRI’s earn a lot as they are paid in other currencies. This is not true as their expenses are very high, and life out of India is very challenging.
Many banks offer NRE/NRO accounts for NRIs, but which bank should be considered is a tough question. Different banks offer different services. Some banks provide full repatriable services, while others offer semi-repatriable services. So, depending upon the income and situation, the appropriate bank account can be chosen.
NRI’s should invest in India as India is one of the fastest-growing economies and also quite stable. This factor encourages investors to invest here, and it is an essential part of planning to find an appropriate and stable investment source. India offers the highest interest rates to the investors as some countries offer around 2-3% interest. Many NRIs make the mistake of not investing in India and earn very little interest.
Factors Affecting The Investments
NRI’s are familiar with the market patterns of India, and they understand the financial system. This familiarity makes investment easy for NRI’s in India. These factors might not seem as a part of planning for investment, but a smart planner always considers even the smallest elements that is the reason smart planner get better results.
The Basic Steps One Should Keep In Mind
- Investors must start their planning process by identifying what kind of results they are expecting and their investment tenure. The investors who are willing to risk their money for longer tenure should prefer equity investments as they give good results in the long run. Investors who want quick returns should invest in simple tools like a savings account and fixed deposits.
- After this, investors must check their risk profile. Investors who can take significant risks can invest in start-ups and equity. On the other hand, investors willing to take less risk should invest in government schemes, bonds, savings account, and fixed deposits.
- After considering personal factors, investors should study the market situations. This study would help them evaluate whether they would be able to recover their money from equities or start-ups. This study would enable investors to identify which company has been performing well, generating good revenue, and has proper cash flow. This combined study of market and companies would help investors to choose the right company for making investments.
- The last step is choosing the amount of investment and their frequency. If investors are willing to make regular small investments, they can invest in mutual funds or recurring deposits. If the investors are eager to make a lump-sum investment, then fixed deposits, equity, and bonds are good options.
These series of steps are just basic guidelines. Investors should follow their own planning process. The major advice given for correct planning is determining the ability of the company to generate profits so that investors are aware that in how much time they can expect good returns. Investors should take the planning process very seriously. In need, they should also take the advice of a financial planner.
There are various options of investments for NRI’s but selecting the best option requires planning and proper research. The results are dependent on the planning and patience of the investor. Patience is of no use if the investor doesn’t do proper planning, and the plan will never be successful without patience.
NRI’s can get good returns and benefits from investing in India only if they do proper planning and evaluation of each and every factor. One of the biggest mistakes made by investors is not staying consistent. The only way to get good returns is to be consistent and patient with your investments. No guide or investment planner can get results if they don’t maintain proper consistency and patience. Investors must evaluate all the factors properly, and then they should start investing.
Many investors make a common mistake of withdrawing funds too early. Every situation is unpredictable, so people should consider the risk factor and then start investing. Investors with low-risk profiles should invest in low-risk investment tools, and investors with a high-risk profile should invest in high-risk investment tools. Investors can get the best returns only with the help of proper financial planning, patience, and consistency. The investors must study all the factors properly and should decide after proper evaluation of all factors and situations.
Good investment results are the outcome of good planning, patience, and consistency. All investors should plan well and start with patience and maintain consistency.