How NRI can get Investment Benefits

Working in the US, UK or other parts of Europe has several advantages. You earn in dollars/pounds/euros and also get to live in one of the finest places in world. But if your heart still call for investing in India and Indian economy, don’t worry you can do it.As a NRI (non-resident Indian) you still have the opportunity to invest in India. Here are some of the ways an NRI can seek investment benefits by investing in the India.

Fixed bank deposits

Investing in a bank fixed deposit is probably the most traditional mode of investment available for an NRI. It is a simple and easy way to invest a certain amount of money in a bank fixed deposit and choose the tenure. One the FD matures, you either have the option of reinvesting your money for another term or you are free to withdraw the investment amount and the interest acquired. However, you cannot withdraw the money before the lock-in period.

Stock Market

If you are an avid stock market follower and have a penchant for buying and selling shares, you can open a trading account and a demat account and start trading. One can invest in direct equities if they have enough knowledge about the equity markets. However, NRI investors will need to be a part of Reserve Bank of India’s (RBI) Portfolio Investment Scheme (PINS). This will allow NRIs to trade stocks on the NSE. Apart from having a demat account and a trading account, NRI investors also need an NRE/NRO savings account only for PIS transactions.

National Pension Scheme (NPS)

National Pension Scheme or NPS is a pension scheme which NRIs can invest in to seek regular income once they retire. Any Non Resident Indian between the ages of 18 to 60 can invest in a National Pension Scheme. Investors can redeem the investment amount along with the interest accrued after the age of 60. If you retire before 60, you can make a partial withdrawal of up to 20 percent of the investment amount.

Certificates of Deposits (CoDs)

Certificates of deposits work just like bank fixed deposits, but here investors have the option of selling their deposits. In order to buy or sell certificates of deposits, NRI investors need to have a demat account. A CoD promises a fixed amount to the investor which he/she receives after the maturity period.

Mutual funds

Mutual fund schemes are one of the most sought after investments not just by Indian investors but by NRIs too. That’s because mutual funds offer active risk management, are professionally handled by an experienced fund manager and carry a diversified investment portfolio. What fund houses do is that they collect money from investors sharing a common investment objective and invest this pool of funds across the Indian and foreign economy. A mutual fund may spread its assets across equity and debt instruments depending on the nature of the scheme and the risk profile it carries. Mutual fund investors receive units in portfolio depending on the investment amount and depending on the fund’s existing NAV. Investors have the option of making a lumpsum investment or starting a mutual fund SIP. Several investors prefer SIP because it allows them to invest in mutual funds at regular intervals. One can even take the help of online SIP calculator to get a fair idea about how much income their investments can generate over the span of xyz number of years. SIP not only inculcates the discipline of regular investing but it also helps you to benefit from the power of compounding and rupee cost averaging.

These are some of the ways an NRI can invest and gain investment benefits. However, they are expected to determine their risk appetite first before making an investment.

Richard Buckley