What are the best investment options for NRIs returning to India?

India has seen significant investments in the digital space, with a growing number of fintech firms taking off. tech talent shortage aside, there is one caveat to investing in Indian startups – a vast majority of the startups entering the ecosystem are based on USP ( utility & services ) technology.

While this is great for domestic investments, it poses a problem for NRIs returning to India to spend their hard-earned money. After all, most people earn abroad and bring back money only to spend it in countries like India. If you’re also looking to invest in Indian startups, here are some investment options for you.

Real Estate

Real estate is one of the best investment options for returning NRIs. It offers a safe, secure and stable investment opportunity with the potential for high returns. It also provides a way to diversify one’s portfolio, reduce risk and achieve long-term financial goals.

Real estate investments can be made in a variety of ways. One of the most popular forms of real estate investing for returning NRIs is property ownership. This involves buying a property outright or taking out a mortgage loan. Property ownership provides the investor with equity that can be used as collateral for future investments.

Additionally, owning real estate can provide the investor with rental income and the possibility of capital appreciation over time.

Another form of real estate investing for returning NRIs is through real estate funds. These funds allow investors to invest in a variety of real estate investments including residential and commercial properties, as well as land and infrastructure projects.

Real estate funds are managed by professional fund managers who invest the money of investors in a diversified portfolio of real estate assets.

Finally, real estate investments offer tax benefits. Depending on the country of residence, certain types of real estate investments may be eligible for tax deductions and credits. This can help investors save money on taxes and increase their overall return on investment.

Overall, real estate is a great investment option for returning NRIs. It provides a safe, secure and stable investment opportunity with the potential for high returns, as well as tax benefits. Additionally, it allows investors to diversify their portfolios and reduce risk.

Mutual Funds

Mutual funds are an attractive investment option for returning NRIs (non-resident Indians) because they offer a number of advantages.

Mutual funds provide diversification, which helps to reduce risk by spreading investments across different asset classes. They also offer the potential for higher returns than many other investments due to their professional management and access to a wide range of investments.

Additionally, mutual funds allow NRIs to benefit from tax advantages such as capital gains exemptions and indexation benefits.

Mutual funds also provide the flexibility to invest in a variety of currencies, allowing NRIs to invest in their home currency or in foreign currencies.

This can help to reduce exposure to currency fluctuations and protect against loss in value due to exchange rate movements. Additionally, mutual funds provide liquidity, allowing investors to withdraw their money when needed without incurring any penalties.

Finally, mutual funds offer convenience and ease of access, allowing NRIs to quickly and easily invest online or through their bank accounts. This allows NRIs to manage their investments with minimal effort and time.

Overall, mutual funds offer a number of advantages to returning NRIs, making them an attractive investment option. They provide diversification, potential for higher returns, tax advantages, the flexibility to invest in multiple currencies, liquidity, and convenience.

Fixed Deposits

Fixed deposits are a great investment option for returning NRIs due to their safety and guaranteed returns. Fixed deposits are low risk investments and are ideal for NRIs who want to invest their money in a secure manner.

Moreover, the returns on fixed deposits are generally higher than other investment options such as savings accounts, making them an attractive option for NRIs.

Another benefit of fixed deposits for NRIs is that they can be easily opened and managed from abroad. Most banks and financial institutions have online portals which allow NRIs to open and manage their fixed deposits from anywhere in the world.

This makes it easy for NRIs to take advantage of the attractive returns offered by fixed deposits.

Finally, fixed deposits offer flexibility with regards to the tenure and amount of deposit. NRIs can choose the tenure of the deposit as per their convenience, and the minimum deposit amount is generally quite low.

This makes fixed deposits an ideal option for NRIs who are looking for a safe and secure investment option with attractive returns.

Stocks & Shares

Stocks & Shares are an excellent investment option for returning NRIs, as they offer a range of advantages over other investments. Firstly, stocks and shares offer higher returns than many other investments and can help to diversify an NRI’s portfolio.

Secondly, stock and share investments are more liquid than many other investments, meaning that it is easier to buy and sell stocks when needed.

Thirdly, stocks and shares provide the potential for capital appreciation, meaning that the value of the investment may increase over time. Finally, stocks and shares can be used as a hedge against inflation, helping to protect an NRI’s wealth from the impact of rising prices.

Overall, stocks and shares provide a great opportunity for NRIs to diversify their investment portfolios and take advantage of the potential for high returns and capital appreciation.

Exchange Traded Funds (ETFs)

Exchange Traded Funds (ETFs) are a great investment option for returning NRIs, as they provide access to a wide range of stocks and bonds, with a low cost structure.

ETFs are highly liquid, meaning that you can buy or sell them at any time during market hours. This makes them a convenient option for NRIs who need to quickly access their funds when returning home.

ETFs also offer diversification benefits. By investing in a basket of stocks and bonds, you can reduce your risk exposure, as the performance of one security is not solely responsible for the overall performance of your portfolio. ETFs also offer tax advantages, as investors are not subject to capital gains taxes on their profits.

Finally, ETFs have the potential to generate higher returns than traditional investments.

Many ETFs are actively managed and have the potential to outperform the broader market. Additionally, many ETFs have lower expenses than traditional investments, which allows more of your money to be invested in the market rather than going towards fees and commissions.

Portfolio Investment Schemes

Portfolio Investment Schemes (PIS) are a great option for returning Non-Resident Indians (NRIs) looking to invest their money in India. This investment scheme provides NRIs with the flexibility to invest in Indian equities, bonds, mutual funds, and other financial instruments.

This allows them to take advantage of the strong economic growth in India and benefit from the potential returns that come with it. Furthermore, PIS also offers NRIs a tax exemption on capital gains earned from their investments, making it an attractive option for those looking to invest in India.

Moreover, PIS allows NRIs to make regular investments into the Indian stock market without having to worry about exchange rate fluctuations.

The process of opening an account is relatively simple and straightforward, and once opened, the account can be managed online or through a broker.

This makes it easy for NRIs to keep track of their investments and adjust their portfolio accordingly. Additionally, the Indian government has put in place regulations to ensure that the investments made through PIS are safe and secure.

Overall, PIS is a great investment option for returning NRIs who are looking to benefit from the growth opportunities in India.

It provides NRIs with flexibility to choose their investments, and allows them to enjoy a tax exemption on their capital gains. Furthermore, the process of opening an account and managing investments is hassle-free and secure, making it an attractive option for those looking to invest in India.

Life Insurance Plans

Life Insurance Plans are a great investment option for returning NRIs, because they offer a variety of benefits. First, life insurance plans provide financial protection for the insured’s family in the event of their death.

This means that the NRI’s family can be provided with a lump sum payment or a steady income stream in the event of their death. This provides peace of mind to the insured, knowing that their family will have some financial security even if they are no longer around.

Another benefit of life insurance plans is the potential for cash value accumulation. Many policies offer cash value accumulation, which means that any excess premiums paid by the insured will be placed in an account and accumulate interest.

This money can then be used for future investments or even loaned against in the case of emergency expenses. This provides the NRI with another source of income and also allows them to build up their capital over time.

Finally, life insurance plans also offer tax benefits. For example, in India, life insurance policies are eligible for tax deductions under Section 80C of the Income Tax Act.

This means that the premiums paid on these policies are eligible for deductions from the policyholder’s taxable income. This helps to reduce the amount of taxes the NRI pays and helps to increase the net return on their investment.

Overall, life insurance plans are a great investment option for returning NRIs. They provide financial protection for the insured’s family, allow for cash value accumulation, and offer tax benefits. With all these benefits, life insurance plans are a great way to ensure the financial security of an NRI’s family.

Gold & Silver

Gold and silver are often considered to be the best investment options for returning NRIs (Non-Resident Indians). Investing in gold and silver is a great way to diversify your portfolio and reduce risk, as gold and silver prices tend to move in opposite directions to equity and other asset classes.

Gold and silver also offer protection against currency devaluation and inflation, so they can help to protect your savings from the effects of devaluation or inflation.

Furthermore, gold and silver have traditionally been seen as safe havens for investors, offering a hedge against political and economic uncertainty.

This means that, even if stock markets and other asset classes experience a downturn, the value of gold and silver should remain relatively steady. This provides an attractive option for NRIs who want to protect their investments against the risks of fluctuating global markets.

Finally, gold and silver are widely accepted as a form of payment, both domestically and internationally, making them useful for NRIs who need to make payments while abroad.

Furthermore, gold and silver are highly liquid investments, which makes it easier for NRIs to convert them into cash when needed.

Bonds & Debentures

Bonds and Debentures are a good investment option for returning NRIs because they offer stable and predictable returns.

Bonds are issued by corporations, governments and other entities and offer a fixed income stream in the form of interest payments. Debentures are similar to bonds but are backed by the issuer’s assets.

Both investments offer a safe way for investors to diversify their portfolios and protect their capital from market volatility.

Bonds and debentures have attractive tax benefits for NRIs, including low capital gains taxes and exemption from wealth taxes.

Additionally, the longer the maturity period of the bond or debenture, the more attractive the returns become. This makes them an ideal option for long-term investors.

Unlike stocks, bonds and debentures are not subject to market fluctuations, making them a much safer option for NRIs who want to generate steady returns. Moreover, bonds and debentures can be used as collateral for loans, making them even more appealing to investors.

Overall, bonds and debentures provide NRIs with a safe and secure way to invest and build wealth. They offer the potential for higher returns than bank deposits and other traditional forms of investments while providing protection against market volatility.

Currency Derivatives

Currency derivatives are a good investment option for returning NRIs because they provide exposure to currency movements in the global market.

Currency derivatives can be used to hedge against exchange rate risk, allowing investors to protect their investments from sudden fluctuations in the value of a currency.

Additionally, by taking advantage of the volatility in the currency markets, investors can potentially increase their returns.

Finally, currency derivatives are also a cost-effective way to gain exposure to global markets, as they typically require lower amounts of capital than other investment products.

This makes them an attractive investment option for NRIs who may not have large amounts of capital to invest.

Summary

Investing is an important way to build wealth and financial security.

NRIs returning to India have access to a wide range of investment options, from stocks, mutual funds, and bonds to real estate and gold. Each of these options has its own advantages and disadvantages and it is important to understand the risks associated with each before making any decisions.

With careful planning and research, NRIs returning to India can make wise investments that will help them achieve their financial goals.