With the growing economy, India has become a pool of investors with limited options to diversify its portfolio. On March 14, the Government of India announced that it would be taking measures to make the country’s economy cross the $5 trillion mark by 2026-27.
If you are a Non-Resident Indian (NRI), you would know that there are multiple options to invest in India. However, seeing and hearing about several of these options can overwhelm and confuse anyone.
Therefore, we spoke to Shreyaa Kapoor, a finance content creator, to understand the safe and risky options where NRIs can invest in.
Kapoor clarified that NRIs must know the concept of NRE/NRO bank accounts. NRE stands for Non-Resident External, and NRO refers to Non-Resident Ordinary bank accounts that NRIs can open in India.
The minute difference between these two accounts is NRE accounts maintain the data in Indian currency (Rupee). Money can be transferred abroad from these accounts freely without any restrictions.
However, if you have an NRO account, they maintain savings for the money earned in India. The amount is subjected to tax according to the Income Tax Act of 1961.
Here are a few options to consider:
NRIs have the option to invest in Fixed Deposits (FDs) in Indian banks. Depending on the rate of interest, you can pick the best option available. Kapoor shared that the interest rates for NRE fixed deposits are generally higher than domestic FDs. The interest remains tax-free.
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Kapoor says it is a good option for people who want to park money for an emergency fund and not worry about market risks.
Kapoor said, “If equity is your cup of tea, then NRIs can invest in Indian mutual funds.” Using your NRE or NRO accounts, you can start investing in plans. But you must be assured that the plan you are picking up accepts money from NRIs. You would need to do some research and understand the market risks attached to the plan.
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According to reports, the rate of real estate has sky-rocketed in India in the past couple of years. Hence, it is another good option for NRIs to start thinking about investing here. Either you can buy a piece of property or invest in Real Estate Investment Trusts (REITs) and Real Estate Mutual Funds (REMFs).
The National Pension Scheme (NPS) is not only for Indians but also for NRIs. It is a government-backed pension scheme proven to be a great pick for people planning their retirement. It can offer good returns. The contributions you make towards NPS are also eligible for tax deductions in India.
NRIs have the option to invest in corporate and government bonds. If you pick this option, you must be careful about which one you select. The bond must be listed on the stock exchange and freely tradable.
NRIs can purchase shares of companies. The Indian Stock Market (ISM) listed companies on the stock exchange for you to verify their share value and pick the option best suited to your pockets.
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