NRI Investment Plans to Explore in India
NRIs who plan to invest their hard-earned money for growth and diversification have ample lucrative options to explore in India. Today, they can find NRI investment plans tailored to their needs. However, it is important to pick investment plans that suit their needs and risk tolerance. On that note let’s explore some NRI Investment Plans that are popular in India.
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Unit Linked Insurance Plans
Popularly known as ULIPs, the Unit Linked Insurance Plans are known to extend the perks of both investment and insurance protection. While the former allows to create wealth, the latter helps build a financial safety blanket for one’s family and dependents which kicks in after the sudden death of the insured.
This is why a part of the money parked in ULIPs is treated as a premium for insurance coverage while the remainder goes towards debt and equity funds to help grow the capital. The USP of the plan is that NRIs can select which funds to invest in and they can also avail of tax benefits.
In addition, ULIPs offer a guaranteed sum assured to the policy nominee. The NRI plans also allow individuals to withdraw funds partially after the lock-in period of 5 years is completed. These features make it suitable for individuals with moderate to high-risk tolerance levels.
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Retirement Plans
In India, NRIs can find retirement plans catered to their needs and requirements. Retirement plans have over the years gained popularity among those planning retirement and senior citizens to safeguard their capital and build a corpus for the future. Essentially there are two types of retirement plans – pension plans and annuities for individuals to explore.
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Child Plan
The previous rate of India’s economic growth and scope of future development has gained the attention of NRIs. As a result, they are now keen on investing their capital in the country for better growth. In this regard, child plans are emerging as one of the popular NRI investment options. Such plans enable NRIs to safeguard the financial future of their children.
These plans also offer a combination of investment and insurance to help grow the capital and protect children against unwarranted financial strain arising due to the absence of the insured. Such plans are designed to offer a fixed annual payout to the child based on the plan’s terms and conditions. These plans invest money in various options including debt funds, equities, and more to help fund accumulation.
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National Pension Scheme
The government-backed National Pension scheme allows NRIs to invest in debt or equity, or both as per need and risk-taking level. NPS allows adults between 18-60 years to open an NPS account by submitting basic documents like PAN and Aadhaar. However, NRIs would need a Non-Resident External Account and Non-Resident Ordinary Account to park money in NPS.
Notably, the asset allocation under NPS depends on the NRI’s age. They may opt for the auto process where allocation would be automated and will not depend on the investor’s age.
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Mutual Funds
NRIs with little experience in Indian investments can consider investing in mutual funds for better returns and diversification. However, it is important to check the house rules for NRIs based in different countries before investing in Indian mutual funds to understand whether the instrument is open for them or not. In India, NRIs can invest in direct stocks, mutual funds, and ETFs. They can park their money into a mutual fund through a Non-Resident External Account, or a Non-Resident Ordinary Account. However, it should be remembered that individuals can invest money only in Indian currency.
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Fixed Deposits
Fixed deposits are also among popular NRI investment plans. The scheme allows individuals to deposit a lump sum amount into a bank for a certain time to accrue interest on it. This helps individuals to build a corpus over time and use the fund to meet specific requirements.
NRI can park their money into fixed deposits through designated accounts such as Non-Resident External Account, Non-Resident Ordinary Account, and Foreign Currency Non-Resident Account. Notably, factors such as deposit amount, tenure of the FD, and interest rate affect the returns. So individuals must pay attention to these and use an FD calculator to plan their deposits beforehand.
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Real Estate
India’s rapidly growing infrastructure and development in tier I and tier II cities have contributed significantly to the growth of the real estate sector. The growth potential backed by the rapid developmental rate has drawn the attention of NRIs. Today, they are more inclined to invest in properties to build a source of additional income. In addition, investing in REITs has emerged as a lucrative means to park money into properties. NRIs can also use their Non-Resident External Account, Non-Resident Ordinary Account, or Foreign Currency Non-Resident Account, to invest in real estate.
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Equity Investments
NRIs with aggressive risk-taking capacity can park their money into equity investment plans. Equities are known for their high-risk reward aspects which help investors build substantial wealth over time. Nonresidents who wish to invest in the Indian stock market can do so through RBI’s portfolio investment scheme. They may also use bank accounts like Non-Resident External Accounts, Non-Resident Ordinary Accounts, Demat Accounts, or Trading Accounts to enter the stock market.
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Public Provident Fund
Public Provident Fund (PPF) is one of the most well-known NRI plans that allow individuals to save money over the long term and safeguard their financial future, especially the phase after retirement. The scheme allows NRIs to park money for 15 years, which can further be extended for another five years.
Being a government-backed scheme, it assures safety and guaranteed returns. This makes it a safe option for NRIs. However, PPF accounts for NRIs are subject to terms and conditions. For instance, they can either open the account in their name or the name of their minor child. Additionally, the plan is available to Indian citizens and not to those whose resident status has changed.
These NRI investment plans are lucrative avenues for individuals to park their money and grow their capital. However, individuals are advised to read the terms and conditions of NRI plans to understand their scope and plan their investments.
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