The government of India is working to expand the lucrative investment opportunities for non-resident Indians (NRIs) to entice them to invest in their country. The availability of tailored options further offers individuals ample options to diversify their global portfolios. This makes it imperative for NRIs to know about the best investment plans in India and research their features and benefits to make an informed addition to their portfolio.
Read along to check out some of the most popular investment plans in India for NRI.
Best Investment Options for Non-Resident Indians in India
These are some popular investment options for the NRIs in India:
- Unit Linked Insurance Plans
ULIPs offer the combined benefits of insurance and investment. In ULIPs, the premium is divided into two parts, wherein, one part puts money towards insurance cover and the other is parked into preferred investment options.
This insurance plus investment option facilitates the creation of wealth and protects the family members and dependents of the insured after their sudden demise. Today, ULIPs are considered to be one of the best investment plan in India for NRIs with moderate to high-risk appetite.
- Retirement Plans
Retirement plans are basically plans that are designed to help safeguard an investor’s financial future after retirement. Typically, retirement plans are of two types, pension plans and annuity plans. While the former helps build a retirement corpus, the latter can be bought after retiring to ensure a steady flow of income throughout. These plans help ensure that retired individuals can maintain their current lifestyle long after retirement.
- Traditional Plans with Guaranteed Returns
Guaranteed returns traditional options are among the oldest forms of insurance plans that offer benefits like fixed returns, life protection, complete risk coverage, and tax deductions under section 80C. Such a plan is most suited for individuals with low risk-taking capacity. At maturity, these plans offer the investor a sum assured and a vested bonus. Notably, the USP of these Traditional Plans is that they are not directly linked to the market. This allows investors to enjoy returns on investment without being worried about market fluctuations.
- National Pension Scheme
NPS is a government-backed scheme that allows Non-Resident Indians to invest in either debts or equity or a combination of both. The National Pension Scheme is designed for individuals between the age group of 18 years to 60 years and can be easily opened with just Aadhaar and PAN card details. It allows investors the freedom to choose the assets they want to park their money into. Note that, an individual’s Non-Resident External Account along with their Non-Resident Ordinary Account can come in handy while investing in NPS.
- Mutual Funds
They are safer compared to direct equities and are known to provide substantial returns over time, making them suitable for NRIs with little expertise in foreign investment. However, it is crucial to determine whether the chosen mutual funds are available for USA or Canada NRIs by checking the rules for the selected house parties. Note that NRIs are allowed to invest in Direct stocks, Exchange-traded funds, and mutual funds. However, these funds are considered riskier than NPS and Fixed Deposit schemes as they are subject to market risks and volatility. Individuals should remember that they can invest in mutual funds via a Non-Resident External Account and a Non-Resident Ordinary Account. Also, they can invest only in Indian currency.
- Fixed Deposits
This traditional savings option is also popular among non-resident Indians as well, owing to their guaranteed results and lack of exposure to market risks. However, unlike residing Indian citizens, NRIs have to invest in FD through either an NRE Account (Non-Resident External Account), FCNR Account (Foreign Currency Non-Resident Account), or NRO Account (Non-Resident Ordinary Account).
- Real Estate
Real estate prices have surged significantly over the years, making it convenient for NRIs to invest in the sector to diversify their portfolio and boost income. Generally, the sector is considered to be a decent investment option as it offers investors substantial returns over long-term returns and ensures that they achieve steady growth. However, NRIs again need to have either a Non-Resident External Account, Non-Resident Ordinary Account, or Foreign Currency Non-Resident Account, to invest in the real estate.
- Equities
Investors with an aggressive investment approach may consider parking money into equities. This investment option is known to accompany a high risk-reward component, which means under favorable circumstances investors can generate substantial returns, but during a market downturn, they might incur huge losses. However, staying invested for the longer haul can help individuals spread out the risk and generate inflation-adjusted returns. NRI may consider investing in the stock market within RBI’s portfolio investment scheme. However, they can route the same through a Non-Resident External Account, Demat Account, Non-Resident Ordinary Account, and Trading Account.
- Portfolio Management Services
Portfolio Management Services can be described as popular professional investment services that are tailored to meet the requirements of High high-net-worth individuals (HNIs) who plan to maximize their returns. Typically, a high volume of investments is routed through PMS, which is often uncommon in regular mutual funds and equities. A professional manager is appointed to manage this investment portfolio professional fund according to the client’s risk appetite and objectives.
One of the top benefits of a PMS is that the option provides a higher level of flexibility and control over the entire investment portfolio. They can also choose their investment picks for the portfolio and decide when to enter or exit any particular investment. Notably, this facility is not available in regular mutual funds where the key decisions are implemented by the fund managers.
Besides these, NRIs can consider opening a Public Provident Fund account in their or their minor child’s name. However, they can do so only if their NRI status has not yet changed into that of a resident of a foreign country. Regardless of which investment plan one opts for it is advisable to factor in their risk-taking capacity, financial goals, and end objectives to align their goals and investment approach in the best possible way.