Amid the looming threat of recession, the International Monetary Fund (IMF) has termed India a bright star. India has been among the fastest growing economies of the world and there could not be a better time to invest in India, suggest experts. For the NRIs, there are several investment options and periodic income generation instruments available today that come with their unique sets of benefits. Since the festive season is here, it’s often considered an auspicious time to make decisions like investments.
Speaking about the best suitable investment option for NRI investors, Shiv Parekh, founder hBits, said that the best instrument depends on one’s investment goals, risk appetite and expectations of returns. “In the case of mutual funds, it is suitable for those who are looking at long-term investments. Investors are liable to pay capital gains on the returns earned from mutual funds. For NPS, investment is good if they plan to settle in India post-retirement. As far as real estate is concerned, favourable policy interventions and pent-up demand signal steady growth and will prove to be a good investment option in the long run”.
Here are five investment options for NRIs:
Real Estate: The real estate sector has been an attractive investment destination and is on track to reach $1 trillion in market size. Both residential and commercial real estate (CRE) has been a key investment option. Also, a commercial property grows between 5 to 10 per cent depending on the location and thus can be a good investment option.
“More accessible instruments like REITs and Fractional ownership have given a massive boost to the CRE sector. These instruments have made the market more accessible to retail investors. The rental yield of a commercial property, at around 8%-10% per annum, is higher than the yield from a residential property,” said Parekh.
Mutual Funds: Mutual Funds are gaining rapid popularity as an investment that can beat the annual rate of inflation. NRIs with limited expertise in foreign investment but looking to invest for the long term, can consider mutual funds for better returns. Mutual funds spread out the risk in equities by investing in a basket of stocks.
ULIP: Unit-Linked Insurance Plan combines the benefits of investment and insurance with a typical lock-in period of five years. The hybrid option allocates a portion of one’s premium towards offering him/ her a life cover and the rest is invested in a variety of financial instruments.
NPS: National Pension Scheme, the government-backed pension scheme, invests in equity, debt or a combination of the two. NRIs may opt for the active choice or auto choice options to decide the amount to be invested in the equity. Anybody between the ages of 18 and 60 years can contribute to the NPS. NRIs can also open an online eNPS account if they have a PAN or Aadhaar card.
Fixed Deposit: Fixed Deposits or FDs are not only popular amongst Indians but also among non-resident Indians. Since it’s a risk-free investment and comes with different tenure options, it allows flexibility besides guaranteed income. NRIs can start investing in FDs through NRE, NRO or FCNR accounts.
