Investing in a foreign country may seem daunting, but if you are a native of India who has relocated for work or obtained citizenship elsewhere, there are still investment opportunities available to you. India offers a wide range of options within its financial sector that can yield profitable returns.

Non-Resident Indians (NRIs) have the chance to capitalize on unique opportunities and face specific challenges when investing in India. With the growing Indian economy, NRIs can explore various avenues to achieve higher investment returns in their native land. Below are some key strategies for NRIs seeking to optimize their investment returns in India.

Understand Regulations

Before investment, you must understand the regulatory norms. The Foreign Exchange Management Act (FEMA) governs NRI investments in India. NRIs can invest in various instruments such as equities, mutual funds, real estate, and fixed deposits. It’s essential to stay updated on any changes in regulations to ensure compliance and adjust investments.

Also Read: Investment Tips for NRIs: Where to invest in India for higher returns?

Diversify Your Portfolio

Diversification is key to minimising risk and maximising returns. NRIs should consider a balanced mix of asset classes:

Equities: The Indian stock market offers significant growth potential. Investing in diversified mutual funds and exchange traded funds (ETFs) can provide robust returns, provided you also understand the risk.

Real Estate: The real estate sector is witnessing growth, particularly in metropolitan cities. Investing in residential or commercial properties can yield substantial long-term returns.

Fixed Deposits (FDs): While offering lower returns compared to equities, FDs give you stability and assured returns. Many banks offer attractive interest rates for NRI fixed deposits.

Power of Compounding

Investing in long-term instruments can significantly enhance returns through the power of compounding. Equity linked savings schemes (ELSS), public provident funds (PPF), and SIPs are excellent options for you to grow your money slowly but steadily. Regular contributions to these instruments can build a substantial corpus over time.

Explore NRI-Specific Products

NRE/NRO Accounts: Non-Resident External (NRE) and Non-Resident Ordinary (NRO) accounts facilitate easy repatriation of funds. NRE accounts are tax-free, while NRO accounts are taxable.

FCNR Deposits: Foreign Currency Non-Resident (FCNR) deposits allow NRIs to hold fixed deposits in foreign currencies. These deposits are immune to exchange rate fluctuations and offer competitive interest rates.

Check Tax Implications

Understanding the tax implications of your investments is crucial. While NRE account interest is tax-free, NRO account interest is subject to tax. Investments in equities held for over a year qualify for long-term capital gains tax at 10%, whereas short-term gains are taxed at 15%. Double taxation avoidance agreements (DTAAs) between India and other countries can provide relief from double taxation.

Talk To Your Financial Advisor

In case you are pressed for time or are unfamiliar with the concept of investing in India, it is advisable to consult a seasoned investment advisor. They will be able to comprehend your needs, recommend suitable options aligned with your financial objectives, and assist you in creating a portfolio that aligns with your expectations. Additionally, these professionals can provide valuable guidance on tax planning.

Monitor and Review Investments Regularly

It is important to review your portfolio regularly to know what exactly is happening and whether your investment is on track.

Adhil Shetty, CEO, Bankbazaar.com, says, “Regular monitoring and review of your investment portfolio are essential to ensure alignment with your financial goals. Market conditions can change any time. Periodic reviews can help in rebalancing the portfolio to optimise your expected returns. It is good to update yourself with economic trends, govt policies and market changes. It is helpful in making right investment decisions.”

Consider SIPs

Systematic Investment Plans (SIPs) allow NRIs to invest a fixed amount regularly in mutual funds. SIPs mitigate market volatility risks by averaging the purchase cost over time. They are a disciplined way of investing and can lead to significant wealth accumulation in the long run.

Investing in India provides NRIs with numerous opportunities to generate higher returns. By implementing effective investment strategies and maintaining a disciplined approach, NRIs can realize their financial objectives and secure significantly higher returns. Making sound financial decisions during the investment process and regularly monitoring your investment portfolio, either independently or with the assistance of a professional, are essential components for success.