Best Investment Options In India For NRIs

With the availability of vast investment options, non-resident Indians (NRIs) may often find it complex to pick the best scheme among all. To eliminate this, here's a guide that lists the 6 best investment options in India that are best suited for NRIs.

Avenues For NRIs To Invest

Fixed Deposit:

Fixed Deposits, also known as FDs, are a popular investment tool in the Indian market. In fact, they are also a sought-after investment vehicle amongst the NRIs as well. Ideally, FDs are low-risk investment options. This is because the Bank FDs have negligible chances of default. However, they give average returns.

You can begin investing in FDs via Non-Resident Ordinary (NRO), Foreign Currency Non-Resident Account (FCNR), or Non-Residential External (NRE) accounts. The interest rate, i.e. the ROI, depends on a range of factors, including the amount, bank, and tenure of the fixed deposit.

National Pension System:

As the name suggests, the National Pension System or NPS is a scheme backed by India's government that invests your funds in debt, equity, or both. Also, the associated tax benefits with investment in NPS make it an excellent investment option for NRIs.

Generally, NPS comes in two variants: a Tier 1 account and a Tier 2 account. Each come with a different set of rules. To open an online eNPS account, NRIs need a PAN or Aadhaar card. Funding here can be done via any of the NRI accounts.

Direct Equity:

Investing in direct stocks or the equity market provides a higher return than fixed income products as it also has higher risk. So, if you do not mind taking an extra risk or have a bigger risk appetite and are aggressive in your investment strategy, this could be the best option for you. Your risk would be comparatively lower if you do your research well and opt for stocks in companies with solid management and sound fundamentals.

However, it would help if you had a Demat and a trading account in India, your PINS (Portfolio Investment Scheme) account, and your NRO or an NRE account to invest in the same.

Real Estate:

Among all the investments listed here, real estate is considered one of the best investment options for NRIs. Besides being fruitful, this is an emotional quotient for NRIs because it gives them a feeling of belonging to India.

The best part is that real estate prices in India have seen unprecedented growth in many years. Hence, investing here can yield extensive benefits like earning a regular income via rent or benefitting from capital appreciation. Funding here in real estate asks for nothing but NRE, FCNR, and NRO accounts.

Mutual Funds:

This is a vital part of the investments for NRIs, as you can directly invest in mutual funds in India. Note that NRIs can invest in mutual funds through NRE and NRO accounts only. Herein, investing in Indian money is a mandate. If chosen wisely, schemes can offer great returns based on the type of fund, i.e., hybrid, debt, equity, and investment horizon.

Compared to bank FDs, mutual funds offer higher tax returns. Mutual funds are an excellent investment because they can offer inflation-beating returns in the long run.

• Note: Ensure that you follow the FATCA guidelines before investing.

Public Provident Fund:

This is a complex one. Under this fund, you can continue with the PPF account you opened while being an Indian resident. However, note that you cannot opt for a PPF account extension after the maturity period (15 years). An NRI cannot open a PPF account if not present in India.

Conclusion

Choosing the best investment option for NRIs entirely depends on your investment goals and risk appetite. However, do NOT skip on analysing your requirements and reading all the risk profiles before investing in any of them.