Smartest Investment Options for NRIs in India 2021

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There are great investment options for NRIs in India. But many tend to succumb to the sellers’ marketing fraud and end up buying or investing in something they do not need. NRIs must analyze their risk profile and goal and then search for profitable investment options. The number of NRIs in India is enormous. 

According to a UN survey, it is estimated that 16 million Indians are living outside India. But as an NRI, you can not directly participate in all investment options. However, there are several other options available for you. Let’s take a look at all the available options:

High return investment options for NRIs in India

  1. Equity or Stocks: NRIs can invest in the Indian stock market. You will have to open a Portfolio Investment Scheme, also known as a PIS account, to invest in the Indian Stock market. It can be linked to your Demat account which can be opened by any stockbroker in India. 
  2. Mutual Funds: NRIs, except those from Canada and the USA, can invest in mutual funds in India. NRIs from Canada and the USA have some restrictions and can only buy a few selected mutual funds. Depending on the risk profile, an NRI can invest in equity funds, debt funds, liquid funds, balanced funds, and MPI’s.
  3. Real estate: NRI can also invest in residential real estate or commercial real estate for a higher return. They can also apply for a loan to buy property in India. If you invest in reputed properties, you can get fair returns in a few years. However, NRIs are not allowed to invest in agricultural lands, farms, and plantations. 
  4. NPS: NRIs can open National Pension Schemes accounts. You can open these NRI bank accounts online if you possess a PAN card or an Aadhaar card. NRE or NRO accounts can be used as well. If your age is between 18 to 60 years, you can open an NPS account in India called the Point of Presence. You can also choose an asset class in which your funds should be distributed. If not selected, then funds are automatically distributed across different asset classes. 

Low-risk Investment options for NRIs in India

1. Bank Account: There are two types of NRI bank accounts:

  • NRE (Non-Resident External Account): Most NRIs prefer it because repatriation of money is easy. The interest earned is also tax-free.
  • NRO (Non-Resident Ordinary Account): It is meant for saving your income earned in India like rent. Interest is taxable. 

2. Fixed deposits in NRO accounts: You can invest in Indian currency FD’s using NRO accounts. NRI account interest rate is reasonable, and there is low risk involved. Interest on these accounts is taxable and is computed at 30% of the interest earned. 

3. Fixed deposits in NRE accounts: You can invest in FDs using NRE accounts, which are tax-free in India. But you have to understand that it can be taxed in your country. For example, if you live in a no income tax country like UAE, then there is no tax. However, if you live in countries such as the UK, Singapore, etc., you will have to pay tax depending on DTAA. The risk is low. The NRI account interest rate varies from 4.90% to 7.75%.

4. PPF: If you had a PPF account when you were a resident Indian, then you can continue that. But if you are an NRI, then you cannot open a new PPF account in India.

Conclusion

For NRIs, there are many investment options in India. You can surely earn a decent interest with both high-risk and low-risk investments after doing thorough market research based on your investment goals.

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