5 Top Investment Options for an NRI in India

Written by : Knowledge Center Team

2021-10-06

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In the past few years, the Indian economy showed promising growth for investors. The country presented itself as a good investment option for foreign investors. Also, the Government of India conferred numerous relaxations in the provisions of NRI investment and, hence now Non-residents have great options to grow their funds by investing in India. Also, you must know the eligibility criteria if you are an NRI and you are planning to buy a life insurance plan in India. Before you can invest as an NRI in India, it is important to ensure that you fulfil the eligibility as per the law. The Income Tax Act, 1961 defines who should be termed as an NRI. As per the law, someone who does not stay in the country for 181 days is categorized as an NRI.

Further, the person who has stayed less than 365 days during 4 years preceding that year AND less than 60 days in that year in India also falls under the category of NRI. Anyone outside these definitions is categorized as a resident of India.

Five Top Investment Options for NRIs

Here are 5 investment options that NRIs can choose to park their funds and gain returns as per the investments made. Ensure that you have assessed your financial situation well enough and have figured out your risk appetite:

1. Mutual Funds

Mutual funds are an excellent option for investment. The only thing with mutual funds is the market fluctuations and the investor's risk appetite. By investing in mutual funds in India, you can get good returns and that too in a tax-efficient manner. The investment in Mutual Funds by NRIs can take place through NRO or NRE accounts.

An NRI can invest in mutual funds in India in the Indian currency and not the foreign one. There is also an option of systematic investment with mutual funds, which young and first-time investors would like. The Systematic Investment Plan (SIP) allows the freedom to regularly invest a small amount, helping build financial discipline and channel good returns.

Systematic Investment Plan | Types of SIPs

2. Fixed Deposit

The Fixed Deposit (FD) is an all-time safe investment option equally popular between Indian residents and NRIs. NRIs can invest in FDs in the bank or NBFC (Non-banking Financial Institution) of their choice. An NRI is required to get an FCNR (Account for depositing foreign currency earned in India), NRO (Account for depositing income earned in India), or NRE (for income earned from outside) account opened in their name to invest in FD.

However, being an investment option free from market fluctuations, the interest rate in FDs is not that good compared to the other NRI investment options. If you are a senior citizen, this can be the best option considering safety for market fluctuations.

Learn what is a fixed deposit and what are the benefits of including it in your investment plan.

3. PPF (Public Provident Fund)

The PPF or the Public Provident Fund (PPF) is another safe investment for NRIs in India. The scheme backed by the central government of India provides a good interest rate. The present rate of interest is around 7.1 per cent per annum. It is a good option if you are looking to lock in your investment for a certain amount of time.

The scheme comes in with a lock-in period of up to 15 years. The investments get tax exemption under the IT Act. The pullback here is that you can invest not more than Rs 1,50,000 in a given year. Thus, those who are eyeing huge investments can find the limit as low.

4. Real Estate

Real estate is always one of the best investment options if you own a large pool of funds. Unlike other options, this is a one-time investment, and the returns are incredibly higher. Moreover, the best part is that it's not much affected by the market fluctuations.

Hence, the real estate market provides a transcendent opportunity to invest, and you can make planned investments here. The only catch for NRIs investing in real estate is that they need someone to take care of the property.

5. Life Insurance Plan

If you are looking for more secured options then you must always choose comprehensive life insurance plans by Canara HSBC Life Insurance for building a better investment corpus.

a) Invest 4G Plan

Invest 4G plan by Canara HSBC Life Insurance is a ULIP (Unit Linked Investment Plan) that offers the flexibility to switch between investment funds. It also renders the facility of partial withdrawal in case of contingencies, wealth boosters, etc., among other features.

b) Guaranteed Savings Plan

Guaranteed Savings Plan by Canara HSBC Life Insurance is yet another most comprehensive and lucrative NRI investment option in India. This plan allows you to earn a fixed income post-retirement and holds a flexible premium payment option.

c) Money Back Advantage Plan

Money-Back Advantage Plan by Canara HSBC Life Insurance is an Individual Non-Linked Par Life Insurance Savings cum Protection Policy that offers fixed returns at regular intervals, and you get guaranteed returns on maturity.

After looking at all the NRI investment options above, you must now be aware of some top investment plans that yield good returns for them along with insurance safety. So what are you waiting for? Choose your suitable investment option today.

You may also read about - Best Fixed Income Investment Options

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