By Dinesh Yadav
For NRIs, the motivations for investing can vary- some aim to build a financial cushion for their families or plan for a future return to India, while others seek higher returns to grow their wealth more effectively.
There is one common question which comes up as what could serve an NRI investor the best. The solution to this answer depends upon the individual’s investment goals, appetite for risk and return expectations. The investment which is becoming popular amongst these investors includes branded resorts, fractional ownership in commercial real estate apart from all time favourite real estate, government securities and mutual funds. According to our estimates investment in branded residences and resorts will each USD 1 billion by 2027. Below are some options discussed, which can help today’s NRIs gain maximum returns.
Mutual funds are usually good for the investors looking for the long-term investments. It offers a wide range of investment options, from debt to equities to schemes which can deliver best returns. NRI can invest in Mutual funds by opening an NRE or NRO account and the investment can be made only in INR. The return on investment depends on the equity market movement and is considered risky for investors.
Real estate has long been considered by NRI as an attractive and promising investment in India. In particular, the commercial real estate (CRE) sector has gained significant momentum, thanks to more accessible investment options such as REITs, fractional ownership, and branded resorts, which have opened the market to a wider base of retail investors.
The income in the form of rental yield in commercial property is around 6% per annum, which is higher than the investment yield from a residential property. An investment in branded resorts has the potential to deliver higher returns. This leads to a steady expansion of wealth and improved monthly liquidity for the NRI investors. Apart from that, the profit sharing from the property could add additional amount to an investor’s kitty. Sales and leaseback model offered by Fine Acers also offer additional benefits like free stays and option for destination weddings at their properties across India.
Government Securities or G-Secs carry minimum-risk as they are issued by the Government of India. They are provided in treasury bills or bonds, the maturity of which may range from a few days to several years. These bonds generally have fixed interest rates or floating rates, that are arrived at based on market-related changes.
ULIP (Unit Linked Insurance Plans) offer the dual benefits of investment and insurance, typically with a lock-in period of five years. The premiums paid towards ULIPs are eligible for tax deductions under Sections 80C and 10(10D) of the Income Tax Act, 1961.
NPS (the National Pension System) is generally recommended as an investment option for those who plan to retire and settle in India, as it is primarily designed to provide retirement income within the country. As far as government securities go, these are usually low risk investments supported by the Government of India. Government bonds are easy tradable securities and their prices in the market fluctuate based on various external factors.
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