It is important that NRIs should first look at their goals and risk profile before taking a decision. Similarly, Investment Instruments like MF, Equity Market, NRE Deposit, and more have their restrictions. Their rules and regulations are constantly evolving, so a close scrutiny is needed to avoid the pitfalls of additional taxes, lock-in periods, etc.
real estate
The real estate sector has witnessed a steady boom; However, there are certain rules that must be kept in mind to make it a profitable investment. Investing in real estate is profitable only when made with a long-term horizon. There are certain rules for NRIs investing in real estate which differ from country to country. For example in India, a buyer must deduct TDS When buying immovable property from an NRI and deposit it with the government.
REIT
Investors looking to invest in the real estate sector, but don’t want to lock in large amounts of money, can invest in a Real Estate Investment Trust (REIT), which offers partial ownership of quality commercial property that can be rented. . There is easy liquidity, there is no commitment of minimum investment amount or tenure. REITs are mandated to give 90% of their income to investors through dividends. Dividend acts as a steady income for the investors.
mutual funds
It is an ideal vehicle for investors for several reasons; For example it helps in building a well diversified portfolio, the value of investments is easy to track and above all it provides liquidity. Depending on the investment objective, expected returns and risk profile, an NRI can invest in equity, balanced, debt or liquid funds. An investor also has the option of investing in MFs through SIP.
equity market
The equity market of a given country reflects its current economic growth and future growth potential. Investing in equities can be a great way to build long-term wealth. NRIs looking for investment opportunities can invest in emerging companies in the equity market. There are many companies that pay high amounts of dividends (taxable). One must remember that income generated from short-term investments in equities (up to 1 year) is taxable as short-term capital gains – taxable at 15%. Income exceeding INR 1 Lakh per annum is chargeable as per Taxable Long Term Capital Gains (LTCG) at 10% for equities held for more than 12 months.
NRE Deposit
People of Indian origin residing in another country can invest in NRE deposits, which will fetch them higher interest rates. However, this is possible only if they have a bank account in India; Whereas there are certain rules and regulations under the Foreign Exchange Management Act (FEMA).
Property was one of the best investment options for NRIs till a few years back; But investing in India has now started giving serious consideration to financial investments like mutual funds, direct equities and many other options.