Mutual Fund Corner: Best investment options for NRIs in India

In this episode of Mutual Fund Corner, Salonee Sanghvi, founder of My Wealth Guide talks about solution-oriented schemes. It is not a very big category in itself, but it is becoming increasingly more important.

Sanghvi said, “If you ask most people in their 20s, or even 30s, a very few would be thinking about retirement, let alone plan for it. There is a tendency to ignore goals that are usually far into the future, assuming that we have enough time to plan and fund it. So for this express purpose, that is a separate category of solution-oriented funds namely for retirement and children's funds.”

“So why should we be talking about retirement in the first place? The working culture has changed substantially over the years, the number of working years has actually reduced as people joining the workforce later, and want to retire sooner to dedicate that time to other pursuits. So planning for long-term goals becomes an imperative one that people cannot afford to ignore."

"So this is exactly where your retirement and children's funds come in. As you mentioned, it is a very niche category with an AUM of only 27,000 crore. They are open-ended mutual funds, so they have a lock-in of about five years, or until the investor either retires or if it is a child the child reaches maturity.”

Also later on the show, Mrin Agarwal, financial educator & director of Finsafe India Private Ltd, will talk about the various options that NRIs have for investing in India.

Agarwal said, “There are various investments, traditionally if you see NRIs have preferred investing in real estate, it has as being the go-to investment, when we look at financial assets, you cannot do small savings schemes, but you can pretty much do, fixed deposits, you can invest into PMS as well, you can invest into stocks and of course, you can invest into mutual funds.”

“When we look at each one of these investments clearly, I think physical investments or physical assets, like real estate, are a big no because honestly monitoring it sitting in another country is not at all easy. These days, it is very difficult to find people who are going to take care of that property for you. Plus, if you look at the TDS on rent, there are so many other issues involved. On the side of the financial assets, of course, fixed deposit rates are quite low."

"If you look at direct stocks, you need to open something known as a PIS, which is a portfolio information scheme account with certain banks and have a trading account that is linked to it and these investments are actually monitored. So there are various limitations to these particular investments. Hence, I think mutual funds turn out to be a good bet.”