Are you concerned about investment?
It’s always good, as you may get your fingers burnt. Simply say, you may suffer financially due to any reason. You, being an NRI, may have more than enough earning. But, the uncertainty can anytime take a toll. To meet those unexpected financial losses, you should always premeditate. This is where the NRI investment comes into play.
So! What’s the big deal?
“The options are endless”-do you think so?
You have hundreds of options, but being a native only. The situation becomes critical when you change or are expected to change to a non-resident status. Indeed, the endless investment options shrink to countable plans of investment.
Investment options for NRIs and other lingering misconceptions-
1. Mutual Funds SIP:
The “SIP” stands for the Systematic Investment Plan. It often tempts those who want to generate regular income through a small and regular investment, as weekly, monthly or quarterly. The intended ones and buyers buy an equity or debt mutual fund regularly on a specific date. This is how they ensure a substantial wealth quickly in their pocket.
This smart investment plan debits a fixed amount automatically from your SIP account. The investor gets a NAV (Net Asset Value) number. This hassle free service inspires you to achieve long-term or short term financial goals with a higher rate of returns.
But, it’s worth mentioning that you should inquire with your bank to resume the already on mutual fund investment after becoming an NRI. It will confirm whether you can continue or discontinue your existing SIP account.
Some of the bankers advise you to discontinue it, if you settle in the non-FATF compliant countries, such as Canada or the USA. Therefore, you must check with your bank in respect of this fund. If you go abroad for just two years and then, return you will regain the benefits of this account.
2. Insurance:
This investment option is open for the non-resident diaspora to invest into. The immigrants with Indian passport can buy an insurance policy online instantly. However, you may have to bear some additional costs for fulfilling its formalities. If the insurance company has an international branch also, you can directly carry out all formalities there.
You cannot hide your status, as the company’s life insurance policies mandate revealing it. It’s simply because the insurance company wants to know if you live in the civil war or epidemics-hit country. It also evaluates the premium amount upon knowing your profession.
As far as the channelization of transactions is concerned, you should have an NRO or NRE or FCNR bank account. The bank account could be selected on the basis of the currency in which the policy is being issued.
3. Sukanya Samriddhi Yojna (SSY):
This scheme is strictly constrained to native Indians. However, there may be a possibility that you have invested in this scheme in the name of your baby-girl while being a native of India. Your baby will be entertained with all benefits that come under this scheme, until she becomes a non-resident.
It simply puts forth the fact that this investment plan is not meant for NRIs. However, if it is continued till the date of maturity, the bank will not pay any interest since the day she surrendered her citizenship. The account shall be assumed closed.
4. Public Provident Fund (PPF):
The non-residents are not permitted to invest in the fresh PPF plan. But yes, if the person changes his status after being invested in this scheme, the account shall be running till it matures. Mostly, this account remains active for 15 years. It can be extended upon being matured. Yet, this extension will not be valid for the immigrant Indians or NRIs.
On the flip side, the permanent residents can opt for its endless extension plan for the trailing five years after reaching its maturity date. The non-residents often leave the country. This is why most of the people don’t carry it out further, as they don’t have their residence.
5. ULIP Investment:
Unit Linked Insurance Policies (ULIP) policies cater a mix of life cover with mutual funds to NRIs and citizens of India. Your transaction goes partially into life insurance and the rest in the equity (depends on your intention).
But, these things could become a point of contention for the ones with Indian passport:
- Being inflexible, you have limited options to invest in for fixed five years.
- Filing tax could be an uphill battle, as ULIP is dedicated to Indian markets only. You need to mark your earnings as “investments made in foreign” in the country of your residence. Thereby, you have to pay tax on that earning abroad.
- It requires higher investment and processing fee.
- It can be an expensive deal.
We opened the SSY account when in India and later moved to a foreign country , but still citizens of India. Can the SSY account be continued or should it be closed?