NRIs have always planned their stay in India with keeping their investment strategies in mind.
But what actually happens is, the phone starts buzzing nonstop as soon as the NRIs update their Facebook status of their flight landing to India.
All their Bank and Relationship manager’s line up their calls to monger the flavor of the month saying that this is the best option. NRIs often have time constraint due to a lot of other commitments. They tend to just park their money without considering their financial goals in long term.
NRIs Financial Planning needs emphasis on a few important factors:
#Types of NRIs
NRI needs to deliberate the reason for financial planning and tell their financial planner accordingly.
Do you plan to settle in India in near future? Do you wish to spend your life after retirement in India? Or do you plan to visit once in a while to know how your family and friends are doing?
If you are one of them who wish to come back in a few years you should usually opt for an NRO account.
NRO Account Means:
- NRO Account refers to Non-Residential Ordinary
- NRIs investment is done in the Indian market and the account is kept in Indian rupees.
- It cannot be repatriated into foreign currency.
If you are one of them who wish to come and stay back in India after retirement or you wish to stay in abroad and visit India once in a while should usually opt for an NRE account.
NRE Account Means:
- NRE Account refers to the term Non-Resident External
- The funds are committed in the Indian market and they are non- taxable.
- It allows efficient conversion and transfer of Indian and foreign currency both within and outside of India.
Remember, the money transferred in NRO or NRE account is always after conversion so fluctuation in conversion rate also needs to be looked upon.
#Know the difference between investment options
It’s usually observed NRIs follow a traditional rule of parking their money in either real estate or gold. Regrettably, the majority of these investment conclusions are far away from the long-term financial goals of the NRIs family. The actual wealth is not created through that asset class because most of the time it is not given on rent. Broker marginalizes on it rather than the owner but because NRI gets more revenue than their resident countries FD or funds they prefer real estate.
It is also seen that many of them go for Pension plans in the name of retirement planning. The difference between Retirement planning and Pension plan is never explained to NRIs because they are here for short visits and they are not available for required verification and tests.
Real revenue generation and maximum utilization of fund happen once a financial planner understands your goal and allocates your fund accordingly.
#Consult a financial planner
Planning is the key for any activity to be completed successfully. All you can do is plan and meet a financial planner only for signing the documents once you land. Each and every discussion other than that can happen over skype and video calling software’s while you are in your resident country. Just because you are coming for a certain period of time does not mean that you cannot plan.
We have experienced that some NRIs know about the investment options but they are not sure about the balance of portfolio in the right asset classes. Obscurity is one major reason why they should consult a financial planner.
There are not only financial barriers but also the psychological and emotional barriers which have to be taken into consideration. A financial planner should not only consider that what are your financial situations but also match it up with your emotional and personal situations. We strongly believe to attain the financial freedom, a good and honest rapport between you and your financial planner is a must.
So to conclude, “bon voyage” Come back soon to India!